Finance Minister AMA Muhith Thursday proposed a set of fiscal measures for next budget, including increasing the ceiling of tax-fee dividend income to help revive the country's capital market.
"Capital market now stands on strong footing because of continuous efforts in last four years," the finance minister said in his budget speech on the day.
Experts and the bourses have also said the capital market will enjoy a 'long term' benefit due to the proposed incentives announced for the next fiscal year (FY).
"I think the government has offered the facilities as part its move to make the capital market vibrant. All proposed facilities are capital market-friendly," said Faruq Ahmad Siddiqi, a former chairman of the securities regulator.
Mr. Siddiqi said the authorities of the capital market should remain cautious about any kind of manipulations.
The Finance Minister proposed to increase the ceiling of tax-free dividend income to Tk 25,000 from the existing Tk 20,000 in the upcoming fiscal year for fiscal year (FY) 2015-16.
"I propose to fix the threshold of tax exemption of dividend income distributed only by listed companies to Tk 25000," said the Finance Minister in his budget speech.
However, Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) had demanded the ceiling of tax-free dividend income to Tk 50,000 in their budget proposals.
The listed companies, other than banks, insurance and NBFIs, will have to give 5 per cent more tax if they fail to disburse at least 15 per cent dividend.
However, the companies which give 15 per cent dividend or more will be charged as regular tax rate.
The Finance Bill 2015 proposed that during the year of going public, a company will enjoy 10 per cent tax rebate, if it offload 20 per cent shares of its' paid-up capital.
The finance minister has proposed to lift the existing tax exemption facility for the securities regulator and imposed a graduated tax rate like the stock exchanges.
According to the budget proposal, the Bangladesh Securities and Exchange Commission (BSEC) will enjoy hundred per cent tax exemption in the first year, whereas 80 per cent tax exemption will be applicable in the second year, 60 per cent in the third year, 40 per cent in the fourth year and 20 per cent in the fifth year.
The stock exchanges are now enjoying the tax holiday facilities on its own income in a graduated rate meaning that the exchanges income will come under the tax net from the next fiscal.
To ensure the development of the bond market, the government has proposed to withdraw the provision of imposing 5.0 per cent tax at the time purchasing Treasury bond.
"The proposed facilities will create convenient environment in the capital market along with making the economy vibrant," Dr. Swapan Kumar Bala, DSE managing director, said in his immediate reaction.
Mr Bala said the facilities will also attract foreign investors to the capital market along with inspiring the entrepreneurs of the private sector to make their companies listed with the capital market.
Asad Khan, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA) hailed the listed companies' corporate tax rate cut in the upcoming budget.
He said that they have been demanding to reduce the listed companies' corporate tax rate and it will have a positive impact in the capital market.
"We are cautiously optimistic for a better future as the proposed budget offered some good packages for the capital market," said Mr Khan.
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Set of measures announced for stock market
FE Report | Published: June 05, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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