Govt holds back from taxing capital gains

The government finally scrapped the proposal for imposing tax on the capital gains earned by individual investors in the stock market by taking into account the demand made by stakeholders.

Officials concerned said the rolling back of the taxing plan is part of steps for helping revival of the capital market that has been on a downslide since the 2010-11 burst of bubbles.

Finance Minister AMA Muhith, in his closing budget speech in parliament Saturday, said the step was taken in keeping with the Prime Minister's proposal.

"The Prime Minister has recommended keeping the income from stocks free of tax to help the market flourish and encourage investment," he told the lawmakers before he laid the Finance Bill 2014 in the House for endorsement with a number of amendments.

The government has also raised the tax-free dividend-income ceiling for individuals from Tk 10,000 to Tk 15,000 to bring investors back in the bourses.

The minister proposed Saturday 10 per cent tax rebate for listed companies which will provide 30 percent or more dividends instead of 20 per cent.

Managing Director of Dhaka Stock Exchange (DSE) Dr. Swapan Kumar Bala hoped the market would see a positive impact following the government's initiative in scrapping the capital-gain tax.

The policymakers of the Bangladesh Securities and Exchange Commission (BSEC) have also personally requested the finance minister and the revenue board to scrap the proposal on gain tax.

In its argument the DSE said the proposal of collecting the capital-gain tax by the TREC (Trading Right Entitlement Certificate) holders is impractical as a TREC-holder has no mandate to know beyond two pieces of information: the number of securities and the money of investors with them.

The DSE also stated that an investor may maintain multiple accounts with several TREC-holder companies and hence individual investor-wise capital gains cannot be determinable at one TREC-holder company.