The budget for fiscal 2019-20 has proposed a set of incentives to make the capital market more vibrant.
As part of the move, the budget proposed to raise the tax-free dividend income to TK 50,000 from existing Tk 25,000.“We will offer numerous incentives to the capital market in the coming years. Dividend income of up to Tk 50,000 from the listed companies will be tax-free. Double taxation on dividend from listed companies will also be removed. Special incentives will continue for encouraging investment in the capital market,” said Finance Minister AHM Mustafa Kamal in his budget speech on Thursday.
For the best interest of investors, the budget has also proposed a 15 per cent tax on stock dividend distributed to the shareholders.
The minister also proposed an additional 15 per cent tax on retained earnings and reserves exceeding 50 per cent of the paid-up capital of a company.
“The investors expect cash dividends from their investment in the stock market but some companies are generally distributing stock dividends. This makes imposing such tax necessary,” said the finance minister.
Mustafa Kamal said if a financially solvent company wants to merge or amalgamate with a financially sick company, the government will create the scope for that.
“We believe that creating this scope even with an investment allowance will help build a stronger capital market. Through the process, the depth and stability of the capital market will be enhanced,” he said.