Capital market to get incentives in next budget

Sohel Hossain Patwary

2 June, 2018 12:00 AM printer

The government is going to announce a set of incentives in the upcoming budget for 2018-19 fiscal year to make the country’s capital market vibrant.

Finance Minister AMA Muhith is likely to propose reducing corporate tax for listed companies and reducing turnover tax on transaction, said sources at the Finance Ministry and the National Board of Revenue.

Currently, the listed companies have to pay minimum 25 percent and maximum 40 percent corporate tax based on their business category.

NBR sources said the government is likely to reduce corporate tax by five percent in the next budget to encourage more companies to enlist in the capital market.

The NBR is also mulling over reducing the turnover tax from the existing 0.05 percent.

Sources at Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) said they proposed the government to increase the ceiling of tax-free dividend income to Tk 100,000 from existing Tk 25,000, and reduce corporate tax and turnover tax.

The bourses also sought a three-year tax holiday on sales proceed of shares as well as exemption from capital gain tax on block shares in the 2018-19 fiscal year.

Giving importance of the proposals and current faded scenario of the country’s twin bourses, the government is paying importance on the capital market issues. Even, the budget may have a special move to revitalise the bond sector for capital market.

Hinting a set of incentives for capital market, the finance minister recently said there will be a bucket of incentive package and surprise for strengthening the capital market in the next budget.

He also spoke of the government’s plan to make the market as a source of long-term financing to achieve its goal of transforming Bangladesh into a manufacturing and export-led country.

Economist and former adviser to the caretaker government AB Mirza Azizul Islam said a kind of no confidence is prevailing in the country’s capital market.

In a bid to bring back the investors’ confidence, government incentives along with the regulatory good governance are must, he said.

Opining to reduce corporate tax, this economic analyst said a thorough assessment is required on how much the previous incentives are involved with the capital market investors.

Sources at Brokerage Association, DSE and CSE, said that basing on the budgetary action, initiatives will be taken for the development of capital market.

Besides, DSE’s strategic partnership with the Chinese consortium will also bring a change in the trading floor.

Disappointment is rising among investors as the twin bourses of the country saw massive fall in the last one month.

Analysts said the market should go towards a good direction as it recently got Chinese consortium as its strategic partner.

Analysing the market trend last month, it was seen that the key index of DSE, DSEX, fell by 355 points only in May.

The market stayed negative during the entire month except three price correction session.

Following the situation, a team of DSE Brokerage Association (DBA) met Finance Minister AMA Muhith on Tuesday to find a way out of the current market situation.