National Board of Revenue (NBR) chairman Nasiruddin Ahmed has said that the capital market will continue to enjoy all the incentives it has been given.
After coming out of a meeting with the Dhaka Stock Exchange (DSE) directors and officials on Wednesday, the NBR chief said the provision to legalise undisclosed wealth through capital market investments would be retained in the upcoming budget for the next fiscal.
"The capital market will continue to enjoy all the incentives it has been given. We will ensure that investors don't suffer anymore losses," he told the DSE members in the meeting organised by the NBR at its headquarters ahead of the next budget.
At the meeting, the DSE placed a 10-point proposal relating to the capital market for the next financial year. Presented by DSE vice president Ahmed Rashid Laly, the proposals are mostly related with reducing tax for both individuals and institutions investing in the capital market.
The proposals include reduction of tax for financial institutions other than banking and insurance companies, slashing tax on the commission of the capital market brokers and reduction of tax on the investors' profits.
In response to a question on the 'money whitening device', the NBR chief categorically said, "There will be no change in the existing arrangement."
A provision in the budget for the current fiscal allows whitening of black money in the capital market on payment of 10 percent tax on the undisclosed wealth. Besides, the current budget also relaxed conditions over giving tax on income rebate and mutual funds for share market investors.
"Daily turnover at the share market will increase once the proposals are implemented and the government will earn more in taxes," said DSE president Rakibur Rahman after the meeting.
The NBR chairman assured the DSE of considering its proposals that include reduction of the existing 0.050 percent tax on the broker's commission to 0.015 percent and not to impose tax on the benefits of the investors unless they exceed Tk 25,000.
Currently, financial institutions other than banking and insurance companies have to pay 42.5 percent tax on their income. The DSE has proposed to reduce it by 5 per cent.
The DSE has also proposed to keep a 5-percent difference in the tax of banks, insurance and non-financial institutions. It has urged a 15 percent tax rebate for the newly-listed companies and waiver of compulsion to disclose the source of the money earned by them in two years prior to arrival in the market.
It has also proposed to impose 7 percent tax on the capital gain for those investing for two years in the capital market and reduce it to 5 percent for those investing for more than two years. Currently the tax rate is 10 percent.
People belonging to the Tk 10-lakh yearly income group investing Tk 50,000 in the capital market could be given 50 percent tax rebate, according to another proposal.
"The government will earn more in taxes anyway if the market remains healthy. Our target is to take the daily turnover at the market from Tk 20bn to Tk 25 billion," said the DSE president.
Urging NBR to initiate a move for getting new companies listed at the market, he said, "In the developed world, no foreign company is allowed to open business without being listed at the capital market. Many of the foreign companies operating in our country are still not listed."
"These foreign companies are taking away a lot of money out of the country without giving us any share in their profits," he added.