Budget FY26: Merchant banks to get 10% tax cut
A merchant bank is a financial institution that provides a range of investment banking services
The finance ministry has proposed a 10% tax cut on merchant banks - one of the key intermediaries in the capital market - in the upcoming fiscal year 2025-26 (FY26).
Presenting the budget via a pre-recorded speech today (2 June), the Finance Adviser Salehuddin Ahmed said, "Since merchant banks (acting as intermediaries in the capital market) are not scheduled banks, their tax rate has been reduced from 37.5% to 27.5%."
Besides, in order to make tax compliance easier, he also said the 2.5% reduced corporate tax rate benefit for listed companies has been made more accessible. "Instead of requiring all income, expenses, and investments to be transacted via bank transfer, now only income must be transacted through bank transfer to qualify for the reduced rate."
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A merchant bank is a financial institution that provides a range of investment banking services.
These services include underwriting IPOs, managing new issues, providing portfolio management, advising on mergers and acquisitions, and facilitating corporate finance.
Thanking the government for the proposed tax cut, Bangladesh Merchant Bankers Association (BMBA) General Secretary Nazrul Islam told The Business Standard, "This tax exemption will increase the investment capacity of merchant banks in the capital market."
He said, "Merchants are usually subsidiaries of some listed company. Due to the tax benefits, it will be possible to give good returns to the parent company. As a result, the listed parent company will be able to give good dividends to shareholders.
