15% tax exemption proposed for good companies' listing on stock market
The association also proposed reconsidering the issue of taxation on over Tk50 lakh capital gains from the stock market, with a suggestion to impose different tax slabs on capital gains above the Tk50 lakh threshold
The Bangladesh Merchant Bankers Association (BMBA) has proposed a 15% waiver on tax and VAT for large multinational, local, and state-owned companies to encourage their listing on the capital market.
In a statement on Monday, the association also proposed reconsidering the issue of taxation on over Tk50 lakh capital gains from the stock market, with a suggestion to impose different tax slabs on capital gains above the Tk50 lakh threshold.
Calling for some clear instructions and steps in the FY25 budget, the BMBA said the capital market can play an important role in raising the tax-to-GDP ratio and meeting the budget deficit.
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"It has been proposed to borrow from the banking system to meet the budget deficit. But initiatives should be taken to collect money from the capital market as a long-term source of finance," it said in the statement.
Budget financing initiatives can be taken by issuing various bonds and debentures through the primary market of the capital market, the merchant bankers urged the government.
Additionally, merchant banks can also play a key role in deficit financing as they deal in capital market financing and the listing of new companies through stocks, bonds and other securities, according to BMBA.
"If the scope of work increases, the tax income will increase a lot. Merchant banks pay 37.5% tax, but others pay 27.5% tax. In this situation, the tax rate of merchant banks should be reduced to 27.5%," the BMBA said.
It believes that the primary market needs to be given more priority to encourage small entrepreneurs, SMEs, start-ups and other non-listed firms to raise capital from the capital market while encouraging investors to invest in stocks.
To this end, they called for some effective policy measures, like simplification of the enlisting process, making compliance and legislation investment-friendly and simplified, and providing advisory support to the companies.
They also demanded that the tax gap between listed and non-listed firms be raised from the existing 5% to attract companies to be listed on the capital market. Moreover, Non-listed or newly registered companies may be directed to be listed within a specified timeframe.
