Budget positive for capital market, says BSEC chairman

The proposed national budget for the 2025-26 fiscal year is positive for the stock market as it accommodated the chief adviser's instructions on capital market development, according to Khondoker Rashed Rashed Maqsood, chairman of the Bangladesh Securities and Exchange Commission (BSEC).

In a statement issued today, the BSEC praised the interim government and its Advisory Council for approving the proposed national budget and the Finance Bill at a critical juncture of the nation following last July's economic upheaval. It said the government has taken commendable steps to steer the economy towards recovery.

"The proposed budget includes several positive measures for the capital market. The finance adviser's budget speech seriously incorporated five key directives from the chief adviser," said the BSEC chairman.

The directives include facilitation of leading multinational and homegrown firms, appointing foreign consultants for market reforms, strict actions against wrongdoers, and most importantly policy support to position the capital market as the cornerstone of the future economy. 

Recognising the capital market's importance, the government has increased the corporate tax differential between listed and unlisted companies from 5% to 7.5%. This grants tax incentives to listed companies, encouraging profitable domestic foreign firms with strong fundamentals to list, said BSEC Chairman.

Additionally, the advance income tax on brokerage turnover has been reduced from 0.05% to 0.03%, a move expected to increase transactions amid the current liquidity crisis and low trading activity.

Merchant banks, key capital market stakeholders, will also benefit from the 10% reduced tax rate – from 37.5% to 27.5% – which the BSEC believes will encourage merchant banks to enhance market development and increase the supply of quality shares for sustainable growth.

For investor interests, in November, the interim government halved the maximum capital gains tax on share sales of listed companies. These steps demonstrate the government's sincere commitment to market development.

For investor welfare and protection, BSEC has reduced the annual BO account maintenance fee by 70%, from Tk450 to Tk150. 

The government also directed that 25% of interest from consolidated customer accounts be deposited into the Investor Protection Fund, directly benefiting retail investors.

"Finally, we earnestly request the government to reconsider some other changes in the budget – like raising the tax free annual dividend income limit to Tk1 lakh, and setting the final tax on dividends above Tk1 lakh at 15%," the BSEC chairman said in the statement.