NBR’s capital gains data request spooks high-net-worth investors
Experts expect that the capital market regulator is implementing several positive reforms, some of which are already showing results
Major investors in the country's stock market have been rattled by a move by the National Board of Revenue (NBR) to gather information on those who earned capital gains exceeding Tk50 lakh in the 2024–25 fiscal year.
On 14 September, the Bangladesh Securities and Exchange Commission (BSEC) sent a letter to the stock exchanges regarding the matter. Both bourses will now collect the information from brokerage houses, submit it to the BSEC, and the commission will then forward the data to the NBR.
Market insiders say the decision will have a negative impact on the market. They argue that the method of collecting information was not appropriate and that the confidentiality of high-net-worth investors will be compromised.
Keep updated, follow The Business Standard's Google news channel
Abdur Rahman Khan, chairman of the National Board of Revenue (NBR), told TBS, "We need to verify the information of them (individuals and entities). He, however, declined to comment further.
Saiful Islam, president of the DSE Brokers Association, told TBS, "We were not prepared for such a step at this time. It has created discomfort for big investors. Through this, confidentiality of information will not be maintained."
He added, "The negative situation prevailing in the market now is one of the results of this step. We will soon sit with the NBR to discuss the issue. We have no objection to paying taxes, but there can be no compromise on the confidentiality of taxpayers' information. Although it has been said that the DSE will collect the information, we are doubtful whether confidentiality can actually be ensured."
Even a year after the introduction of the capital gains tax, investor dissatisfaction remains high. Many market participants believe the move could discourage large investors from participating actively, which may also affect general investors.
Two authorised traders from separate brokerage firms, speaking anonymously to TBS, said that some investors who placed funds under other names may withdraw them from the market. Investors with undisclosed money will now fall under the tax net, which they are unlikely to accept.
They added that many investors who earned more than Tk50 lakh in profits last fiscal year had reinvested that money into the stock market. Currently, some are facing losses or only marginal gains, yet they are still required to pay tax on the earlier profits, which they consider unjustified.
Meanwhile, the NBR's request for investor information has contributed to a negative spell in the market over the past few days. Today, more than 76% of listed companies on the Dhaka Stock Exchange (DSE) saw their share prices decline. Along with the indices, turnover also fell on the day.
The DSEX shed 42 points to close at 5,450, while the blue-chip DS30 index dropped by 20 points to 2,107. The shariah index lost 13 points, closing at 1,178. Market turnover decreased to a one-month low, falling by 11.25% to Tk655 crore, compared to Tk738 crore in the previous session. Out of 397 issues traded, 44 advanced, 303 declined, and 50 remained unchanged.
Experts expect that the capital market regulator is implementing several positive reforms, some of which are already showing results. A major factor supporting equities is the declining yield on government securities, which analysts expect to fall further. With stock market returns currently above 10%, lower bond yields are making equities increasingly attractive.
Investor confidence has also been boosted by positive macroeconomic indicators. Bangladesh's foreign exchange reserves have stabilised and started to rise. The government's plan to merge weaker banks has reassured the market, and political uncertainty ahead of the national election has eased.
In its daily market review, EBL Securities said Dhaka stocks continued to face hurdles as late-hour selloffs weighed on investor sentiment amid ongoing volatility. Market volatility persisted throughout the session, with participation remaining subdued as cautious investors mostly stayed on the sidelines.
It added that recent regulatory fines for stock manipulation further fuelled investor caution, while market participants are waiting for a fresh catalyst to revive momentum as they prefer to observe trends ahead of the upcoming earnings season.
The port city bourse, the Chittagong Stock Exchange (CSE), also ended in the red. The Selective Categories' Index (CSCX) dropped by 46.2 points, while the All Share Price Index (CASPI) fell 78.2 points.
