Capital tax exemption for sukuk bonds proposed

AHM Mustafa Kamal has recommended exemption from 5% capital tax applicable for transfer of assets to trust of Sukuk, or Islamic Bond.

He made the proposal in the budget session of the National Parliament on Thursday.

In his budget speech, the finance minister said the government has decided to provide policy support to develop a strong bond market as an alternative to banks for raising long-term capital for entrepreneurs. As part of this policy, he recommended tax exemption on transfer of assets in the proposed budget.

He said if the proposal is passed, it will be easier to raise long-term capital and reduce bank dependency. At the same time, economic activities will be more dynamic through the development of the bond market, which will play a positive role in the development and growth of the infrastructure and capital-intensive industries.

In response to the finance minister's proposal, City Bank Capital Resources Limited's Managing Director Ershad Hossain said, "It is a very good proposal. This will make the bond formation process easier and reduce the cost of entrepreneurs."

The finance minister said, "We have declared the 'Safe Water Supply Project for the whole country' as an asset for the Sukuk issue and as per the recommendation of the Shariah Board, a decision has been taken to issue a five-year lease of Sukuk in two installments of Tk4,000 crore each."

It has also been recommended that the declared assets will be exempted from the applicable tax on the transfer of the bond to the trustee.