Home ›› 17 May 2022 ›› Front
The upcoming budget should be corporately friendly, entailing a lower tax ceiling and unrestrained flow of capital in the financial market – a peculiarity that would lure more corporations into getting listed in the stock exchanges.
This will make the investment market more vibrant which is a reflection of good economy while the government should allow investment of undisclosed money in the capital markets without questioning its source, said Md Sajedul Islam, senior vice-president of DSE Brokers Association, and managing director of Shyamol Equity Management Limited.
The stock broker was sharing his view on the ensuing budget with The Business Post’s Niaz Mahmud recently.
DBA is a platform of Trading Right Entitlement Certificate holders on the country’s prime bourse, the Dhaka Stock Exchange (DSE).
What do you expect from the upcoming budget?
For a long time, the capital markets suffered massive financial losses as a result of the extreme global crisis in the wake of the pandemic and its impact on various sectors of the economy. Although the situation has improved a bit, the injury the economy has sustained is yet to be healed. So, we have a huge expectation from the budget for Fiscal Year 2022–23.
The budget must address the vulnerabilities of overall economy, especially keeping export-oriented industries afloat.
Besides, small and cottage industries need special attention as they are at risk of closure. All other industries, including large ones, are also important to be cared for in the budget.
Moreover, the next budget should have sufficient fiscal and non-fiscal incentives for the manufacturing sector to generate more employment. We hope that the upcoming budget will be business-friendly.
Please state five major demands for the upcoming national budget.
First and foremost is reduction of Advance Income Tax (AIT) on securities trading from the existing 0.05 per cent to 0.015 per cent and repeal of section 53 BBB of Rule 82 (c) 2 (b).
We want that the investors’ tax-free dividend income limit be increased to Tk 2 lakh from the existing Tk 50,000 and the tax on capital gains be decreased to 5 per cent from 10 per cent for corporations, and it should be a full and final tax settlement.
The investment allowance has to increase to 30 per cent of total taxable income from the existing 25 per cent. We also want to use the money-whitening facility for stock business without any question.
What is the logic behind money-whitening facility for stock business without any questions?
This facility will increase cash flow in the capital market. The capital market will be strengthened if the black money whitening scheme is available in FY23.
The initiative will increase liquidity in the capital market. The dynamics of the stock market will then increase. Industrial and economic development will take place. Preventing money laundering and investment in the country would help the government revenue grow.
What should be the percentage of the corporate tax rate?
To be in line with our regional competitors, we have demanded the authorities lower the corporate tax rates.
The rate is still very high in our country. Hopefully, in the future, this will be brought on a par with the neighbouring countries.
We have proposed reducing the corporate tax rate to 15 per cent for listed companies in the next national budget.
According to the current regulations, listed companies other than banks, insurers, financial institutions, tobacco companies and telecom operators pay 22.5 per cent corporate tax.
The reduction of corporate tax to 15 per cent for listed companies will encourage many more companies to go public and the government revenue income will also be enhanced.
We anticipate that the listing companies will receive a significant tax break, i.e., 7.5 per cent less tax than non-listing companies.
What initiatives are needed now to strengthen the stock market?
More multinational and state-owned companies should be listed to strengthen the capital market.
If we want to make the market bigger and more vibrant, the government support is very important for all our initiatives. First of all, many good companies have to be listed in the market, for which the listed companies have to get some tax benefits.
When a good company enters the market, many new investors will also come with it. If the number of quality shares and companies cannot be increased, this market cannot be made very big.
The profitable companies of the government need to be listed in the market. We need quality IPOs in the market to accomplish this.
New ventures like Padma Bridge, Elevated Expressway, Metro Rail, etc. can help create a bond market by issuing bonds.
