Companies listed on the stock exchanges will get a 2.5% corporate tax cut from the 2021-22 fiscal year, according to the budget proposal placed in the parliament on Thursday.
"I propose to further reduce the tax rate for listed companies from 25% to 22.5% for FY22", said Finance Minister AHM Mustafa Kamal.
He also proposed to reduce the tax rate for not-listed companies from 32.5% to 30%.
Minister Kamal said, "The government is implementing various reform measures to make the capital market dynamic and vibrant. A few more initiatives will be taken soon to make the stock market a profitable institution and keep pace with the times."
Steps also have been taken to make insurance services people-friendly and welfare-oriented, he added.
Stakeholders said the reduction of corporate tax will play an important role in making the capital market more vibrant.
Professor Shibli Rubayat-Ul-Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC), hailed the budget proposal, saying the 2.5% corporate tax cut will encourage listed companies to offer dividends for their shareholders.
Riad Mahmud, vice president of the Bangladesh Association of Publicly Listed Companies (BAPLC), said all companies will benefit from the corporate tax rate cut.
He, however, said, "The tax rate gap between listed and non-listed companies needs to be increased. This is because listed companies' expenses are higher than non-listed ones, as the former have to conform to the rules of the market."
Because the budget proposes a 2.5% cut on corporate tax of all companies, the tax rate gap between listed and non-listed companies remains the same as before.
Mahbub H Mazumdar, managing director of AFC Capital, said they had proposed the government to raise the tax rate gap between listed and non-listed companies to 15% from existing 7.5%.