Following pre-budget fiscal proposals for the development of the capital market, the Chittagong Stock Exchange (CSE) highlighted some important points on Tuesday.
Asif Ibrahim, chairman of the port city bourse, said corporate tax for listed companies - other than banks, financial institutions, insurers, telecom operators, and tobacco companies - should be slashed to 20% from the existing 25%.
Citing primary budget documents, The Business Standard (TBS) recently reported that corporate tax rates for both listed and non-listed companies are set to be reduced by 250 basis points — 22.5% for listed and 30% for non-listed companies — other than exceptions.
In his statement on Tuesday, the CSE chairman said the difference between listed and non-listed companies should be broadened so that the bourses can attract fundamentally strong companies on board.
"The move would enrich the capital market, alongside helping the government collect more revenue due to the increased transparency after listing," he added.
At present, companies enjoy a 10% corporate tax waiver in the first year of their listing on the stock market.
The CSE has proposed a 5% tax waiver for both the second and third fiscal years of listing, on top of the existing 10% for the first year.
"To make sure that only good companies avail the tax benefits, the government can impose a condition on listed companies to maintain an 'A' status at the bourses in their second and third years of listing to avail the proposed corporate tax waivers," the chairman added.
"As SME companies barely contribute to aggregate corporate tax collection due to their weaker corporate structure, the government should set their corporate tax rate at 10% for the first five years of listing in the SME boards developed by the bourses."
"If the SME boards can successfully bring small companies on board, the firms will have potential to grow and achieve the full status of publicly listed companies," Asif Ibrahim continued.
He also proposed increasing the annual tax free dividend income limit for local individual investors to Tk2 lakh a year, from the current Tk50,000.
"At this phase of the much needed development of a bond market in Bangladesh, the government should make all income from bonds tax free," said Asif Ibrahim, adding that the current tax waiver on income from zero coupon bonds should be available to banks, financial institutions, and insurers as well.