Economy
Shareholders to face taxes on loans taken from listed companies
A new clause has been incorporated in the proposed Finance Bill, suggesting that loans taken from public limited companies by its shareholders be treated as dividends and subject to taxation.
Some directors of listed companies have been taking loans from their companies as a means to avoid taxation, often without distributing dividends, according to a senior official of the National Board of Revenue.
Wishing anonymity, the official said shareholders do this because loans are not taxed, but dividends are.
“We have observed instances where directors of public limited companies have taken loans without distributing dividends and delaying repayment while continuing to acquire new loans.”
To combat tax evasion through this method, a new proposal has been introduced in the finance bill, he added.
Currently, if shareholders, typically directors, of “private” limited companies with accumulated profits can take loans from the company, it is treated as dividends and taxed accordingly.
Any income received as dividends is added to the total income of an individual and is taxed at the regular rate, up to a maximum of 30%.
By dropping the word “private” in the new proposal, shareholders of public limited companies will also come under this tax.
Tax experts view this proposal positively as a measure to address tax avoidance.
Syed Md Aminul Karim, former NBR member, told the news reporter that the move is positive, which is expected to reduce tax avoidance and increase revenue.
He said, “Some company directors are taking loans without distributing dividends, potentially to evade taxes.”
The number of companies listed in the stock market in the country is about 400. More than 300 of these companies are paying dividends against profits.
Rizwan Rahman, former president of Dhaka Chamber of Commerce and Industry (DCCI), said this kind of loan in a public limited company is unethical.
He told the news reporter that taking loans from a company where not all shareholders have representation on the board could be seen as unethical.
“There are certain companies where sponsors hold barely 30% of the shares while the main liability lies with the public. Therefore, such loans in private limited companies shouldn’t be allowed and should be closely monitored by regulatory authorities,” he added.
However, he does not support treating such loans as dividends and imposing taxes. He believes it is solely the choice of the board of directors whether to grant a loan to a director or not.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
