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Proposal to be Offered to Withdraw Double Taxation on Dividends

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The Planning Minister, M.A. Mannan, has stated that in order to curb the dependency on interest income in the stock market, the government is considering adjustments in the corporate tax rate for listed and non-listed companies and making all types of bond markets completely tax-free. These proposals are aimed at budgetary considerations to increase revenue and ensure a more robust and free bond market.

On Sunday, June 4th, a discussion titled “Discussion on Budget: Perspective of the Stock Market” was held, organized jointly by the Bangladesh Merchant Bankers Association (BMBA) and the Capital Market Journalist Forum (CMJF). The event saw the presence of esteemed individuals such as Professor Dr. Hafiz Muhammad Hasan Babu, Chairman of the Dhaka Stock Exchange (DSE), Asif Ibrahim, Chairman of the Chittagong Stock Exchange (CSE), Richard De Rosario, President of the DSE Brokers’ Association (DBA), and Md. Sayadur Rahman, President of the BMBA.

During the event, the Planning Minister emphasized that the country is on the path of economic development. Although the stock market might not have received significant attention in our country yet, its importance is gradually increasing.

He stated that it is appropriate for multinational companies to be listed on the stock market. I had expressed this view when I was the Finance Minister. However, I wonder why these companies have not been listed.

Regarding advance income tax, he mentioned that it should be abolished, just like military laws. It is advisable to repeal this law.

President of the Bangladesh Merchant Bankers’ Association (BMBA), Mr. Sayadur Rahman, stated that the country’s economy is progressing. However, he emphasized that economic stability cannot solely rely on banking. The stock market should play a crucial role in long-term investment.

He proposed that both listed and non-listed companies should be subject to a 15% tax on profits. The dual tax system needs to be abolished, considering the tax as a final charge on dividend income sources. By removing the dual tax system, it will encourage long-term investment by taxing only the company’s income.

Richard De Rosario, President of the Dhaka Stock Exchange Brokers’ Association (DBA), expressed the need to focus on small-scale companies in the country and foster new entrepreneurs. In this regard, the stock market can play a vital role. The absence of significant measures related to the stock market in the budget is deeply disappointing.

In his claim to increase the tax on profits, he stated that listed companies have responsibilities in various aspects. They must be accountable in stock exchanges, the Bangladesh Securities and Exchange Commission (BSEC), and many other areas. Being listed improves transparency. As a result, many companies that are currently reluctant to be listed will eventually choose to do so, benefiting the government.

Asif Ibrahim, Chairman of the Chittagong Stock Exchange (CSE), stated that a significant portion of the country’s industrial investment has been channeled through banks so far. However, it would have been more appropriate if it had been done through the stock market. Unless a space for long-term investment is created through the stock market, the country’s economy can never achieve stability. Additionally, the importance of the bond market needs to be enhanced for long-term investments. In this regard, all types of bonds should be made tax-free, similar to zero-coupon bonds.

Dr. Hafiz M. Hasan Babu, Chairman of the BSEC, stated that in major economies around the world, the stock market is considered a key driving force for the economy. However, in our country, it is being neglected. There is negligence towards the stock market. I firmly believe that neglecting the stock market will not be possible, and it will continue to exist. Because it involves the people at the grassroots level of the country, and it holds the future of the economy.

CMJF President Ziaur Rahman presided over the program moderated by CMJF General Secretary Abu Ali.

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