Stocks
Stock investors may face 15% tax on capital gains exceeding Tk50 lakh
The finance ministry plans to impose a 15% capital gains tax on stock market earnings exceeding Tk50 lakh by individuals in the upcoming national budget. Currently, individual stock investors do not pay any capital gains tax.
Finance ministry officials told the news reporter that this initiative aligns with IMF recommendations aimed at enhancing revenue collection and ensuring fiscal discipline within the country’s economic framework.
In 2015, individual investors were exempted from paying tax on capital gains from stocks, mutual funds, bonds, and debentures – a provision that may be revoked by the end of this fiscal year.
Capital market stakeholders have expressed concerns regarding the potential removal of the waiver of individuals’ tax on capital gains. They highlight that individual investors outnumber institutions in the country, and their sentiment could further dampen the already bearish stock market.
Saiful Islam, president of the DSE Brokers Association, told the news reporter, “We do not want any tax burden on the capital market now, as it has been suffering for several years amid the global crisis. Any tax imposition will negatively affect the market, causing hardship for general investors.”
He also mentioned that brokerage firms have been struggling for several years due to lower market participation amid the ongoing crisis. The imposition of a capital gains tax could create further uncertainty for the capital market.
Mazeda Khatun, president of the Bangladesh Merchant Bankers Association, told the news reporter that it is not the right time to impose a capital gains tax for individual investors in the capital market, even though the government aims to enhance revenue collection.
“The capital market may react negatively to this, as the overall situation is currently very volatile,” she added.
Mohammad Ali, a chartered accountant and former vice president of the DSE Brokers Association, previously told the news reporter, “Implementing taxation on individual stock market gains this year would be detrimental to capital market development, given that investors are already experiencing losses due to the market downturn.”
He suggested that the government should allow the market to develop in line with the economy before considering taxes, citing India’s example where capital gains tax was introduced after significant market maturity and growth.
“India started taxing long-term capital gains in 2018, after 200 years of their stock market history, whereas Bangladesh has a long way to go,” Ali added.
Abu Ahmed, a stock market expert and former economics professor at Dhaka University, said stock investors have nearly forgotten about capital gains amidst the prolonged bearish trend since the 2010-11 crash.
He expressed scepticism about the government generating sufficient revenue from the proposed measure, suggesting, “Instead, the capital gains tax could significantly harm investors.”
Since last February, the market has been in a bearish run, with recent talks about implementing a 15% capital gains tax for individual investors in the upcoming budget intensifying investor panic and leading to a sell-off of their holdings throughout May.
Meanwhile, the DSE argued that any new tax would burden capital investors, especially given the market’s critical condition due to factors like the pandemic, the Russia-Ukraine war, and the global economic crisis.
Sponsors and directors of listed companies currently face a 5% tax deduction at source on capital gains from share transfers. The finance ministry is expected to increase this rate to 15% in the upcoming budget.
One of the Listed companies, National Polymer Limited has recommended 10.50% Cash Dividend for the year ended June 30, 2024.
It has reported Consolidated EPS of Tk 2.27 paisa, and Consolidated NAV per share of Tk 30.63 for the year ended March 31, 2024.
The Annual General Meeting (AGM) of the company will be held on December 18, through the digital platform. The record date for this has been fixed at October 22.
The Company also discloses its financial reports for the second quarter, (April – June 24).
As per the company’s consolidated life revenue account for April to June 2024, the excess of total income over total expenses, including claims (surplus), stood at Tk 1,394.24 million. This marks a significant increase from the surplus of Tk 823.68 million during the same period in 2023.
For the first half of 2024, from January to June, the company reported a surplus of Tk 2,177.57 million, compared to Tk 1,290.39 million in the corresponding period of the previous year.
Additionally, the Life Insurance Fund balance as of June 30, 2024, reached Tk 55,188.62 million, showing a net increase of Tk 5,892.25 million from Tk 49,296.37 million on June 30, 2023.
One of the Listed companies, Beacon Pharmaceuticals PLC has recommended 20% Cash dividend and 10% Cash Dividend to Sponsor Shareholder and Directors for the year ended June 30, 2024.
It has reported EPS of Tk 2.26 paisa, and NAV per share of Tk. 26.37 for the year ended June 30, 2024.
The Annual General Meeting (AGM) of the company will be held on December 23, through the digital platform. The record date for this has been fixed at October 27.
The Bangladesh Securities and Exchange Commission (BSEC) has removed three audit firms from its panel for their failure to secure enlistment with the Financial Reporting Council (FRC), according to a notice issued today.
The firms—A Hoque & Company, FAMES & R, and SK Barua & Company Chartered Accountants—were delisted following the FRC’s request. In December last year, the FRC published a list of enlisted audit firms and subsequently, in February, requested the BSEC to remove any firms that were not included on that list.
BSEC regulations mandate that financial statements signed by auditors outside its approved panel will not be accepted. With the removal of these three firms, the total number of audit firms on the BSEC panel has been reduced from 48 to 45.
Sources from the FRC revealed that 15-20 audit firms failed to secure enlistment last year, and approximately 45 chartered accountants are currently under restrictions imposed by the Institute of Chartered Accountants.
Although the delisted firms can no longer audit issuer companies or listed securities, they are allowed to complete audit and assurance services that were initiated before their removal, the BSEC clarified.
