Capital gains tax reduced to 15pc for current, upcoming fiscal years

The interim government has decided to reduce the tax imposed on investors making over Tk 5 million in profits from stock market trading to 15 per cent for the current and upcoming fiscal years.

The budget approved for the current fiscal year by the previous parliament had kept the tax rate on capital gains unchanged at 30 per cent.

The interim government has taken a number of steps with regard to the capital gains tax, including reducing the surcharge on the net assets of the investor. This will reduce the tax burden on investors by nearly half.

The Bangladesh Securities and Exchange Commission (BSEC), the stock market regulator, says the National Board of Revenue (NBR) issued a circular on the tax rate adjustment on Monday.

 “The NBR has sent a notice announcing the new tax rate,” said Rezaul Karim, BSEC executive director and spokesman. “The commission had previously urged the government and the NBR to reduce the capital gains tax as a reasonable measure. As the investor-friendly government has implemented this decision quickly, investors will make more gains than ever. The government and the commission are also working on many other policy support measures to develop the stock market and increase confidence in it.”

The budget passed in June says that the regular tax rates on capital gains would apply for the current and next fiscal year if the shares were sold within five years of purchase.

If capital gains exceed Tk 5 million, it is liable to be taxed at the regular rate – with a maximum rate of 30 per cent. In addition, there was a required surcharge on capital gains that could go as high as 35 per cent based on the amount of assets.

Including the surcharge and the capital gains tax, the total tax rate on stock market income could go as high as 40.50 per cent.

Based on the new decision, the tax rate on capital gains from shares traded within five years will now be 15 per cent. The surcharge rates will now be 10 per cent for investors with net assets over Tk 40 million, 20 per cent on investors with over Tk 100 million, 30 per cent on investors worth over Tk 200 million, and 35 per cent on investors worth over Tk 500 million.

The minimum rate of the surcharge has been reduced from 15 per cent to 10 per cent.

However, the maximum rate of 45 per cent still applies for banks, financial institutions, insurance companies and mobile companies.

The new tax rate will be applicable for the current and next fiscal year.