Stock, bond mkts can’t woo educated investors

National Board of Revenue (NBR) chairman Md Mosharraf Hossain Bhuiyan said on Tuesday the capital and bond markets have still to attract 'educated investors'.

There are speculators who remain mostly active staking and betting on the markets, he added.

"Educated investors couldn't be attracted to stock and bond markets, rather speculators are more active and they want to become rich within a short period."

Price indices at the bourses often fall even after making simple comments on the market, Mr Bhuiyan said.

He said this at a pre-budget discussion with the Foreign Investors' Chamber of Commerce and Industry (FICCI) held at the NBR's Segunbagicha headquarters.

Mr Bhuiyan urged the multi-national companies (MNCs) to invest in the domestic share market.

In reply, FICCI member Mahtab Uddin Ahmed said the MNCs' compliance cost to go to the stock market is very high.

"The MNCs aren't coming to the stock market as it hasn't reached a stable position," said Mr Ahmed, also managing director and CEO of Robi Axiata Ltd.

FICCI president Shehzad Munim placed the chamber's budget proposals for fiscal year 2019-2020 at the programme presided over by the NBR chief.

The chamber placed a set of proposals, including a reduction in corporate tax rates in phases, raising tax-free income limit and clarifying complexities in the new VAT act.

FICCI members also proposed to cut customs duty and supplementary duty (SD) on raw materials and introduce uniform duty rates for capital machinery and spare parts for local manufacturers.

Terming corporate tax rates very high and uncompetitive for MNCs, Mr Munim said the rates could be reduced in phases by framing a plan of five years.

"Gradual cuts in corporate tax rates for different listed and non-listed companies will attract more foreign direct investment in the country," he argued.

Currently, corporate tax rate for listed companies is 25 per cent while it is 35 per cent for non-listed companies.

The rate is 37.50 per cent for non-publicly traded banks, insurance and financial institutions while it is 40 per cent for publicly traded ones.

Meanwhile, the rate is 47.50 per cent (including 2.5 per cent surcharge) for tobacco product manufactures and 45 per cent for mobile phone operators.

Mr Munim, also managing director of British American Tobacco Bangladesh, proposed to increase the tax-free income limit for individual taxpayers from Tk 250,000 to Tk 350,000 in the next fiscal.

He exhorted the NBR to widen the tax net.

FICCI leaders said tax rates for offshore banking units (OBU) in the country can be set at preferential rates ranging from zero to 20 per cent like other Asia-Pacific countries.

Currently, the tax rate for offshore and onshore banking services is 40 per cent.

FICCI member and Berger Paints Bangladesh director (finance) Abdul Khalek suggested the NBR clarify anomalies in the Value Added Tax (VAT) and SD Act 2012 before its implementation.

He sought to lessen complexities in the auditing process and called for coordination among different audit authorities to lessen harassment of businesses.

Besides, the MNCs sought at least six months' time from the revenue authorities to assess all aspects before the implementation of the VAT Act 2012.

Referring to corporate tax rates, Mr Bhuiyan said the government would careful deal with the rates and also scrutinise the rates in the neighbouring countries.

"Bringing changes in the corporate tax structure may not be proper before finding out a way to compensate the possible revenue loss," he added.

He stated that the NBR would cautiously set regulatory duty (RD) and SD so product sales of the companies do not come down.

The FICCI also proposed to reduce customs duty and SD on raw materials for local manufacturers to make their prices competitive against imported products.

They also recommended uniform import duty rates for capital machinery and spare parts to facilitate local industries.

NBR member (tax policy) Kanon Kumar Roy and representatives from MNCs, including Nestle Bangladesh, HSBC Bank, Unilever and Banglalink, were present at the event.

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