DBA urges to withdrawal of capital gain tax

DSE Brokers Association of Bangladesh (DBA) urged the government to withdraw capital gain tax for at least one year and simplify the capital gain calculation, considering the present market condition.

The DBA placed seven-point demands and reconsidered some of the key proposals, including a road map for listing the government-owned entities to enhance the supply of good shares, to tax waiver for new beneficiary owners and a reduction of the tax rate on commission income from share transactions by the brokerage firms.

“We are not against the capital gain tax, but this is not the right time as it puts a negative sentiment among investors while the market has been passing a tough time,” said Md Saiful Islam, president of the DBA at a post-budget press briefing held on Tuesday.

Referring to the present market condition, the DBA president urged to withdraw the capital gain tax on individual investors at least for one year and simplify the capital gain tax calculation as in many cases individuals have to pay more than 40 per cent corporate tax as per the latest Finance Bill.

Instead of making attempts to help the market recover from the perpetual decline, the budget proposed imposing a capital gain tax on individual investors for the first time, applicable when profits exceed Tk 5.0 million. 

The proposal of capital gain tax has already put a negative sentiment among investors, dragging the prime index down by 132 points in just two days after the budget announcement.

The DBA president also urged tax waiver for the new beneficiary owner (BO) account holders at least for the first three years to increase new investors.

“In the past four years, we have been in a bad time. Brokerage firms, merchant banks, asset managers and investors are struggling,” he said, adding “We need policy support from the government to resolve the situation.

Replying to a query, the DBA president said, the stock market is suffering for three major reasons—transference & accountability, lack of good listing and confidence crisis of investors.

The main problem of the market is the lack of good issues. “If there are no investable stocks in the market, where the investors will invest," he said, adding that only 20-25 good companies.

He also wanted to revise the public issue rules, margin loans rules and demutualisation Act.

“Now it is time to revise the Demutualization Act as it is not working now,” he added.

Earlier, in a pre-budget press briefing, the DSE placed five-point demands, including not imposing capital gain tax, and widening the corporate tax rate gap between listed and non-listed firms.

The tax rate on commission income from share transactions by brokerage firms should be reduced alongside an increase in tax-free dividend income up to Tk 50,000 annually and tax exemption on interest income from all kinds of bonds.

But the government did not include any of the DSE demands, instead reducing the corporate tax rate gap between listed and non-listed firms to 5 per cent from 7.5 per cent.

The negative sentiment about the market made investors shy away from taking fresh positions while they saw losses mount in their portfolios since the removal of the floor price.

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