BUDGET PROPOSAL OF
CHITTAGONG STOCK EXCHANGE LIMITED
FOR THE FISCAL YEAR 2004 - 2005

 

DIVIDEND DISTRIBUTION

  1. In the case of dividend declaration the existing law requires payment of dividend distribution tax @ 10%. This hampers general investors’ interest. Because earlier the recipient had to pay tax on dividend received more than Tk. 25,000. But now they are eventually paying tax on every taka they are getting as dividend. This should completely be waived.

  2. A publicly traded company for declaration of dividend at 20% or more is entitled to have a tax rebate of 10% of the income tax. But in some sectors it is not at all possible to earn such profit to declare dividend at 20% or more. To rationalize the tax rate, we propose the following rates to be allowed:
Companies declaring Rate of rebate
10% Dividend 
15% Dividend
18% or more dividend
 10% of the amount of Tax
15%                 -do-
18%                 -do-

 

CORPORATE TAX

  1. i) Tax rates in case of listed company declaring dividend less than 10% has been fixed @ Tk. 37.5%  which is equal to non-listed companies. In such case the rate of tax may be higher by 2.5% of existing normal rate of tax of listed companies.

    ii) Banks, Insurance Companies and other Financial Institutions are currently taxed  @ 45% which is considered very high compared to other listed Companies. For the listed Banks, Insurance Companies and other Financial Institutions the rate should be equal to other listed Companies.

  2. Tax rate gap between listed and non-listed companies should be increased. This difference should be at least 17.5%.

  3. Mutual Fund, a good secured investment, is very poor in number in the market. To have a huge number of this kind of fund tax rate should be different from general publicly traded companies. Companies issuing Mutual Fund should be taxed at a lower rate, say @ 10% to 15%.

 

TAX HOLIDAY

  1. Listed companies enjoying tax holiday if fail to pay any dividend for consecutive two years, the facility of tax holiday may be withdrawn.

  2. At present tax holiday for the expansion unit is not  allowed. This may be allowed for the existing listed company and non listed companies on condition that it goes for public offering.

  3. Companies enjoying tax holiday must go for public issue within 3 years out of their allowed 5 years tax holiday, which will tremendously help the corporate body to list their securities.

 

BROKER/DEALER

  1. The stock market is facing sluggish period now. In this connection all Brokers/Dealers should be kept outside the tax scope at least for some years.

  2. Bank loan at preferential rate of interest should be allowed to stock brokers/dealers, merchant banks, investors and other market intermediaries for investment in securities.

  3. Stock brokers/dealers should be kept outside the BTTB Multi Metering System in line with Internet service providers (ISP’s).

 

PERSONAL TAX

  1. At present to an individual 15% rebate is allowed on 20% of total income of actual investment whichever is lower. We suggest to raise the rebate from 15% to 20% and total investment allowance from 20% to 25% of the total income if the investment is made in buying shares and debentures etc. both from primary and secondary markets.

  2. Individual tax exemption limit should be increased to
    Tk. 1,50,000 instead of Tk. 90,000.

 

NEW LISTED COMPANY

  1. To increase the number of listed securities in the capital market –
    1. The shares of 100% Government owned profitable companies should be off loaded for public participation through the stock exchange brokers/dealers.
    2. The Government shares in the Multinational Companies should be off loaded to public through the stock exchange brokers/dealers.
    3. All Multinational and foreign companies operating in Bangladesh must have to be made IPO to the general public.
    4. Local companies who have paid up capital of more than Taka forty crore should be in the form of public limited and be listed with the stock exchange

  2.  Companies established in any Export processing zone should have some criteria to come in the share market.

  3. Many renowned group of companies are not in the stock market and policy can be adopted that any company of the group will not get tax holiday benefit if it does not go for public floatation.

 

NEW PRODUCT IN STOCK MARKET

  1. To augment the capital market Debt/Bond should be transacted in Stock Exchange which may comprise of fixed income securities issued by the Government, Financial Institutions and Public Limited Companies etc.

 

OTHERS

  1. Fund Manager who can bring Tk. 50 crore and above foreign fund in the Capital Market should be declared CIP.

  2. Special incentives regarding VAT and import duty could be given to the publicly traded companies helping them to increase their earnings and declare more dividends.