Budget good for stock market: DSE

Budget good for stock market: DSE

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Finance Minister AMA Muhith’s budget proposals will create a favourable climate for stock markets, feels Dhaka Stock Exchange (DSE) chairman Justice Siddiqur Rahman Mia.”Whatever steps have been suggested in the budget proposals for the stock markets will end up boosting investor sentiment,” Siddiqur Rahman Mia said on Sunday. “It will also infuse dynamism and growth in the national economy.” He said more companies will like to get themselves listed in the stock exchanges. “That will attract domestic and foreign investors to our bourses.” The DSE chairman said that this ‘timely’ budget will go a long way in creating a ‘Digital Banglades’h — and it will boost investments and industrialisation. “The efforts to boost the stock markets reflected in the budget proposals will ultimately infuse dynamism in the national economy.” The 2015-16 budget proposals include raising the threshold of tax exemption on dividend income from Tk 20000 to Tk 25000.It also proposed to cut the tax rate from 42.5 percent to 40 percent for publicly traded banks, and insurance and other financial institutions.Muhith also proposed a tax reduction from 27.5 percent to 25 percent for other companies listed on the bourses.The 10 percent deduction at source on income from share market by any company or joint venture would also be withdrawn, Muhith had said.But DSE managing director Swapan Kumar Bala felt the government needs to do more.He urged the government to provide a full tax exemption facility for five years, instead of the existing partial exemption at graduated rates, for sustainable growth and smooth operation of the bourse.The premier bourse, which has been allowed to pay taxes at graduated rates from the current fiscal year, will have to pay 7.5 percent tax on its net profit in fiscal 2015-16.Under a graduated rate, the bourses will get full tax exemption in the first year of demutualisation, 80 percent tax exemption in the second year, 60 percent in the third year, 40 percent in the fourth year, 20 percent in the fifth year; but will have to pay full taxes after that.“We want full tax exemption for five years to continue the reforms under the demutualisation scheme and invest further in infrastructure development,” said Swapan Kumar Bala. Before the demutualisation, stock exchanges were non-profit cooperatives owned by the exchange members, and were not subject to corporate tax.But demutualisation has led to separation of the stock management from ownership and they have been converted into profit-oriented companies in November 2013, owned by shareholders. 35 percent corporate taxes apply on them as non-listed companies.Bala also urged the government to pass the Financial Reporting Act and implement the financial reporting council under the law to ensure transparency and accountability in the stock market.“We hope the government will also continue the 10 percent tax waiver for the companies that declare dividends of 30 percent or more,” he said. Terming the proposed budget market-friendly, Bala said the corporate tax cut for listed companies will encourage the non-listed ones to raise capital from the stock market.

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