DSE urges NBR to repeal 15% capital gains tax to stabilise market
The Dhaka Stock Exchange (DSE) has called on the National Board of Revenue (NBR) to withdraw the 15% capital gains tax imposed on individual investors in the current fiscal year to stabilise and strengthen the stock market.
A DSE delegation, led by Chairman Mominul Islam, met with NBR Chairman Md Abdur Rahman Khan at his office yesterday and submitted a written proposal seeking policy support.
In its proposal, the country's primary bourse highlighted the stock market's vital role in the economy but noted that irregularities and policy inconsistencies have hindered its growth.
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The NBR chairman acknowledged the proposals and assured that decisions would be made soon, taking into account both the overall economy and the need for a stable stock market and investor confidence, according to a press release.
He also encouraged the DSE to take the lead in providing tax withholding certificates for dividend income and in promoting professionalism among market intermediaries.
The discussion referenced ongoing efforts by the government, Bangladesh Securities and Exchange Commission (BSEC), Dhaka and Chattogram stock exchanges, and other institutions to address these issues through structural reforms.
The DSE expressed hope that these reforms, combined with supportive policies, would enable the stock market to play a more significant role in economic growth.
The proposal pointed out that under the "Income Tax Act 2023," individual investors are now taxed on capital gains exceeding Tk50 lakh from the sale of listed shares or units, leading to an effective tax rate of up to 40.5%.
According to the DSE, this has discouraged investors, resulting in a decrease in daily transactions and index values, which has, in turn, reduced both capital gains and turnover tax revenues for the government.
To encourage investment, the DSE requested the reinstatement of the capital gains tax exemption on income over Tk50 lakh, which they believe would positively impact the market.
Additional recommendations included treating withholding tax on dividend income for individual investors as final, reducing the withholding tax rate on brokerage house transactions, and allowing stock market losses to offset other income or be carried forward for up to six years.
