Tax from DSE drops 23% in FY23 amid poor trading
The stock market, choked on floor price, saw trading turnover drop by 40% in fiscal 2022-23 at the Dhaka Stock Exchange (DSE).
Consequently, the government's revenue from the premier bourse dropped 23%.
According to the DSE, tax collection from public trading dropped by 33% to Tk193 crore in the last fiscal year.
Thanks to the increase in securities buy-selling by sponsor-directors and the owners of significant stakes, the tax collected from such large transactions increased by more than 15% to Tk84 crore.
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In total, the secondary market transactions directly contributed Tk277 crore to the national exchequer in the last fiscal year, while the five year total stood at Tk1,266 crore.
On top of that, the government also gets corporate tax on the profits of the bourse and its brokerage firms. Institutional investors and sponsor directors have to pay capital gain tax if they have any.
The DSE collects Tk50 against Tk1 lakh turnover of shares, mutual fund units in the form of stockbrokers' advance income tax (AIT). The sum of the deduction was later paid to the National Board of Revenue.
DSE Brokers Association Vice President Sajedul Islam said the AIT was Tk12.5 per Tk1 lakh in transaction value a decade ago, and the rate now becomes a burden for the brokerage industry as their commission income drops amid increasing competition over the years.
The majority of the brokerage firms were suffering losses due to the long-term bearish market that saw lacklustre trading, he said, adding that the AIT deducted at source should have been adjusted later in cases of loss-making firms, but the NBR does not do it.
His community requests every year that the government reduce the AIT rate to somewhere between where it is now and where it was a decade ago.
He opined that the government's revenue from the capital market should grow manifolds if its development and popularity are ensured through supportive policies and best practices.
In the last fiscal year, total trading turnover in the DSE was one fourth of the total market capitalisation. The ratio is much higher in developed and emerging markets and lower in weaker markets across the world.
