BSEC proposes 10pc tax difference for companies to be listed

Muhammad Ayub Ali :

In a bid to attract fundamental, profitable and transparent domestic and multinational unlisted companies to be enlisted on the stock market, Bangladesh Securities and Exchange Commission (BSEC) has requested the Finance Ministry to doing a minimum 10 percent difference in tax rates.

At present, the current tax rate for listed companies is nearly 22.5 percent while unlisted companies are around 27.50 percent.

In this regard, BSEC Chairman Khandaker Rashed Maksud sent a letter to the Finance Ministry on Thursday (April 24).

The letter, states that the Bangladesh stock market has been suffering from a lack of fundamental and profitable companies for a long time, which has limited market depth.

Most of the profitable domestic and multinational companies in the country have not yet been listed on the stock market which is why the market is not attractive, especially for institutional and foreign investors.

One of the main reasons for this is that the difference in tax rates between listed and unlisted companies is insufficient.

The letter states that companies that are listed on the stock market generally adhere to good governance and protect the interests of investors. By giving tax breaks, it will be possible to encourage this responsible behavior, which will also encourage other good companies to get listed.

In addition, increasing the number of listed companies to ensure good governance will increase investor confidence in the market, which will stabilize and strengthen the market in the long run. Foreign investment will also increase significantly.

Currently, most corporate institutions in Bangladesh are dependent on bank loans and creating an opportunity to raise capital through listing on the stock market will reduce economic risks.

The letter states that providing tax benefits is very important to encourage domestic and foreign companies to raise capital in the stock market, which will act as an incentive.

This application by BSEC will help make the stock market stronger, more dynamic, and more stable, and will help make a significant contribution to the development of the country’s economic sector.

The stock market witnessed its losing streak for a ninth consecutive session on Thursday, dragging the benchmark index of the Dhaka Stock Exchange (DSE) to a six-month low.

Market Analysts say due to the dearth of new listings by good companies, lackluster corporate performance, and weakening investor confidence, are responsible for the persistent downturn of the market.

The market started to rally last year following the ousting of Sheikh Hasina-led government in August, amid widespread expectations of sweeping reforms. Investors were optimistic that promising companies would soon list.