Tax incentives aim to revive stock market

Finance Minister Amir Khosru Mahmud Chowdhury has announced a package of tax incentives and policy reforms aimed at restoring stability and resilience in Bangladesh’s stock market, with the goal of attracting both domestic and foreign investors.

The measures include lower tax rates on dividend income for both companies and individual investors, as well as the removal of the existing investment ceiling for mutual funds to qualify for tax benefits.

The proposals were unveiled during the finance minister’s winding-up speech on the proposed FY2026-27 national budget in the Jatiya Sangsad on Monday (29 June), chaired by Speaker Hafiz Uddin Ahmed.

He also proposed a series of amendments to the Finance Bill to support sustainable capital market development and strengthen long-term capital formation.

The finance minister said income earned from zero-coupon bonds would be fully exempt from tax. He added that a range of tax incentives had also been proposed to encourage more companies to list on the stock market.

Under the proposals, companies entering the capital market through share transfers will be eligible for a 2.5 percentage point reduction in their tax rate.

Companies that float at least 10 per cent of their shares through an initial public offering (IPO), direct listing, rights issue or repeat public offering will qualify for a further 2.5 percentage point tax reduction.

To encourage greater transparency and digital financial transactions, the minister proposed an additional 2.5 percentage point tax benefit for both listed and unlisted companies that conduct all financial transactions through banking channels.

As a result, listed companies that route all transactions through banks and make at least 10 per cent of their shares available for public trading will enjoy a cumulative tax advantage of 7.5 percentage points over unlisted companies.

To make equity investment more attractive, the minister proposed reducing the tax on dividend income to 20 per cent for corporate taxpayers and 15 per cent for individual taxpayers.

He also proposed abolishing the existing Tk500,000 investment ceiling for tax concessions on mutual fund investments, allowing investors to invest without limit while continuing to enjoy the available tax benefits.

Saiful Islam, president of the DSE Brokers Association (DBA), described the measures as a timely and positive initiative to protect investors’ interests, rebuild market confidence and revitalise trading activity.

He said the incentives would play an important role in restoring market stability and encouraging broader investor participation.

According to the finance minister, the government’s objective is to attract fundamentally strong and promising companies to the stock market to mobilise long-term capital for industrialisation and investment.

He expressed confidence that the proposed incentives would encourage more businesses to seek stock market listings, thereby deepening and strengthening the capital market.

The minister also noted that investor confidence had already begun to improve, as reflected in the recent upward movement of stock market indices, and assured that reforms in the capital market would continue.