The DSE Brokers Association of Bangladesh (DBA) has demanded a reduction in the existing withholding tax rate on brokerage house transactions in the capital market. It has also demanded an opportunity to adjust this tax.
DBA leaders made this demand at a meeting with journalists held at the Dhaka Club in the capital on Saturday (April 12).
DBA leaders said that the National Board of Revenue (NBR) collects withholding tax at the rate of 0.05 percent on the total transaction (tax and securities transaction) on the payment of securities transaction fees by the member companies of the stock exchange, which is about 25 percent of the total income or gross receipts. In the Finance Act, 2005, this tax rate was 0.015 percent. This tax rate is significantly higher than that of our neighboring countries.
According to the DBA, among neighboring countries, this tax is 0.05 percent in India, 0.00065 percent in Pakistan, 0.0075 percent in Singapore and 0.00565 percent in Hong Kong.
Accordingly, for a transaction of 1 lakh taka, 50 taka at source is paid in Bangladesh. For the same amount of transaction in India, 10 rupees is paid, and only 65 paisa in Pakistan. The amount of this tax in Singapore and Hong Kong is much less than in Bangladesh. On the other hand, no tax at source is paid on transactions in Malaysia, the United Arab Emirates and Turkey.
Due to the current bad market conditions, no brokerage house is able to make a profit. All institutions have made operating losses in the last accounting year as well. However, there is no scope for tax adjustment at this source. Even if a brokerage house makes a loss, it has to pay this tax, which is unfair and contradicts the main spirit of the tax law. Because income tax is supposed to be applicable only to net income or profit.
They said that the pace of transactions is not increasing due to high withholding tax. Commission on securities transactions is the main source of income for brokerage houses. Due to the imposition of excessive tax rates, it has become difficult for brokerage houses to survive and contribute to the capital market. Therefore, in order to increase the capacity of brokerage houses and to move the capital market forward by activating it, it is necessary to reduce the existing tax rate on securities transactions for logical reasons.
DBA leaders said that the current government under the leadership of Dr. Muhammad Yunus is taking various initiatives to accelerate various sectors of the economy. Unfortunately, this does not seem to have any impact on the capital market. This market is largely neglected as before.
They complained that a major investment conference was recently held in the country. A significant number of foreign investors participated in it. This is a major success of the current government. But there was no presence of the capital market anywhere in such a big event. Although there were booths of various institutions at the conference, no booth of the capital market was kept. There was no slot for the capital market in any seminar. However, it is very important to promote the capital market to attract more foreign investors. Because foreign investors also take exit opportunities and ways to withdraw investment seriously before investing in a country. If there is an easy way to exit, their interest in investing increases. Only the capital market can provide an easy way to exit.
DBA leaders said, we hope that the government will give importance to making the capital market more dynamic and efficient for the sake of greater development.
DBA President Saiful Islam delivered the keynote speech at the event. Among others, former President of Dhaka Stock Exchange (DSE) Shakil Rizvi, Vice-President of DBA Md. Saifuddin CFA, Minhaj Mannan Emon, Director of Dhaka Stock Exchange, Mohammad Nasir Uddin Chowdhury, Managing Director of LankaBangla Securities, Ahsanur Rahman, CEO of BRAC EPS Securities, Sumon Das, CEO of Bank Asia Securities, Affan Yusuf, Managing Director of City Brokerage, among others, spoke.
