Bangladesh Merchant Bankers Association (BMBA) has made eight demands, including increasing the corporate tax rate of companies listed on the stock market to 15 percent in the budget of the next financial year 2024-25.
BMBA made this claim in a press release on Monday (June 24). It was signed by BMBA President Sajeda Khatun and General Secretary Muhammad Nazrul Islam.
It is said that the stock market can play an important role in raising the necessary financing to achieve the targets of the National Budget 2024-25 and increase the tax-GDP ratio.
BMBA demanded the inclusion of eight items in the budget, calling for the inclusion of the stock market as an important source of financing the national budget deficit. BMBA’s demands are precisely highlighted:
Merchant banks can play a key role in financing the national budget deficit through the stock market. In addition to conducting other activities, merchant banks work in financing from the stock market through stocks, bonds, and other securities and listing of new companies in the stock market. Note that if the scope of these works increases, the tax income will increase a lot. Merchant banks are taxed at 37.5% of their operating income, while related parties are taxed at 27.5%.
If such taxes are reduced, merchant banks will be able to play a greater role in financing from the stock market and their efficiency will increase subsequently, which will essentially play a supporting role in collecting additional taxes.
The basis of the stock market is the primary market. The primary market needs to be given more priority to encourage various entrepreneurs, SME companies, start-up companies, and other non-listed companies to raise capital from the stock market and to encourage investors to invest in the stock market. In this regard, various effective policy measures can be taken such as simplifying the enrollment process, making compliance and legislation more investor-friendly and easier, and providing advisory support.
The existing tax rate gap between listed companies and non-listed companies is 5 percent, which is so small that there is little incentive for companies to list on the stock market. Increasing the tax rate gap between listed and non-listed companies in the national budget will attract companies to list on the stock market. Besides, non-listed or newly registered companies may be directed to get listed within a specified period.
Apart from policy support, a corporate tax rate of 15 percent and VAT exemption for listed companies can be provided to encourage large and reputed companies of the country, various multinational companies, and government profit-making companies to list in the stock market. Such facilities will encourage more good companies to list in the stock market. This will create portfolio diversification opportunities for investors, increase market depth and diversity, and increase listed companies.
