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Budget to make capital market vibrant


Published : 16 Jun 2019 09:00 PM | Updated : 06 Sep 2020 08:37 PM

The government in the proposed budgetfor the fiscal 2019-20 has announced many market supportive steps, which will help create a favourable environment for building a strong, vibrant and well-functioning capital market. The pro-investment budget is expected to make the private sector more powerful and developed by attracting more domestic and foreign investors.

Dhaka Stock Exchange (DSE) Managing Director KAM Majedur Rahman made these remarks while speaking at a post-budget briefing organized by DSE at its premises on Sunday. He said investors expect cash dividends from their investment in the shares of a company.
From that point of view cash dividend plays an important role in increasing the value of a share and also strengthening the share market.
But companies generally distribute stock dividend instead of cash dividend. As a result, investors are deprived of their well-deserved return, he noted.

In order to encourage the distribution of cash dividend, the Finance Minister has proposed imposition of 15 percent tax on stock dividend distributed to the shareholders by any listed company, hepointed out. Majedur Rahman went on saying that training would be imparted on potential investors to help them acquire a clear understanding of share market before making investment in shares.

Dividend income from listed companies shall be tax-free up to Tk. 50,000 which is present only up to Tk. 25,000, he said, adding that double taxation on dividend from listed companies will also be removed. On the other hand, he proposed imposition of 15 percent additional tax on the net profit for encouraging companies to distribute more dividend among the investors, which, he said, will encourage investors to invest more by getting more profit.

“A provision was made in the income tax ordinance last year to avoid the multilayer taxation on dividend income. However, the application of the provision was limited only to the resident companies,” he said. To promote foreign investment, the Finance Minister has proposed extending the application of this provision to the non-resident companies as well, which will attract more investors to the market, he said.

“If a financially solvent company wants to merge with a financially sick company, we will create the scope for that,” he mentioned.
“We believe that if this can be done even allowing investment allowance, it will lead to a strong capital market,” he said, adding that in the process the depth and stability of the capital market will be enhanced.

DSE Chairman Prof Abul Hashem, DirectorsRakibur Rahman, Sharif Atiur Rahman and Monowara Hakim Ali were also present at the press briefing.