TAX NEWS - 2010

Bangladesh Tax: Listed companies against tax measures

Dhaka, June 19, 2010 -- Bangladesh Association of Public Listed Companies has sought withdrawal of a proposed five percent tax on income of sponsor shareholders and directors of companies listed with the stock exchange.

The recommendation was made by the association president Salman F Rahman at a post budget press conference on Saturday.

Also vice chairman of the Beximco Group, one of the largest conglomerates of Bangladesh, Salman Rahman proposed halving the 10 percent tax on company income from share trading.

Rahman also demanded withdrawal of the proposed 3 percent tax on the premiums secured by companies on top of share prices.

He explained saying, "The 3 percent tax on the premium basically amounts to axing the equity of the company which is against the basic principles of taxation."

Finance minister AMA Muhith targeted Tk 928.47 billion in revenues in the next fiscal's budget which will depend largely on the amount of income tax the government is able to collect to finance its Tk 1321.70 billion budget.

Rahman said: "The stock market index held steady parallel from 2007 to 2009. But it has been rising over the last six months."

He believed that the proposal of taxation will raise the cost of transaction and pointed out that the government should watch another year before it decides.

An adviser to the prime minister, Rahman said that imposing taxes on the sponsor shareholders and directors meant taxing individuals.

He said since the number of registered companies is low compared to the demand taxes will further discourage companies from getting registered.

On the proposed tax on share premium, he said: "Premium is the capital. No tax can be imposed on capital."

Rahman also said that the government should raise the annual levy on BO (beneficiary owner) account to Tk 500 to increase revenues.

Dhaka Stock Exchange president Shakil Rizvi said the new taxes may reduce transaction.