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 Listed companies demand withdraw

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Posts : 63
Join date : 2010-06-05

PostSubject: Listed companies demand withdraw   Sun Jun 20, 2010 1:04 pm

al of share tax
Star Business Report

The listed companies have urged the government to withdraw the proposed tax on premium value of shares.

They also pointed out that such provision is contrary to the basic principles of taxation.

The income of sponsor shareholders or directors of a listed company should not not be taxed, they demanded. They also suggested the government halve the tax on capital gains of institutional investors.

The appeals came at a post-budget press conference in Dhaka yesterday, organised by Bangladesh Association of Publicly Listed Companies.

The new budget for the coming fiscal proposed imposition, for the first time, of a 10 percent tax on a company that profits from share trade, 5 percent tax on income of sponsor shareholders or directors of a company listed with the stock exchanges, and 3 percent tax on premium value of the shares of companies being sold at a premium value.

One of the key problems that the stockmarket now faces is the imbalance between excess demand in the capital market and insufficient supply of high quality stocks, said Salman F Rahman, the association's president.

The tax on premium value and sponsor shareholders' income would seriously discourage the privately owned companies from coming to the market, he said.

Moreover, he said, the tax on the premium value of shares basically amounts to taxing the equity of a company, which goes against the taxation principles.

"We would recommend that the proposed tax on sponsor director sales and that on the premium value are withdrawn," Salman said.

"We also believe that the 10 percent tax on financial institutions income in the stockmarket should be reduced to 5 percent," he said, adding that the goal of widening the tax net to capital gains on share sales can be considered in a future budget.

However, he said, recognising the need to raise revenue and limit some speculations at retail level, annual levy on BO (beneficiary owner's) accounts charged by the National Board of Revenue might be set at Tk 500 which, with 25 lakh BO accounts outstanding, would generate Tk 125 crore in a financial year.

"With revisions of the taxation measures, the capital market growth will sustain over the medium term, which is critical for the effective financial intermediation of Bangladesh's gross savings surplus for productive investment," he said.

"Capital market must continue to play a bigger role in channelling savings to productive investment, and we must refrain from taking any step which could undermine that objective by destabilising the already volatile market," Salman F Rahman added.
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