Star Business Report
Dhaka stocks suffered a big jolt yesterday after the news of the government imposing tax on capital gains in the next budget had spooked investors.
The benchmark index of Dhaka Stock Exchange -- DSE General Index -- dived 127.47 points, or 2.05 percent, to 6,067.43, the second biggest fall in years.
The DSE said the news of tax on capital gains, published in several newspapers, misled the already jumpy investors.
Premier bourse authorities said they spoke to the high officials of the National Board of Revenue and the finance ministry.
Both offices replied to the exchange that no official or spokesman was designated to speak on budgetary measures, the DSE said.
Quoting anonymous officials of the finance ministry, some newspapers have reported that the government is set to impose 5 percent tax on individual investors whose profits from stockmarket would cross Tk 5 lakh in a year from the next fiscal year.
"The NBR said it several times that they would not impose tax on individual investors. The NBR told us that it would not impose any condition on the stockmarket that will hurt the growth of the market," said Rakibur Rahman, a DSE director, at a press meet.
"We proposed a 3 percent tax on capital gains of institutional investors such as banks, insurers and non-bank financial institutions, instead of individuals," he said.
Opposing any tax on capital gains of individual investors, DSE President Shakil Rizvi said levying tax on individual investors would seriously affect the "nascent market".
"You see the behaviour of the market. It reacted very negatively to the news whether it is confirmed or not," he said.
When investors enter the tax net, they will require tax identification numbers (TINs), said DSE members.
But most investors want to avoid TINs, they said.
Moreover, the existing trading system does not allow it to sort out an investor's capital gains. The brokerage houses use different kinds of software to maintain back-office data, they said.
The DSE members suggested the installation of uniform back-office software before imposing tax on investors.
They recommended an alternative: the government can hike the tax rate on share transactions. Presently, stockbrokers pay tax at 0.25 percent on each transaction.
The DSE paid Tk 90 crore in taxes to the national exchequer in July-April, up from Tk 26 crore last fiscal year.
Home 
