Revamping Bangladesh's Capital Market: Major Tax Breaks on the Horizon
The FY26 budget may introduce significant tax incentives aimed at revitalizing Bangladesh's capital market with anticipated tax breaks for listed companies.
Bridging the Gap: The Budget’s Potential Impact
The national budget for FY2025–26, set to be unveiled tomorrow, is poised to bring transformational tax measures aimed at stimulating growth within Bangladesh’s capital market. The anticipated strategies seek to narrow the tax divide between listed and non-listed companies, bolster securities trading, and enhance the financial ecosystem overall. According to The Business Standard, the proposed budget measures a significant corporate tax gap expansion and a reduction in turnover tax that carries the potential to reinvigorate a declining market landscape.
Tax Incentives to Empower Financial Institutions
The budget’s core provisions aim to widen the corporate tax disparity between listed and non-listed companies to 7.5% from the existing 5%. Industry leaders such as Saiful Islam and Minhaz Mannan Emon have shown overwhelming support, highlighting how these tax strategies might restore market confidence and fortify the country’s economic standing. The focus on easing advance income tax on securities trading from 0.05% to 0.03% aligns strategically with efforts to maximize transaction efficiency, thus inviting greater market participation.
Merchant Banks: A New Era of Investment Opportunities
One of the budget’s standout aspects is the anticipated cut in corporate tax for merchant banks, setting the stage for incentivized investment. Lowering the rate from 37.5% to 27.5% serves as a longstanding demand fulfilled, aiming to create a more equitable environment among market players. Industry insiders like Syed M Omar Tayub foresee this shift as a pivotal mechanism to boost merchant banks and catalyze alternative income streams for traditional banking entities.
Ethical Concerns and Legal Compliance: A Mixed Bag
However, not everyone is unequivocally pleased. Industry veterans like former BSEC chairman Faruq Ahmad Siddiqi caution that such measures may predominantly benefit larger brokerage firms without sufficiently addressing systemic challenges faced by general investors. His call for more robust legal enforcement underscores the importance of compliance in achieving long-term financial sustainability.
Towards a Thriving Capital Landscape
Additionally, the proposed alleviation of turnover tax exemplifies the budget’s commitment to fostering market robustness. By decreasing the tax burden from the current rate, brokerage firms and retail investors alike stand to gain, paving the way for increased liquidity and reduced financial strain.
The ambitious budgetary framework anticipates an exhilarating era of growth and vitality, propelling Bangladesh’s financial market into a promising dawn. With crucial interventions and innovative tax solutions, the capital market may soon find itself on a revitalized path to prosperity.
