NBR chief questions stock market tax incentives

The government has reduced the spread between corporate taxes of publicly traded and non-listed firms

The chairman of the National Board of Revenue has questioned tax exemptions for publicly traded companies, asking if the facilities really helped the capital market grow.

Abu Hena Md Rahmatul Muneem answered questions on cutting the spread between corporate taxes of publicly traded and non-listed companies from 7.5 percentage points to 5 points in the national expenditure plan at a post-budget press conference on Friday.

Finance Minister AH Mahmood Ali also announced taxes for over Tk 5 million income from trading shares.

“I don’t know how effective the spread between the taxes of listed and unlisted companies is. The rate was kept low for the listed firms and the spread was high for a long time. Did our stock market grow much because of that?” Muneem asked.

After a collapse in 2010, the share market has continued to frustrate investors despite a raft of measures taken by the government, the central bank and the regulator.

“We don’t think only tax exemptions will help the stock market develop. Did we see good results from many types of tax incentives for the stock market? Does the problem lie somewhere else? Has it been identified?” the NBR chief asked.

“Still you [the journalist who raised the question] think that only tax exemptions can expand the capital market. The tax exemptions were there for a long time.”

Muneem observed that the NBR was levying new taxes, increasing existing taxes and lowering waivers because revenue collection must increase to cut the budget deficit.

“We must increase tax collection. We have pressure from inside and outside the country. That’s why taxes have been increased,” he explained.

Noting that the minimum corporate rate now stands at 20 percent, he said: “If we fix 15 percent tax, we won’t get revenue. Our state hasn’t reached that position yet.”