Govt proposes minimum share offload threshold withdrawal to attract listings
Listed companies will receive a 2.5% corporate tax rebate regardless of the volume of shares floated, while firms offloading at least 10% of their shares will qualify for an additional 2.5% tax benefit.
Highlights:
- Listed companies to receive 2.5% corporate tax rebate without minimum share offload
- Additional 2.5% rebate proposed for offloading at least 10% through public offers
- Another 2.5% tax incentive for companies conducting all transactions through banks
- Dividend tax proposed at 15% for individual investors and 20% for corporate taxpayers
- Tk5 lakh ceiling on mutual fund tax rebate proposed to be withdrawn
The government has proposed removing the minimum share offload requirement for companies to qualify for a corporate tax rebate upon listing on the stock market, aiming to encourage more businesses to go public.
Speaking during the budget discussion in parliament today (29 June), Finance Minister Amir Khosru Mahmud Chowdhury proposed a 2.5% reduction in corporate tax for any company immediately after it lists on a stock exchange, regardless of the percentage of shares offered to the public.
Keep updated, follow The Business Standard's Google news channel
Under the existing tax regime, companies must offload at least 10% of their shares to qualify for the rebate.
The finance minister also proposed an additional 2.5% corporate tax rebate for companies that float at least 10% of their shares through an Initial Public Offering (IPO), Direct Listing, Rights Issue or Repeat Public Offering (RPO).
The proposed budget also includes a further 2.5% tax incentive for both listed and non-listed companies that conduct all business transactions through banking channels.
If implemented, listed companies that transact entirely through banks and float at least 10% of their shares would enjoy a total corporate tax reduction of 7.5 percentage points compared with non-listed firms.
The budget also proposes reducing the tax rate on dividend income to 20% for corporate taxpayers and 15% for individual investors.
In another move to support the capital market, the government has proposed removing the existing Tk5 lakh investment ceiling for claiming tax rebates on investments in mutual funds.
The finance minister also proposed continuing the tax exemption on income earned from zero-coupon bonds.
Speaking in parliament, Amir Khosru said the proposed fiscal measures are intended to strengthen the capital market by encouraging more quality companies to list and by facilitating long-term investment for industrialisation.
He said investor confidence in the stock market had shown signs of improvement, reflected in recent gains in market indices, adding that the government would continue implementing structural and fiscal reforms to deepen the capital market.
