The Bangladesh Merchant Bankers Association (BMBA) urged the National Board of Revenue (NBR) to further widen the tax-rates gap between listed and non-listed companies to attract more large companies to the capital market.
"Since the listed companies have to transparently report their financials and many non-listed businesses keep theirs concealed, the NBR should significantly reduce corporate tax and value-added tax rates for the listed firms," it wrote in its budget proposal submitted to the NBR on Wednesday.
Currently, listed firms other than banks, insurers, financial institutions, mobile operators, and tobacco companies pay 22.5% corporate tax while their non-listed competitors pay 30% tax.
Since the benefits of concealing turnover and profits were bigger than the 7.5% corporate tax gap, the incentive failed to attract the successful, large companies for listing, the BMBA said, noting that out of nearly 1.5 lakh registered companies, only 348 are now publicly listed.
The merchant banks proposed to cut the corporate tax to 15% from the existing 22.5% for the listed firms, and VAT to 10% from the common 15% on their products and services.
"The NBR would be able to bag more revenue despite the proposed cut in taxes if more large companies come to the capital market," the proposal reads.
The BMBA also called for counting the 15% dividend tax on individual investors as their ultimate tax liabilities. Currently, tax on dividends is being deducted at sources. Again, the taxpayers need to pay income tax for the dividends, in case of each annual dividend income crossing Tk50,000.
The association also urged the NBR to reduce merchant banks' corporate tax to 25% from the existing 37.5% as it was too high compared to that of 30% for stockbrokers and 15% for asset management companies.