Bangladesh: Tax-free limit of stock capital gain to be raised to Tk 20 lakh

Dhaka, June 27 (New Age): The government is likely to increase the limit of tax-free capital gains from stock investment for individual investors to Tk 20 lakh from the proposed Tk 10 lakh amid protest from the investors, officials of the National Board of Revenue said.

The government may also reduce the proposed tax on realised capital gains and increase the slabs of gains bowing down the tremendous pressure from the stock market players, they said.

In the last moment, the revenue officials on Thursday prepared an amendment proposal of the Finance Bill-2014 following the instruction from the finance minister Abul Maal Abdul Muhith.

According to the proposal, individual investors will have to pay tax at the rate of 2 per cent on capital gains from Tk 20 lakh to Tk 50 lakh in the coming fiscal year of 2014-15.

Tax will be imposed at the rate of 3 per cent on capital gains above Tk 50 lakh, officials said.

Earlier on June 5, Muhith proposed in the finance bill to impose tax on capital gains for the first time in the country.

The proposed tax rate was 3 per cent on capital gains above Tk 10 lakh but less than 20 lakh, 5 per cent for above Tk 20 lakh.

Tax-free limit of capital gains was proposed at Tk 10 lakh.

Earlier this week, finance minister in a meeting with the NBR officials organised for finanlising amendment of the finance bill categorically instructed for not to change the proposed tax rate and tax-free limit.

By this time, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange mounted pressure on the NBR and lobbied with the government high-ups to withdraw the proposed tax.

The country’s two bourses also reacted sharply to the ups and downs in the capital market.

Experts also criticised the decision saying that though the imposition of tax on higher capital gain was right but it was not the right time to do so and the decision would put a negative impact on the already volatile market.

Muhith, returning from Jeddah on Thursday morning, asked the revenue officials for changing the tax rate and tax-free threshold, officials said.

By the evening, the amendment was sent to the law ministry for vetting, they said.

The proposed amendment is final and it will not be changed unless the prime minister instructs otherwise, officials said.

The NBR also finalised an upward revision of the proposed tax exemption limit on dividend income increasing the amount to Tk 20,000 from the proposed Tk 15,000.

Currently, stock investors enjoy tax exemption on dividend up to Tk 10,000.

NBR officials said that the government imposed tax on realised gains to boost revenue collection from the sector.

The initiative was just and fair taking the amount of realised gains into consideration.

‘An investor who has high capital gains from the capital market should pay tax and the proposed slab at Tk 10 lakh capital gains in a year for imposing tax was reasonable,’ an official said.

Small investors who are dominating in the market would not be affected by the decision, he said.

Finance minister was also convinced and decided to not to change the proposal till Sunday, but he has to bow down to the pressure from beneficiaries to review the proposal, he said.

There are approximately 29.79 lakh beneficiary owner’s accounts in the country.

The revenue board expected to collect nearly Tk 200 crore from tax on capital gains. Now the amount will be significantly low.

Bangladesh: Insurers say govt neglects insurance sector

Dhaka, June 27 (New Age): Financial sector experts at a seminar on Thursday said that the government’s negligence was the major impediment to the development of the country’s insurance sector.

They also said that the members of the Insurance Development and Regulatory Authority were not equipped with enough knowledge about the insurance industry to serve the sector.

They made the allegations while speaking at a seminar on ‘role of insurance sector in developing economy’ organised by the Bangladesh Insurance Association at its office in the city.

BIA president Sheikh Kabir Hossain said, ‘The insurance sector is very much neglected by the government in our country. The trend is reverse in the developed countries.’

Insurance policy is almost everywhere mandatory in the developed countries and that has helped the sector to grow there, he said.

‘Though the government has constituted a regulatory body for the sector, but the regulatory body is yet to be strengthened with proper manpower and regulations,’ he said.

‘We have requested the government several times to open a separate department for the insurance sector under the finance ministry, but no response is yet to be found,’ said the BIA president.

Federation of Bangladesh Chambers of Commerce and Industry president Kazi Akram Uddin Ahmed said that the government should take necessary steps to empower the regulator as soon as possible.

He also requested the government to scrap 5 per cent source tax on premium and commission earning.

Eastland Insurance chairman Mahbubur Rahman said, ‘Insurance sector is the most neglected sector by the government.’

He also said that the some of the members of the IDRA were not properly equipped with knowledge to serve the sector properly to boost the growth of the sector.

State minister for finance MA Mannan said, ‘If there is any negligence, it is not intentional.’

The main motto of the government is to facilitate the businesspeople as they play the key role in driving country’s economy, Mannan said.

IDRA acting chairman Kuddus Khan said that along with facilitating the insurance sector the regulator would always try to stop irregularities in doing business.

‘Every company should try to prevent irregularities on their own to ensure good governance.’

Companies should take steps to dispose claims promptly which will help to restore clients’ confidence over the insurance companies, he said.

BIA vice-president Ahsanul Islam Titu also spoke on occasion.

Bangladesh: Investment in NSCs soars to Tk 10,000cr

Dhaka, June 27 (New Age): The net investment in the national savings certificates and bonds crossed Tk 10,000 crore in the first 11 months of financial year 2013-14 as the clients invested heavily in the savings tools due to lower rate of interest in scheduled banks’ deposit products.

According to the Directorate of National Savings data, the net investment in the savings instruments was Tk 10,018.25 crore in July-May of the FY14 while it was Tk 735.19 crore in the same period of the FY13.

A DNS official told New Age on Thursday that the premature cashing by clients also declined in the period as the five-year savings tools, which were sold hugely in the FY10, would mature in the next financial year.

He said that previously clients had made huge premature cashing of their savings tools, but the trend (premature cashing) changed significantly this fiscal year.

The DNS data showed that sales of the national savings certificates and bonds increased by 1.26 per cent in the first 11 months of the FY14 compared with that in the same period of the FY13.

The savings instruments worth Tk 21,656.12 crore were sold through banks, national savings bureaus and post offices in July-May of the FY14 whereas the total sales of NSCs in the same period in the FY13 were worth Tk 21,384.59 crore.

The premature cashing of savings tools by clients declined by 43.64 per cent in July-May of the FY14 compared with that in the same period of the FY13.

Clients cashed prematurely savings instruments worth Tk 11,637.37 crore in the first 11 months of the FY14 while the figure was Tk 20,649.49 crore during the same period of the FY13.

The official said that the scheduled banks had recently cut the interest rate of their savings products due to the increasing trend in excess liquidity amid sluggish business.

The business people are yet to start their business expansion by receiving loans from the banks due to political uncertainty which pushed up the idle fund of the banks, he said.

The banks are now reluctant to take deposit from the clients, so they cut the interest rate on their deposit products, he said.

The banks are now giving maximum 11 per cent to 12 per cent rate of interest to the clients for the fixed deposit schemes while the interest rate on the savings tools is between 12.59 per cent and 13.45 per cent.

Against the backdrop, the clients have made investment heavily in the savings certificates and bonds this financial year, the DNS official said.

The official said that the net investment in the savings tools might cross Tk 11,000 crore in the FY14 if the trend of lower premature cashing continues in the last month of the outgoing  financial year.

The government in the last financial year collected only Tk 772.84 crore or 10.44 per cent of its annual target of Tk 7,400 crore in investment in the national savings certificates and bonds.

For this reason, the government set a lower net investment target of Tk 4,971 crore for the FY14.

Another DNS official said that the net investment might plunge in the coming financial year if the clients cashed their investment prematurely like the recent fiscal years.

Besides, the banks will increase the rate of interest on their deposit products in the coming months when the businesspeople will go to banks to receive loans, he said.

Bangladesh: BB launches Tk 100cr refinance scheme for new entrepreneurs

Dhaka, June 27 (New Age): Bangladesh Bank on Thursday introduced a refinance scheme worth Tk 100 crore for the new entrepreneurs to encourage self-employment.

The BB in a circular to banks and non-bank financial institutes said that the entrepreneurs, who had not accumulated any business experiences earlier, would be able to receive the loans from the refinance fund.

The maximum tenure of the loan is five years with an interest rate of 10 per cent.

The entrepreneurs will avail a grace period of six months to repay the loan, the BB circular said.

Each of the clients will get a maximum amount of Tk 10 lakh in loan without any mortgage but the banks and the NBFIs will be able to take

personal guarantee or third party guarantee from the clients.

The clients will get a maximum Tk 25 lakh from the scheme by giving mortgage to the banks and the NBFIs, the circular said.

The entrepreneurs, however, will have to arrange 20 per cent of the total costs of any project. They have to attain technical education about their proposed projects.

The entrepreneurs must hold training certificates from government and non-government institutions which are recognised by the central bank.

The BB asked the banks and the NBFIs to give priority to women entrepreneurs and projects on import alternative products, export-oriented businesses, innovative and creative enterprises and ICT related businesses in disbursing the loan under the refinance fund.

Bangladesh: BSEC rejects IFIC Bank’s time extension plea on rights offer

Dhaka, June 27 (New Age): The Bangladesh Securities and Exchange Commission has rejected the time extension application of IFIC Bank for submitting rights offer documents to the commission after getting shareholders’ approval, a Dhaka Stock Exchange web post said on Thursday.

As per the rule 7(1) of the Securities and Exchange Commission (Rights Issue) Rules 2006, companies have to file offer documents of rights shares to the commission within 15 working days after getting shareholders’ approval in a general meeting.

The BSEC rejected IFIC Bank’s application as it has failed to comply with the rule.

A BSEC senior official told New Age on Thursday, ‘As the commission denied to extend time for filing offer

documents of rights shares, there is no chance for the bank to file the documents this time and get approval from the commission to the rights offer as well.’

‘The rights offer of IFIC Bank may be considered in the next time if the company files offer documents to the commission within 15 working days after getting shareholders’ approval in general meeting and comply with other rules related in this regard,’ he said.

The board of directors of the bank on April 27 decided to issue one rights share against its existing one share at an issue price of Tk 20 including premium of Tk 10 each share to meet the future capital requirement of the bank.

The board at the meeting also decided to hold annual general meeting on June 1 in this regard.

The paid-up capital of IFIC Bank is Tk 437.70 crore with earning per share and net asset value of Tk 3.60 and Tk 24.29 respectively.

The shares of the company traded at Tk 23.7 on Thursday.

Bangladesh: GP re-launches service centre in Ctg

Dhaka, June 27 (The Daily Star): Bangladesh cricket team all-rounder Nasir Hossain yesterday re-launched Grameenphone Centre at GEC in Chittagong city.

The outlet is one of the most preferred GP service experience zones for local customers.

Shah Mohammad Ibrahim Azad, GP's Chittagong regional head, and Mohammad Ziaul Huda, head of GEC centre, also attended the event in Nasirabad.

Customers met Nasir during the daylong event and 10 lucky customers had dinner with Nasir at Peninsula Hotel in the city. Nasir is a brand ambassador of Grameenphone.

Bangladesh: Dhaka stocks end positive

Dhaka, June 27 (New Age): Dhaka stocks ended positive on Thursday, last trading session of the week, but turnover at the bourse dropped as some investors remained cautious ahead of the budget approval.

The benchmark general index of the Dhaka Stock Exchange, DSEX, finished at 4,409.42 points, adding 0.13 per cent or 5.77 points.

Turnover of the bourse declined to Tk 302.78 crore on the day from Tk 337.72 crore in the previous trading session.

Market operators said investors were little-bit cautious ahead of the final approval to the proposed budget for the fiscal year 2014-2015.

The government in the proposed finance bill imposed 3-5 per cent gain tax on individual investors and scrapped 10 per cent tax rebate for the listed companies that had kept investors pessimistic for two weeks after the budget proposals.

Investors became hopeful after the Bangladesh Securities and Exchange Commission and the bourses had requested the finance minister, AMA Muhith, to scrap capital market unfriendly proposals from the budget, they said.

Operators also said that investors were hoping that the proposals would be reviewed by the government.

DS30, the blue-chip index of the DSE, however, closed negative at 1,616.57 points, shedding 0.16 per cent or 2.74 points.

The Shariah index of the bourse, DSES, slipped by 0.10 per cent, or 1.01 points, to close at 1,006.22 points.

Of the 294 shares and mutual funds traded on the day, 152 advanced, 104 declined and 38 remained unchanged.

‘FY 2013-14 is close to its end and the bourse observed June-impact, lately,’ IDLC Investors said in its daily market commentary.

Most of the individual investors started positioning on the hope of getting tax rebate on their income, it said.

‘Accordingly, they preferred selective lucrative scrips, fundamentally as their safe investment,’ it said.

‘Meanwhile, budgetary hopes still prevailed,’ said IDLC.

But, this rebate seeking money flow was out-weighted by the inactivity of large investors, it also said.

Bangladesh Export Import Company traded the most with its shares worth Tk 24.08 crore changing hands, while share prices of the company advanced by 7.90 per cent on the day.

Bangladesh: BGMEA demands action against trade union for US letter with ‘false’ info

Dhaka, June 24 (New Age): The Bangladesh Garment Manufacturers and Exporters Association on Monday demanded action against some trade union leaders accusing them of acting against country’s readymade garment industry by sending letters to the US congressmen with false information about labour standard. BGMEA president Md Atiqul Islam alleged that a trade union federation, the National Garment Workers Federation, recently wrote a letter to the US congressmen mentioning that workers have been repressed in the work place in Bangladesh’s RMG factories. Atiqul made the allegation against the federation affiliated with the IndustriALL Bangladesh at a programme in presence of commerce minister Tofail Ahmed. Tofail on Sunday labelled same accusation against IndustriALL but the leaders of the Bangladesh chapter of the global trade union federation denied the charges. Amirul Haque Amin, president of the National Garment Workers Federation, however, told New Age that they had not sent such letter to the US administration directly but they had submitted a report on torture on a worker leader to the labour and home ministries of Bangladesh, BGMEA, Inspector General of Police, director general of industrial police and superintendent of police of the Mymensingh district. He said that tortured worker leader Moniruzzaman, whose name was mentioned in the letter, was still staying in the capital with serious injuries. Atiqul at the programme on BGMEA-BUFT Journalism Fellowship 2014 said, ‘I urge the commerce minister to take necessary actions against them who have taken stand against the largest foreign currency earning sector of the country and against four million people who are employed in the sector.’ Handing over the copy of the letter to the commerce minister, the BGMEA president said that those who were acting against the country in the name of trade unions should be punished. As the president and the secretary of IndustriALL Bangladesh council, Nazrul Islam Khan and Roy Ramesh Chandra, could not avoid the responsibility of such kind of letter that has been sent to the US administration with false information about labour situation, said Atiqul. Nazrul is a senor BNP leader while Ramesh is an Awami League leader. Amirul, however, told New Age, ‘The allegation on torture on labour leader Monir was not false and we have documents. We submitted those in several ministries and government agencies.’ ‘If anyone wants to talk to the assaulted worker, Monir, to prove the issue, he/she can contact the NGWF,’ Amirul said. Tofail Ahmed said that some trade union leaders, who were not involved with work in any establishment, were giving negative message about the labour standards in Bangladesh across the world. Tofail, however, slightly backtracked from his remarks made on Sunday that Nazrul Islam and Roy Ramesh sent the letter to US congressmen. ‘I don’t have any grudge against Nazrul as he is a nice person. But the letter was sent by the NGWF to the US using the official pad of IndustriALL and Nazrul is the president of the IndustriALL Bangladesh,’ he said. The minister urged the trade union leaders to uphold the interest of country and said that despite ideological difference no one can take stand against the dignity of the nation. Dhaka University vice-chancellor AASM Arefin Siddique, Continued on Boishakhi Television chief executive officer Manjurul Ahsan Bulbul, the Bhorer Kagoj editor Shyamal Dutta and the Financial Express advisory editor Jaglul Ahmed Chowdhury attended the programme. In the programme, the BGMEA announced the names of six journalists who have been elected for the BGMEA-BUFT Journalism Fellowship 2014 in different categories.

Bangladesh: Govt unlikely to withdraw tax on stock investors’ capital gains

Dhaka, June 24 (New Age): Tax on realised gains from stock investment is likely to remain unchanged in the next budget as the government decided not to change the provision in the proposed Finance Bill-2014, officials of the finance ministry said. On the other hand, the government may increase the tax exemption on dividend income up to Tk 20,000 that the investors get from the listed companies from the proposed Tk 15,000, they said. The government may also offer tax rebate for the companies listed in the share market. The companies which will pay dividend more than 40 per cent will get 10 per cent tax rebate on their income tax, according to the proposed amendment. Earlier, companies would get 10 per cent rebate if they gave 20 per cent dividend but the provision was scraped in the proposed finance bill. The government may also exclude from the finance bill a provision that proposed to allow cost and management accountants to conduct audit and certify financial reports under the tremendous pressure from the Institute of Chartered Accountants of Bangladesh. It may also scrap a provision making mandatory for partnership, enterprises and professionals with income exceeding Tk 5 crore a year to submit audited account statements to the NBR. Finance minister AMA Muhith on June 5 placed the finance bill in parliament proposing 3 per cent tax on individual investors with more than Tk 10 lakh but less than Tk 20 lakh capital gain in a year from the stock market and 5 per cent tax on capital gain above Tk 20 lakh. Investors protested against the decision and demanded withdrawal of imposition of gain tax. The country’s two bourses also reacted sharply with ups and downs in the market. Experts also criticised the decision saying that though the imposition of tax on higher capital gain was right but it was not the right time to do so and the decision would put a negative impact on the already volatile market. The National Board of Revenue officials said that the finance minister on Sunday instructed them to keep the provision unchanged in a bid to bring people with more income under tax net and collect revenue from the sector. The government thinks that those who earn above Tk 10 lakh a year from share market should pay tax, they said. Small and medium investors will not be affected due to the imposition of gain tax, they said. Earlier, capital gain from the stock market was tax-free. Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange were demanding to scrape the new provision saying that the imposition of gain tax would create significant effect on the market. On the other hand, investors get tax exemption on dividend up to Tk 10,000 and they have to pay tax at the rate of 10 per cent on the amount above Tk 10,000. In the proposed finance bill, the government proposes to increase the tax-free dividend to Tk 15,000 which now will be Tk 20,000. Demutualised DSE and CSE will enjoy tax holiday for the next five years until in a way the finance minister proposed in the finance bill. Finance minister proposed tax holiday in a graduated rate for the exchanges but they demanded for absolute tax holiday for next 5 years.

Draft finance company act allows BB to dissolve leasing company boards

Dhaka, June 24 (New Age): Bangladesh Bank will be empowered with the authority to dissolve the boards of non-bank financial institutions in a proposed Finance Company Act that has put stringent restriction on lending by the financial entities, commonly known as leasing companies. BB has drafted the Finance Company Act-2014 to place the existing Financial Institution Act-1993 to regulate the country’s leasing companies more strictly. The proposed act, now being scrutinised by finance ministry, said BB could dissolve the boards of finance companies, its chairman, directors and chief executive officer if the central bank finds any gross irregularities harmful to its depositors. The current provision lying in the FIA stipulates that BB only could fire chairman, director or CEO of any leasing company for valid ground, but not the board of such company. Both the acts, existing and the proposed ones, however, have provisions for seeking clarifications from the persons in questions, before BB applies its ultimate powers. Presently, the country has 30 leasing companies. The proposed act has put restriction on holding more than 10 per cent share of a finance company by any individuals or any company or members of a family. Restricting investment, the act said no finance company is authorised to invest more than 25 per cent of its paid-up capital in a single subsidiary organisation that belongs to the finance company concerned. The current provision under the FIA allows 50 per cent investment by a leasing company of its total paid-up capital. The number of board of directors of such finance companies will be as high as 16, according to the new act. The maximum number of directors to be appointed from a family having shares above five per cent on the finance company could be only two, while one director can be appointed from a family having less than five per cent stake in a finance company, the proposed act said. Presently, no capping on board members applies to a leasing company as the companies concerned generally decide on the numbers of their board members. The tenure of office of a director has been proposed for three years with limiting their terms for maximum two consecutive times. Any finance company director will be disqualified to become director of a bank company or other finance company simultaneously. The current provision disqualifies a leasing company director from becoming a director of an insurance company along with directors for bank and other leasing company at a time. An executive director of BB said they had finalised the draft act in consultation with different stakeholders including that of association of leasing companies. He said the current FIA has lost relevance on many counts as that was enacted more than two decades ago. The finance officials said they would submit the draft act to cabinet division next month with minor changes for approval.

Stock Refinance Scheme: Application deadline extended again for 3 months

Dhaka, June 24 (New Age): The supervision committee on the Tk 900-crore government refinance scheme for the small-scale investors affected by the 2010-11 capital market crash on Monday extended the deadline again for receiving applications from merchant banks and brokerage houses. This time the application deadline, which was to expire on June 30, has been extended by another three months. The committee at a meeting also decided to suggest the ICB for filing application with the central bank to get Tk 300 crore as the second tranche from the refinance scheme, BSEC executive director Saifur Rahman told New Age after the meeting. Saifur, also the convener of the committee, said, ‘Considering the gradual improvement in loan disbursement of the fund, we have decided to extend the deadline for another three months to get loan applications from the merchant banks and brokers on behalf of the affected small investors.’ As per the latest report provided by the Investment Corporation of Bangladesh, loans worth Tk 239 crore have so far been disbursed among the investors and applications for Tk 111 crore loans are in progress for disbursement, he said. Bangladesh Bank on August 26, 2013 released Tk 300 crore to the ICB as the first tranche of the refinance scheme. More than 9 lakh affected investors are yet to file applications to the loan approval committee to get the loans from the government fund. The supervision committee for the first time had set November 30 as deadline to receive applications from the merchant banks and brokerage houses in favour of affected small investors. Since then, it has extended the deadline for four times due to slow response from the merchant banks and stockbrokers. Merchant banks and brokerage houses have time and again demanded that the BSEC should take steps in obtaining a directive from the National Board of Revenue allowing the amount of loans waived for the affected small-scale investors as allowable expenses. The stock market intermediaries also requested for waiver of some conditions out of the 18 conditions set by the government to apply for the loans. As per a Bangladesh Securities and Exchange Commission report sent to the finance ministry in April 2013, only 7,413 small-scale investors out of the 9,53,849 affected by the 2010-11 stock market crash got interest waiver. The loan benefit was announced as part of government-set compensation package for the investors who had investment below Tk 10 lakh during the market crash.

SSC Exams 2014 Results Published

The results of this year’s Secondary School Certificate (SSC) and its equivalent examinations have been published on Saturday. Education minister Nurul Islam Nahid formally handed over the results to prime minister Sheikh Hasina at 10:00am on the day, said a press release of the education ministry. Later, the education minister unveiled the results at a press briefing at his secretariat office on Saturday noon. This year, a total of 1,432,727 students under 10 educational boards had been registered from 27,489 institutions for the examinations that began on February 9 and ended on March 20. The SSC examinations were held under creative question papers except Bangla 2nd paper, English 1st and 2nd papers, and Mathematics.

Apple’s Next 12-inch iPad May Hammer The Notebook Market

Apple and Google have both already done a lot to shake up the traditional PC market but don’t expect either of them to stop anytime soon. Barron’s flags a note from Evercore Partners analyst Patrick Wang, who thinks that Apple’s upcoming 12- to 13-inch iPad has the potential to “transform the traditional notebook market as we know it” because it will be the first time that Apple has made an iPad that’s targeted specifically toward Microsoft’s PC customer base.

“Arriving in fall ‘14, Apple goes Enterprise with an 12-inch iPad,” Wang writes. “Powered by the A8 chip (perhaps 4C), this expands ARM’s reach and, once again, transforms the traditional notebook market as we know it. Expect a 2-1 hybrid — think iPad + MBA — similar to how most iPads are used in the workplace and in the same spirit of MSFT’s Surface.”

As Wang acknowledges, Apple isn’t really doing something innovative as far as form factor goes since it’s basically releasing a new version of the iPad that will be built like Microsoft’s Surface. So why would companies flock to the Apple device instead toward devices such as the Surface Pro? One answer could be that the iPad already enjoys a robust app ecosystem that isn’t at all lacking for developers. Another is that workers who have iPhones and iPads at home are already familiar with iOS so in theory there shouldn’t be the same sort of learning curve that comes with Windows 8.

What’s particularly interesting about Apple’s upcoming “iPad Pro,” however, is the specific market that it will reportedly target: Schools. We’ve read reports that Google has been making major inroads into schools with its low-cost, low-maintenance Chromebook laptops, so it looks like Microsoft rivals smell blood when comes to displacing PCs as the default computing machines in schools.

Any way you slice it, it looks like Apple and Google are going to keep aggressively invading Microsoft’s territory throughout the year. (source)