BSEC seeks fiscal concessions to help develop bond market

The Bangladesh Securities and Exchange Commission (BSEC) has sought a number of fiscal concessions, including tax waivers, to help develop the country's moribund bond market, officials said.

The commission has put forward a set of proposals to the National Board of Revenue (NBR) for consideration, they added.

"The development of bond market is essential for the much-expected expansion of the stock market," BSEC chairman Dr M Khairul Hossain in a letter wrote to the NBR.

In this case, he referred to the finance minister's last budget speech that highlighted the necessity of developing the bond market.

"Currently, tax waiver facility is conditionally available in case of zero coupon bond," wrote Mr Hossain.

"The facility needs to be made available for all types of corporate bonds and investors concerned," he continued.

Mr Hossain also suggested rationalising tax at source in case of the transaction of corporate bonds.

Presently, 0.10 per cent tax at source is applicable to a broker, depending on the transaction price, he said.

The BSEC chairman proposed that tax be realised based on the number of transactions instead.

He also requested rationalisation of stamp duty on corporate bonds.

Currently, 2.0 per cent stamp duty is levied on the issuance of corporate bonds (which can be handed over through endorsement).

Again, 3.0 per cent stamp duty is realised on 'value of consideration' of bonds (which can be handed over through delivery).

The BSEC chairman found the 'high' stamp duty as a barrier to the growth of bond market.

He suggested that stamp duty on paper-based bonds be fixed at 0.01 per cent or Tk 0.5 million.

The BSEC chief also recommended withdrawal of stamp duty on dematerialised corporate bonds.