Listed companies that issue better dividend will not get any benefits from the corporate tax cut offered in the national budget for the financial year 2015-16 as the government withdrew a 10 per cent tax rebate for the companies which pay dividend above 30 per cent. As many as 45 heavyweight companies gave dividend above 30 per cent for 2013. The government in the budget for the FY16 reduced tax rate for the listed companies to 25 per cent from earlier 27.50 per cent. Considering the 10 per cent tax rebate, the final tax on the listed companies, which offer 30 per cent or above dividend, was 24.75 per cent. Due to the scraping of the tax incentive, the listed companies which issue higher dividend have to pay a 0.25 per cent increased taxes compared with the taxes they paid in last year. Capital market experts said that the government might have taken the step in a bid to increase its tax collection. They, however, said that the 10 per cent tax rebate was one kind of stimulus for the listed entities to offer 30 per cent or above dividend for its shareholders, but scrap of the facility might discourage corporate bodies from declaring higher dividend. On the other hand, as the companies will have to pay increased amount of dividend that will ultimately put an impact on net profit of such companies and will reduce dividend payment capacity, they said. According to a Bangladesh Securities and Exchange Commission report for the FY14, out of 260 companies listed with the stock exchanges as many as 46 firms declared more than 30 per cent dividend for the year ended on June 30, 2013 or December 31, 2013. Foreign Investors’ Chamber of Commerce & Industry Bangladesh president Rupali Chowdhury said, ‘We don’t want to criticise for everything, but a large scale of corporate bodies including local and foreign firms will have to pay an increased amount of tax for the fresh tax measures.’ ‘It’s not clear to me why the government took such a step that increases burden on us,’ said Rupali, also the managing director of Berger Paints Bangladesh Limited which issued 220 per cent cash dividend last year. ‘Imposition of increased tax rate on earning of the last year has also created another additional tax burden on the corporate bodies,’ she added. In the budget for FY15 the government had reduced taxes on non-listed companies by 2.50 per cent to 35 per cent instead of 37.50 per cent following demand from the industry leaders for reducing taxes on the corporate bodies. But, the corporate tax on listed companies was kept at 27.50 per cent. Following the reduction of taxes only for the non-listed entities, capital market operators and experts suggested maintaining at least at least 10 per cent tax gap between the listed and non-listed companies in a bid to attract companies to get enlisted with the capital market.
