Dividend up to Tk 50,000 has been exempted from tax with a view to incentivising the small investors and strengthening the capital market.
Finance minister AHM Mustafa Kamal made the announcement while presenting the national budget for the 2019-20 fiscal in parliament.
However, this exemption will only be applicable for the individual taxpayers.
Currently, dividend up to Tk 25,000 received from the publicly traded company is exempted from tax.
In his budget speech, the finance minister said investors expect cash dividends from their investment in the shares of a company.
From that point of view, cash dividend plays an important role in increasing the value of the share and also strengthening the share market, he added.
“But we observed that the companies are generally distributing stock dividend instead of cash dividend. As a result, investors are deprived of their well deserved return. In order to encourage the distribution of cash dividend, I propose imposition of 15 per cent tax on stock dividend distributed to the shareholders by any listed company,” Mustafa Kamal said.
He mentioned some companies retain or reserve the net profit instead of distributing dividend to the investors.
The investors are deprived of getting dividend from their investment and this in turn is adversely affecting our share market, the finance minister pointed out.
Mustafa Kamal proposed imposition of 15 per cent additional tax on so much of retained earnings and reserves as it exceeds 50 per cent of the paid up capital of the company.