Written by The Banking Post
The securities regulator has decided to authorise the Capital Market Stabilisation Fund (CMSF) to distribute cash dividends to investors on behalf of listed companies in a bid to streamline the tax collection process and make it easier for shareholders to claim tax waivers.
Under the plan, the CMSF will introduce a centralised tax deduction at source (TDS) system. Instead of collecting multiple tax certificates from different companies, investors will receive a single digital TDS certificate covering their entire dividend income. The certificate will be automatically recognised when filing tax returns, allowing shareholders to claim waivers on dividend income of up to Tk 50,000.
A senior Bangladesh Securities and Exchange Commission (BSEC) official said the finance adviser has already given verbal consent for the move, pending a memorandum of understanding (MoU) between the CMSF and the National Board of Revenue (NBR). A gazette notification will bring the new system into effect once formalities are completed.
Currently, the process is cumbersome. Listed companies deduct 15 per cent tax for taxpayers with TINs and 20 per cent for those without. They then issue separate tax certificates for each investor. Shareholders must collect all such certificates to submit with their tax returns. Many investors avoid the hassle, often losing out on tax benefits.
“Investors have to run from company to company to collect certificates, which discourages them from availing of waivers,” said Golam Rabbani Hamidi, CEO of Modern Securities.
Brokerages like IDLC Securities already provide consolidated tax statements, which the NBR accepts, but most investors still struggle with paperwork. Revenue officials, too, face heavier workloads managing piles of tax certificates, which sometimes do not match online return submissions.
To solve these problems, the CMSF has developed an online module that will sort investors’ dividends through data-sharing with the Central Depository Bangladesh Ltd. (CDBL). Companies will transfer dividend funds to the CMSF, which will then issue a single challan for each investor’s total dividend income.
“Once the system is in place, investors with TINs will automatically receive challans by email and can also download them from the CMSF website,” said Wasi Azam, head of operations at CMSF. Investors without TINs will be provided challans manually.
The CMSF was established in June 2021 to settle claims of undistributed dividends and support market liquidity. Its role had been uncertain following the political transition, but the new initiative signals an expanded mandate to bring efficiency and transparency to the capital market.
