The current financial year is passing the tax benefits of asset management companies. However, the National Board of Revenue (NBR) is going to give the same benefits to the companies in the face of the demands of the Association of Asset Management Companies and Mutual Funds (AAMCMF).
According to NBR sources, these institutions have been paying tax at the rate of 15 percent on the income earned on account of mutual fund management fees for a century. In the current financial year, the institutions will pass that facility. Therefore, AAMCMF has requested the Income Tax Department of NBR to fix 15 percent tax benefit till 2025-2026 tax year in advance.
An NBR official, who did not wish to be named, said that asset management companies are producing world-class highly trained fund managers in the country. Besides, it is making a great contribution to the development of the overall capital market of the country by creating the capacity to hire skilled personnel such as investment fund managers, research analysts, valuation experts. Over the past decade, the asset management sector has seen an increase in the number of highly-skilled workforce fund managers contributing positively to local and international markets. In view of these considerations, it has been recommended to fix the tax rate payable on the income earned on account of mutual fund management fees of asset management companies at 15 percent till the fiscal year 2025-2026.
It is known that Bangladesh’s investment management industry (mutual fund) is still small compared to neighboring countries India, Malaysia, Singapore, Thailand. The size of Bangladesh’s mutual fund sector is less than 0.5 percent of GDP, compared to 16 percent in India, 25.2 percent in Malaysia, 26.2 percent in Thailand and more than the global average of 80 percent. Bangladesh’s mutual fund sector is under more pressure due to the post-Covid economic downturn and the crisis caused by the ongoing Russia-Ukraine war, and the capital market’s distress, with the capital market facing significant losses due to large-scale share sales by foreign investors.
It is also known that on November 27, 2013, the income tax payable on the income earned on account of mutual fund management fees of asset management companies through SRO has been fixed at 15 percent for 10 (ten) years from the date of issuance of notification. The term of which will pass in the fiscal year 2023-2024. But in the meantime, the AAMCMF has recommended keeping the tax rate the same. The organization has requested to fix the income tax of asset management companies at 15 percent for the purpose of increasing institutional investment and creating a business-friendly environment for investment institutions to restore market stability during the recent crisis in the capital market.
When asked, Imran of Shanta Asset Management told Jago News, “We made a proposal in this regard.” I heard that there will not be 15 percent, so I applied. Now it is our favorite. We welcome this initiative.
