The Dhaka and Chittagong stock exchanges yesterday urged the government to continue its full tax exemption facility for the bourses for the next three years.

The government provided full-tax exemption for the first two years of demutualisation of the exchanges and they are supposed to pay taxes at graduated rates from next fiscal year.

Tax exemption for another three years will help the stock exchanges strengthen their technology and provide better services to investors, officials of the twin bourses said.

"Tax exemption is necessary to

make the demutualised bourses lucrative to strategic investors," Saiftir Rahman Majumder, managing director of Chittagong Stock Exchange, said at a media briefing in Dhaka.

Before demutualisation, the stock exchanges were non-profit cooperatives owned by the exchange members and were not subject to corporate taxes.

But with demutualisation, which is a way of separating management from ownership, the bourses were converted into profit-oriented companies owned by shareholders in 2013. As a result, they are subject to 35 percent corporate tax.

Linder a graduated rate system, the bourses will get full tax exemption in

the first two years of demutualisation, 60 percent tax exemption in the third year, 40 percent in the fourth year and 20 percent in the fifth year; it will have to pay full taxes then on.

At a separate press conference, Justice Siddiqur Rahman Miah, chairman of Dhaka Stock Exchange, urged the government to reduce the tax at source on share transactions to 0.015 percent from an existing 0.05 percent, considering the market's current volatile situation.

The reduction will bring down the cost of transactions, which will ultimately enhance trade volumes and related taxes, according to Miah.

The stock exchanges, on behalf of the government, collect the tax on the value of shares, mutual fund units or other securities transacted, and deposit the revenue to the state coffer.

The twin bourses also urged the government to increase the ceiling for tax-free dividend income to Tk 100,000 in bids to

attract more investors to the market, which is going through a liquidity crisis.

At present, the ceiling for tax-free dividend income is Tk 25,000. If the proposal is taken into consideration, it will help ease the liquidity crisis in the capital market.

It will help small investors and ultimately enhance growth and development of the capital market, the bourses said.