Venture Capital and Private Equity Association of Bangladesh (VCPEAB) today urged tax exemption for the Alternative Investment Fund Managers and High net worth Individuals (HNI) investors, and Tax rebate on Provident Fund Investment in the budget for fiscal 2019-20. The association working to flourish the local startup ecosystem held a press conference on Thursday at the Janata Tower in Karwan Bazar in the backdrop of the national budget for the fiscal year 2019-20 proposed by Honorable Finance Minister Mustafa Kamal.
“The relevance of venture capital for economic development became particularly noteworthy for countries like United States, Singapore, Indonesia where the VCs got adequate policy support from their Government and directly helped biggest multi-billion dollar companies emerge. Venture capital directly triggers employment generation, creates self-employment opportunities, and is often the only available source of financing to small and young companies. We appreciate the role of Bangladesh Securities and Exchange Commission (BSEC) for the much needed Alternative Investment Rules, 2015 and other regulatory support. Ministry of Finance and National Board of Revenue (NBR) also have been very considerate of the needs of the VC and PE industry. Policy support regarding tax exemption for the Alternative Investment Fund Managers and High net worth Individuals (HNI) investors, and Tax rebate on Provident Fund Investment can bring revolutionary change in the industry.” said Shameem Ahsan, Chairman of VCPEAB and General Partner of Pegasus Tech Ventures.
Zia U. Ahmed, Vice Chairman of VCPEAB and Chairman of VIPB Asset Management said, “We thank the Government for the special emphasis on IT and supporting the young entrepreneurs to grow and become dynamic. Continual of existing VAT and supplementary duty exemptions to mobile industries, increase of VAT registration threshold, 4% turnover tax for the SMEs having annual turnover from Tk. 50 lakh to Tk. 3 crore are great initiatives and will help the industry grow. To embolden individuals for investing in Alternative Investment Fund and promote the AIFM industry, Investment by High net worth Individuals (HNI) investors in Alternative Investment fund should be given tax exemption like investment in insurance and other types. Tax rebate should be given to the investors for investment from provident fund.”
Shawkat Hossain, Secretary General of VPEAB and Managing Director of BD Venture Ltd. said, “Venture Capital and Private Equity sector being at its nascent stage, we would like to request the opportunity for Alternative Fund Managers to be totally exempted or entitled for reduced tax rate from income tax for a period of 10 years which is a standard time for VCPE firms to earn from their core business. Before that, earnings are small and required to keep the company going only. Tax on this small income will be very ruinous to the industry. We appreciate the Government allocating Tk 100 crore as startup capital to promote all types of startup enterprises by youths. With adequate policy support the venture capital companies in Bangladesh can collectively raise and invest thousands of crores in the startups. All we need is policy support from the government.”
Wali-Ul Maroof Matin, Director of VCPAEB and Founder & Managing Director of Maslin Capital Limited said, “Alternative Investment fund mobilization is the most critical financial inclusion process the world economy is practicing now. This is the way to finance new talents and technology in all the real sector i.e., agriculture, industry and service. Without the alternative investment funds, as being promoted by the government, in particular BSEC and the Banking Division of the Ministry of Finance, our national graduation to high income country will be impaired. Foreign investors are rushing to Bangladesh now more than any time before. However, their main concern is the ease of doing business and our own domestic participation. Not only for own business, we would like to invite all corporate bodies and high net worth individuals in the country to take pat in formation of venture capital and impact funds. It is a national agenda, for each and all of us.”
Bangladesh Securities and Exchange Commission (BSEC) has passed the Alternative Investment Rules in 2015. Under this rule, various venture capital and private equity companies have been established in Bangladesh. In addition to these, many foreign venture capital companies are working in Bangladesh. These venture capital and private equity companies formed 'Venture Capital and Private Equity Association of Bangladesh' (VCPEAB) in 2016 that works to develop the local startup ecosystem.