Capital market regulator seeks change in tax regime
KATHMANDU, JUNE 14:
Stock investors might be freed from paying high capital gain tax from the coming fiscal year.
Securities Board of Nepal (Sebon) has strongly suggested the Finance Ministry to replace the current regime of capital gain tax with pay-per-transaction fee system in the upcoming budget.
“At present, individual investors in the stock exchange are paying five per cent and corporates are paying 10 per cent on each transaction that is profitable. If the ministry is okay with replacing it with a transaction fee of 0.002 per cent per transaction we will be able to see increased market turnover while revenue will also grow,” pointed out chairman of Sebon Baburam Shrestha.
Securities Board of Nepal has once again made the request to finance minister Shankar Koirala regarding the changes.
The capital market regulator had proposed the amendment in taxation for stock market transactions, earlier in July, 2012 — before the budget for fiscal year 2012-13.
But a full budget was not announced on time and later the budget did not include any changes. Now capital market stakeholders have set their heart on the coming budget for any changes in the tax regime.
The capital market regulator has already written a formal letter to the Finance Ministry requesting for these changes in the capital market, which will help boost the secondary market.
Securities Board of Nepal has also requested the ministry to support Nepal Stock Exchange to start an internet based trading platform so that investors outside Kathmandu valley can also be involved in trading.
“If more investors can be incorporated in trading, market depth will improve from what it is at present when only a few players are dominating trading,” said Shrestha.
“Moreover, to attract NRN investment in the capital market, the legal provisions regarding investment and repatriation have to be incorporated,” he added.
Likewise, to promote mutual funds as a major trading instrument in the capital market, Sebon has asked the Finance Ministry to exempt tax for investors who hold mutual funds that are worth less than Rs 50,000.
“We have also asked the ministry to make mutual fund dividend a tax free income so that more investors are attracted to the instrument,” said Shrestha.
Securities Board of Nepal has also proposed for a training centre to increase knowledge about the capital market and to raise investor awareness. “If the budget can provide some legal and physical infrastructure required for the purpose, Sebon will start the preparation from the beginning of next fiscal year,” informed Shrestha.
Source: THT
