Companies Paying Bonus With FPO Money Obliged To Pay Tax; Merger Swap Income Also Taxable

Finance Minister Dr Prakash Sharan Mahat on Monday stated that companies paying bonus with the money of Further Public Offering (FPO) have to pay tax while presenting the annual estimates (budget) of revenue and expenditure for the financial year 2080/81 in the Federal Parliament.

According to which, out of the amount received by an entity from the issue of shares at a premium price from the Further Public Offering (FPO), the dividend amount distributed as bonus shares to the beneficiaries up to the financial year 2078/79 shall be included in the income according to subsection (3) of section 56 of the Income Tax Act, 2058. If not filed, the amount will be taxed. But, if filed before the end of Mangsir, 2080, the fee and interest will be waived. The said arrangement makes Nepal Investment Bank, Standard Chartered Bank (SCB), Nepal Life (NLIC), among others. 

In the same way, if the swap income from the profit (bargain purchase gain) is included in the income for tax purposes when the entities merge with each other or when bargaining for the acquisition (merger or acquisition), the tax on such income up to the fiscal year 2078/79 is filed before the end of Mangsir, 2080. Fees and interest on the amount will be waived. The arrangement makes companies including NABIL, Global IME Bank (GBIME), Nepal Investment Bank, among others liable. 

The constitutional requirement mandates the budget to be unveiled on Jestha 15 each year, following the presentation of the ruling coalition government's policies and programs on Jestha 05.

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