Sebon asks government to simplify tax system

KATHMANDU, NOV 8: 

The prospective full-fledged budget might bring changes in the stock trading cost for investors. 

Securities Board of Nepal (Sebon) has asked the revenue administration to implement pay-per-transaction tax system instead of the current regime of capital gain tax to simplify tax calculation for investors.

The capital market regulator had proposed the amendment in taxation for stock market transactions in July –– before the budgets are supposed to be announced. Since the budget was not announced on time, capital market stake holders have set their heart on the probable full budget announcement for any changes in the tax regime. 

“We have requested both the Ministry of Finance and Revenue Consultation Committee to levy transaction tax for shares being held for a longer period, and levy capital gain tax on short-term investment that is speculative in nature, if the government does not want to remove capital gain tax,” informed deputy director at Sebon Dr Nabaraj Adhikari. 

At present, the government levies a five per cent capital gain tax on transactions that are profitable. Since clearing and settlement is being done manually at present, tax calculations are done on a singe case basis which will not be possible in the CDS and Clearing Ltd’s automated system. 

Likewise, a full budget is also supposed to announce tax incentives for mutual fund unit holders. 

“Mutual funds in the country do not have any tax discounts 

so far, but the upcoming budget 

for fiscal year 2012-13 is supposed to have provisions that will exempt some taxes being levied 

on mutual fund’s gain and dividends to engage more public in the capital market,” deputy director Adhikari said.

Similarly, the full budget is also supposed to address the issue of regulating the commodities market more firmly. 

Securities Board of Nepal has also asked the revenue administration to provide some tax incentives to real sector companies that are willing to issue shares to the public in its bid to increase the participation of such companies in the stock market.

Source: THT