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Dividend Tax Rate in Nepal

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Dividend Tax Rate in Nepal
Dividend Tax Rate in Nepal

We have information of Dividend Tax Rate in Nepal.

Dividend is portion of the profit which is given to its shareholders. There are two types of dividends. They are bonus share and cash dividend. The shareholder has to pay tax on both bonus share and cash dividend.

Red More: Dividend Capacity of Microfinance Company: CLCIK HERE

Dividend Tax Rate in Nepal

Following are the rules for dividend.

Dividend distributed by a resident company and partnership firms is subject to a final withholding tax at the rate of 5% to the resident and the non-resident person.

Example of applying dividend tax rate.

Cash Dividend Tax Rate

Cash Dividend means giving portion of the profit to its shareholder in the form of cash dividend. The company normally deposited cash in respective shareholder bank account. 5% is the rate of cash dividend tax.

Read More: Capital Gain Tax on shares in Nepal: CLICK HERE

For Example.

Example, ABC company Pvt Ltd announce 20% cash dividend to its shareholder. Suppose Mr. A Has 1000 Units of Share of ABC Company Pvt ltd.

Cash Dividend: 1000*100*20% = Rs.200,000.

Tax on Divided: Rs. 20,000*5% = Rs. 1000.

ABC company Pvt Ltd deduct Rs. 1000 from Rs. 100,000 and deposit Rs. 19,000 to Mr. A Bank Account.

Read More: Broker Commission in Nepal: CLICK HERE

Bonus Share Tax Rate in Nepal

Bonus Share is the portion of the profit which is given to its shareholder in the form of Bonus Share. Here, the company keeps cash and distribute the equity to its shareholders. Tax on Bonus share is 5% in Nepal.

For Example:

Example, ABC company Pvt Ltd announce 20% bonus to its shareholder. Suppose Mr. A Has 1000 Units of Share of ABC Company Pvt ltd.

Bonus Share: 1000*20% = 200 units

Tax on Bonus Share: 200 units *100*5% = 1000.

So, the shareholder Mr. A need to pay Rs. 1000 as tax or the company need to increase the dividend to pay the tax on bonus share. Normally, in Nepal, the company pays the tax on bonus share.

Other Important Links

a. Dividend History of Commercial Banks: CLICK HERE

b. EPS of Commercial Bank: CLICK HERE

c. Top 10 commercial Bank: CLCIK HERE

d. EPS of Microfinance Company: CLICK HERE

Frequently Asked Questions?

a. Cash Dividend Tax Rate in Nepal?

= 5% is the cash dividend tax in Nepal.

b. Bonus Share Tax Rate in Nepal?

= 5% is the bonus share tax rate in Nepal.