Dividend tax rate in Nepal

Overview

Dividend is the return given from company for investing on it. Dividend can be of cash dividend and bonus share dividend. Both are taxed. We will know Dividend tax rate in Nepal. 

Dividend is yearly distributed by companies to its shareholder. For obtaining dividend, shareholder must maintain the share up to book closer date.

Dividend tax rate in Nepal

Dividends distributed by a resident company to a resident or non-resident person are subject to a final withholding tax at the rate of a 5 percent. It is withholding tax. Which means the tax amount is withhold by company and pay to government on our behalf.

For Example

National Microfinance  had distributed 45% dividend from the profit of 2077/78. In which bonus share was 40% and Cash dividend was 5%. So if you had 1000 units of National Microfinance :

 Bonus share:1000*100*40% : 400 units

Cash Dividend: 1000*100*5% : Rs. 5000

 TAX : 400*100*5% + 5000*5% = Rs. 2,250

Hence, You will get ( 5,000 – 2,250 ) Rs. 2,750 as a cash dividend. Your Rs. 2,250 will be withheld by company and will be paid to government as dividend tax.

But if company had distributed only bonus share of 40% than you had to pay Rs.2000 by yourself to get 400 unit bonus share.

Related Question:

How much dividends are taxed ? 

= Withholding tax of 5% is taxed on dividend.

What dividend income is tax free ?

= There is no dividend income tax free.

What is the tax rate on dividend ?

= The tax rate of dividend in Nepal is 5 percent.