Kathmandu: The task force formed by Finance Minister Rameshore Khanal to study distortions in Nepal’s capital market has recommended treating capital gains tax on non-business share sales as a final tax.
Submitting its report on Thursday, the team suggested clarifying this provision to simplify compliance for investors. It also proposed easing the process of obtaining tax clearance certificates based on taxes paid during share transactions.
The four-member task force, led by acting SEBON executive director Rupesh KC, was formed on September 19 after the market hit repeated negative circuits and was forced to close. Members included officials from Nepal Rastra Bank, NEPSE, and the Ministry of Finance.
Its short-term reform proposals include:
Removing the Rs 25 crore single-client limit on margin loans from banks and financial institutions.
Allowing banks to invest in listed shares and bonds for periods shorter than one year.
Waiving penalties on unpaid interest for margin loans if settled by Poush end.
Implementing margin trading through licensed brokers.
Standardizing ISIN (International Securities Identification Number) codes via CDS & Clearing.
Maintaining NEPSE’s current index as an All Equity Index while introducing a free-float based benchmark index and revising circuit breaker rules accordingly.
Ensuring companies, not investors, settle dividend tax obligations when issuing bonus shares.
Permitting investors to open multiple beneficiary accounts.
Introducing grievance redress mechanisms for investor complaints.
Establishing systems for timely investigation of securities-related offenses.
The task force emphasized stronger classification of listed companies based on financial health, liquidity, and governance. It proposed requiring 100 pecent cash margin for trades in “Z group” companies deemed weak.
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