Kathmandu: Finance Minister Dr Swornim Wagle has finally put an end to years of policy ambiguity by declaring Capital Gains Tax (CGT) on the sale of listed securities as a “final tax.”
This announcement, made during the presentation of the budget for the upcoming fiscal year 2026/27, settles a long-standing debate among investors over whether stock profits should be treated as separate or subject to further income tax assessment.
While providing legal finality, the Finance Minister has simultaneously increased the tax burden on investors. Under the new provisions, the CGT rates have been revised upward:
Short-term investors (holding for less than a year) will now pay 10 percent, up from the previous 7.5 percent.
Long-term investors (holding for over a year) will now pay 7.5 percent, up from the previous 5 percent.
Despite the hike, many in the financial sector view the “final tax” status as a major victory, as it protects investors from the complexities of the general tax filing system.
The budget is not just about taxes; it aims to modernize Nepal’s ageing capital market. Sagar Dhakal, President of the Stock Broker Association of Nepal, lauded the budget’s focus on international-standard tools.
The government plans to phase in intraday trading, short selling, and derivatives, which experts believe will significantly boost market liquidity and attract institutional investors.
A key highlight is the push to bring Non-Resident Nepalis (NRNs) into the secondary market. The budget promises to streamline legal frameworks regarding foreign investment approval, profit repatriation, and tax accounting to facilitate NRN participation. Furthermore, the government has proposed allowing listed Nepali companies to issue Global Depository Receipts (GDRs) on foreign stock exchanges, opening doors for international capital.
The budget takes a stern stance on market integrity, announcing a policy of “zero tolerance” against undesirable activities such as stock cornering and insider trading. To support this, the government plans to restructure the Nepal Stock Exchange (NEPSE) and introduce a dedicated bill in Parliament to handle securities market management and offences.
Tulsiram Dhakal, President of the Nepal Investors’ Forum, called the legal recognition of CGT as a final tax a “historic milestone” that investors had been demanding for years. Similarly, investor Dev Guragain noted that the budget prioritizes a production-oriented and digital economy without being stingy on capital market reforms.
However, analysts caution that while the policies look good on paper, the success of these reforms, such as the restructuring of NEPSE and the launch of a commodities exchange, will depend entirely on the government’s ability to execute them.
Let’s reflect on a decade of budget promises that have shaped the market:
FY 2020/21 – 2022/23: Focused on making the market fully electronic, introducing stock dealers, and reserving a 10 percent IPO quota for Nepalis in foreign employment.
FY 2023/24 – 2025/26: Introduced the idea of NRN investment in the real sector (hydropower) and began the groundwork for SME platforms and private equity/venture capital regulations for institutional funds like the Social Security Fund.
This year’s budget appears to be the culmination of these years of incremental shifts, finally aiming to provide the legal and structural “teeth” needed for a mature financial market.
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