15% tax on stock dividend, retained earnings

Fifteen per cent tax has been imposed on stock dividend distributed to the shareholders by any listed company in the proposed budget for fiscal 2019-20.

"In order to encourage the distribution of cash dividend, I propose imposition of 15 percent tax on stock dividend distributed to the shareholders by any listed company," Finance Minister AHM Mustafa Kamal today said in his budget speech.

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The minister also proposed to impose an additional 15 percent tax on so much of retained earnings and reserves as it exceeds 50 percent of the paid-up capital of the company.

The minister said investors expect cash dividends from their investment in the shares of a company but some companies are generally distributing stock dividend. So, such a tax is needed, he added.