Withholding Tax Card 2016/2017: bonus shares issued by listed companies
KARACHI: Federal Board of Revenue (FBR) has updated withholding tax on bonus shares issued by companies listed on stock exchange during 2016/2017.
Bonus shares issued by companies quoted on stock exchange under Section 236M of Income Tax Ordinance, 2001.
Sub-Section (1): Notwithstanding anything contained in any law for the time being in force, every company, quoted on stock exchange, issuing bonus shares to the shareholders of the company, shall withhold five percent of the bonus shares to be issued.
Sub-Section (2): Bonus shares withheld under sub-section (1) shall only be issued to a shareholder, if the company collects from the shareholder, tax equal to five percent of the value of the bonus shares issued to the shareholder including bonus share withheld, determined on the basis of day-end price on the first day of closure of books.
Sub-Section (3): Tax under sub-section (2), shall be collected by the company, within fifteen days of the first day of closure of books.
Sub-Section (4): If the shareholder fails to make the payment of tax under sub-section (2) within fifteen days or the company fails to collect the said tax within fifteen days, the company shall deposit the bonus share withheld under sub-section (1) in the Central Depository Company of Pakistan Limited or any other entity as may be prescribed.
Sub-Section (5): Bonus share deposited in the Central Depository Company of Pakistan Limited or the entity prescribed under sub-section (4) shall be disposed of in the mode and manner as may be prescribed and the proceeds thereof shall be paid to the Commissioner, by way of credit to the Federal Government.
Sub-Section (6): Issuance of bonus shares shall be deemed to be the income of the shareholder and the tax collected by a company under sub-section (2) or proceeds of the bonus shares disposed of and paid under sub-section (5) shall be treated to have been paid on behalf of shareholder.
Sub-Section (7): Tax paid under this section shall be final tax on the income of the shareholder of the company arising from issuing of bonus shares.