Kathmandu. The government has made arrangements to levy tax on mergers between companies and Further Public Offerings (FPOs) issued by them. In the budget of the next financial year 2080/81, it is arranged to collect tax on FPO.

In this way, bankers have been protesting against the tax on FPOs and mergers. The government has proposed a new tax in the budget seeing that billions of rupees will be raised by taxing mergers and FPO premiums. President of the Bankers' Association, Sunil KC, said that the government's introduction of ghostly policies will affect many things. He said that such a policy will affect the investment environment.

KC said that he will also discuss with other concerned agencies about the non-taxation of premiums of mergers and FPOs. The bankers are insisting that they should explain to the government that they should not impose taxes. Sudesh Khaling, CEO of Everest Bank, who is also an official member of the association, said that the association will work with the government to resolve this issue collectively with all the concerned sectors.

The government, in point 26 of the economic bill, has made a provision for taxation by saying 'Special provisions regarding fee and interest exemption for entities not included in the income of bonus shares for dividends from the issuance of FPO'. In this, it is said that if an entity does not file the dividend amount distributed as bonus shares to the beneficiaries up to the financial year 2078/79 from the amount received by issuing shares at a premium price from the FPO, the tax on that amount will be waived if it is filed by November 2080.

Not only banks, but also other companies have been continuously protesting against this arrangement made by the government. This arrangement of the government will affect 6 banks and 7 other companies including Standard Chartered Bank. Banks and financial institutions have to pay 30% tax and other institutions have to pay 25% tax.

In addition to the tax provisions on FPO premiums, point 27 of the other economic bill states that 'special provisions regarding the exemption of fees and interest on the tax on the benefits of merger or acquisition' will be taxed. In which it is said that if the income from the profit (bargain purchase gain) obtained when the entities merge or bargain in acquisition is not included in the income for tax purposes, then the tax on such income up to the financial year 2078/79 is filed before November 2080, the fees and interest will be waived.