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Sri Lanka's JKH share buyback not liable for tax: official

Nov 13, 2018 10:35 AM GMT+0530 | 0 Comment(s)

ECONOMYNEXT- An 11.1 billion rupee share repurchase by John Keells Holdings Plc will not be taxed under a new law since the funds returned to shareholders are from a dividend reserve, a top official said.

"This is being paid out of tax-free dividend reserves," Deputy Chairman Krishan Balendra said.

He said the tax had already been levied at the point when JKH subsidiaries remitted the dividends to the parent.

Therefore, the dividend reserves being used for the share buyback is not liable for an additional withholding tax.

The new Inland Revenue Act which came into force this April brought all forms of dividend, including share repurchases and issuances of bonus shares into the tax net at a rate of 14 percent.

In some countries with capital gains tax, share buybacks are not taxed on the principle that a rise in the share price after a buyback (if the shares are sold) will increases taxes to the state.

JKH will buyback stock at 160 rupees per share.

The stock has gained in recent weeks ahead of the buyback.

It gained 6 rupees yesterday. The share was up a further 2 rupees to 153 rupees in early trading today. (Colombo/Nov13/2018)


 

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