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Withholding Tax on Bonus Shares
VituVingiSana
#1 Posted : Wednesday, April 27, 2011 3:21:42 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,221
Location: Nairobi
http://www.sunrise.ug/ne...ra-battles-7-banks.html

Uganda Revenue Authority wants banks to pay 6% on bonus shares!

Plain idiocy. This is what you get in 3rd world countries.

Either the URA is full of idiots or they are being inventive to compensate for dishing millions of $ during the campaign!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Impunity
#2 Posted : Wednesday, April 27, 2011 5:13:18 PM
Rank: Elder


Joined: 3/2/2009
Posts: 26,330
Location: Masada
If u pay tax on bonus shares then the next day the share tubles to new lows how do you get compensated?
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.

VituVingiSana
#3 Posted : Wednesday, April 27, 2011 5:41:52 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,221
Location: Nairobi
What is not clear from the article is whether the tax is on the 'market value' [& which figure/value is used?] or on the Par Value.

If it is on the Par Value, then it is negligible but if on the Market Value then crazy high!

Also - how will URA collect the tax?
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
xxxxx
#4 Posted : Thursday, April 28, 2011 12:39:05 PM
Rank: Member


Joined: 3/20/2008
Posts: 503
VituVingiSana wrote:
What is not clear from the article is whether the tax is on the 'market value' [& which figure/value is used?] or on the Par Value.

If it is on the Par Value, then it is negligible but if on the Market Value then crazy high!

Also - how will URA collect the tax?



The hight court ruled that 30% of the tax should be paid immediately pending final decison by the same court.

The witholding tax is 10% on the face value of the shares and while the shareholders are liable to pay, the collection point is at the Bank.

The bank thus wrote to shareholders asking them to deposit 30% of the assessed tax in an escrow account pending the final court decision.

The bank also advised that payment of the WHT 30% deposit would enable them to issue and credit the bonus shares to CDS accounts. I suppose, the CDS share may not be credited to accounts whose shareholders have not paid.

VituVingiSana
#5 Posted : Thursday, April 28, 2011 12:43:49 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,221
Location: Nairobi
xxxxx wrote:
VituVingiSana wrote:
What is not clear from the article is whether the tax is on the 'market value' [& which figure/value is used?] or on the Par Value.

If it is on the Par Value, then it is negligible but if on the Market Value then crazy high!

Also - how will URA collect the tax?


The hight court ruled that 30% of the tax should be paid immediately pending final decison by the same court.

The witholding tax is 10% on the face value of the shares and while the shareholders are liable to pay, the collection point is at the Bank.

The bank thus wrote to shareholders asking them to deposit 30% of the assessed tax in an escrow account pending the final court decision.

The bank also advised that payment of the WHT 30% deposit would enable them to issue and credit the bonus shares to CDS accounts. I suppose, the CDS share may not be credited to accounts whose shareholders have not paid.


So if I have 1,000 shares & I am to receive 1,500 bonus shares [whose 'face value' @10/- is 15,000/-], I have to pay BoBU 15,000 x 10% x 30% = 450?

Crazy! It will cost me more to pay BoBU 450/- from Nairobi than the bloody 450/-!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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