Tax on cash dividends could be abolished
By Ye Zhen |
August 23, 2012, Thursday
|
Print Edition
Print Edition
CHINA'S securities regulator is studying related policies on cash dividends, including abolishing dividend tax, to encourage more dividend payment, officials from the Shanghai Stock Exchange said during a Q&A session on microblogging website Weibo.com yesterday.
The exchange will solicit and study opinions concerning abolition of dividend tax to push forward its reform, said Hu Ruyin, its chief economist.
Canceling tax on cash dividends will likely boost listed companies' willingness to pay dividends, said Lin Yongfeng, a director of company supervision department at the exchange. Lin said the China Securities Regulatory Commission is actively looking into the issue.
Investors in China currently are required to pay a 10 percent tax on cash dividends received. The rate was lowered from 20 percent in 2005.
There were a mere 12 companies listed in Shanghai that paid more than 5 billion yuan (US$787 million) in cash dividends last year and have been paying for five straight years.
Domestically-listed companies raised more than 3.7 trillion yuan from when the stock market started to the end of 2010, while they disbursed 1.7 trillion yuan in cash dividends during the same period.
The Shanghai bourse on August 16 issued a draft guideline on cash dividend distribution for listed companies, which requires companies offering dividends less than 30 percent of net profit to provide a detailed explanation and gives priority in financing to firms offering dividends of more than 50 percent of net earnings.
The guideline will help cultivate the idea of value investment and attract long-term investment to enhance market stability, Lin said.
The exchange will solicit and study opinions concerning abolition of dividend tax to push forward its reform, said Hu Ruyin, its chief economist.
Canceling tax on cash dividends will likely boost listed companies' willingness to pay dividends, said Lin Yongfeng, a director of company supervision department at the exchange. Lin said the China Securities Regulatory Commission is actively looking into the issue.
Investors in China currently are required to pay a 10 percent tax on cash dividends received. The rate was lowered from 20 percent in 2005.
There were a mere 12 companies listed in Shanghai that paid more than 5 billion yuan (US$787 million) in cash dividends last year and have been paying for five straight years.
Domestically-listed companies raised more than 3.7 trillion yuan from when the stock market started to the end of 2010, while they disbursed 1.7 trillion yuan in cash dividends during the same period.
The Shanghai bourse on August 16 issued a draft guideline on cash dividend distribution for listed companies, which requires companies offering dividends less than 30 percent of net profit to provide a detailed explanation and gives priority in financing to firms offering dividends of more than 50 percent of net earnings.
The guideline will help cultivate the idea of value investment and attract long-term investment to enhance market stability, Lin said.
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