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Weichai Power (2338) hits investors with taxable bonus shares
Company circular, 20-Apr-2017
Yes, it's stupid, but China thinks that a bonus share is a benefit, not just carving the pizza into smaller slices. Weichai Power has declared a final dividend of CNY0.25, but will also make a 1:1 bonus issue out of retained profits, so the new shares will be subject to 10% withholding tax on par value. That results in tax of CNY0.025 on the dividend, CNY0.10 on the bonus share, and a total tax of CNY0.125, or 50% of the dividend. It's even worse for PRC human investors on the SZ-HK Connect, who will suffer a 20% withholding tax, reducing the dividend to zero!
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