What Are The Exemptions Provided To Insurance Companies That Intends To Merger By Ashad End?

The insurance board had decided to increase the paid-up capital of the insurance companies. The minimum paid-up capital of life insurance companies has been increased to Rs. 5 Arba and non-life insurance to Rs. 2.5 Arba, as per the insurance board. The timeline given by the board is till Chaitra 2079. 

The insurance committee has also instructed not to give priority to the issue of right shares for capital increase. It is visible that the committee has attempted to lessen the range by forcing the Insurance companies to head for the merger, directing them to elevate the desired capital without issuing the right shares.

Since the Insurance Regulatory Authority Committee (Beema Samiti) issued a directive to increase the capital within a year, few insurance companies have started merging up to raise their capital. To encourage additional insurance companies to merge, the committee published a circular in the name of insurance businesses exempting merging insurance companies from the capital gains tax, dividend tax, and employee leave until the end of Ashad, 79.

The Insurance Committee has established a variety of discounts for insurance companies looking to merge. Here is the list of exemptions provided to such companies:

• Existing shareholders will not be subject to capital gains tax if they sell their shares within two years of the merger's completion.

• The committee has worked out an agreement that no tax will be paid on dividends distributed to the shareholders within two years after the merger.
• On additional lump sum payments made to workers for the purpose of collective retirements, insurers in the process of merging will receive a 50% discount on the rate of deduction lump-sum payment tax.

However, to qualify for this rebate facility, the insurer wanting to combine, merge, or acquire must have submitted a letter of intent to merge or acquire to the Inland Revenue Department (IRD) by the end of Ashad 2079. The companies that have signed such a letter of intent should finish the merger procedure by the end of Ashad 2080, according to the committee.