K & Q Bangladesh Limited, a company listed on the stock market, has decided to declare more bonus dividends than cash dividends for the 2024–25 financial year. As a result, the company will face additional tax penalties. It will also face the same type of penalty for keeping more than 70% of its profit in reserves.

K & Q Bangladesh made a net profit of Tk 6.64 crore in the 2024–25 fiscal year, which equals Tk 9.49 per share. Out of this, the company will distribute Tk 28 lakh as 4% cash dividend and Tk 42 lakh as 6% bonus shares. The remaining Tk 5.94 crore or 89% of the profit will be kept as retained earnings.

However, according to the approved budget for the 2018–19 fiscal year, no listed company is allowed to issue bonus shares in excess of cash dividends in any financial year. In other words, the amount of bonus dividend cannot exceed the amount of cash dividend. If a company issues more bonus shares than cash, a 10% tax will be imposed on that bonus amount. Additionally, if dividends are less than 70% of the profit, a 10% tax will be imposed on the entire amount kept in reserve.

Based on these rules, K & Q Bangladesh will fall under additional income tax penalties. Since the company declared more bonus dividends than cash, it must pay 10% tax on the Tk 42 lakh bonus shares amounting to Tk 4 lakh. Moreover, for keeping more than 70% of the profit in reserve, it must pay 10% tax on Tk 5.94 crore amounting to Tk 59 lakh.

K & Q Bangladesh, which was listed on the stock market in 1996, currently has a paid-up capital of Tk 6.99 crore. On Monday (1 December), the company’s share price stood at Tk 372.80.