IRD urges taxpayers to utilise waiver facility

KATHMANDU:  Dec 25-

With less than three weeks remaining for the deadline to end, the revenue administration has urged Nepali businesses and professionals to utilise the facility that allows them to get their taxes of previous years cleared by paying the taxes of the last two fiscal years without having to pay any penalties.

The tax waiver facility is applicable till the Financial Ordinance 2013 is valid, that is, till January 14, 2014. After the deadline, taxpayers will have to pay taxes of all the previous years, penalties and interest as well. According to the Inland Revenue Department (IRD), so far only 12,105 taxpayers have availed the facility.

“We are hopeful that more prospective taxpayers will utilise this facility that has

VAT, income tax collection rises

KATHMANDU, JUNE 07: 

The recent revenue mobilisation trend has revealed that the contribution of customs to total revenue mobilisation has been decreasing unlike earlier years but that of Value Added Tax (VAT) and income tax has been increasing.

The contribution of customs has come down to 20 per cent, whereas the contribution of

VAT and income tax has gone up to 29 per cent and 22 per cent, respectively.

The country has to reduce customs duty according to its commitment to the global trade regime by 2015, thus the contribution of income tax and VAT must help cover customs revenue.

Thus, the country needs to expand the tax net and plug tax leakages, said finance minister Shankar Koirala during a meeting at the Finance Ministry here, today.

The organisational structure of the Inland Revenue Department has to be changed, Koirala said, asking the revenue administration to be alert on revenue leakages.

However, senior economic adviser to the finance ministry Dr Chiranjivi Nepal doubted the sustainability of the increase in revenue mobilisation. Suggesting for an expansion in the tax net, he asked the revenue administration to bring the informal sector under the tax net.

“Despite the delayed budget, revenue mobilisation has been encouraging, but bringing the informal economy under the tax net will help sustain the increasing trend.”

The informal sector is as big as the formal sector and has been hurting the economy. Rising inflation despite low money supply and decreasing remittance has been attributed to the ballooning informal sector that has hurt VAT mobilisation.

Though revenue mobilisation has been encouraging, VAT and excise mobilisation has not been satisfactory, said finance secretary Shanta Raj Subedi. “The revenue administration has to start a coordinated campaign to plug the VAT and excise loopholes,” he suggested, asking it to work on meeting the targets of the next two months.

Likewise, joint secretary Rajan Khanal apprised the meeting of the revenue administration’s weakness in bringing the informal sector under the tax net that has bled the economy white. “Rising imports, scientific valuation, reforms in revenue administration, and

increasing contribution of non-tax revenue are attributed to

the increased revenue mobilisation,” he said, adding that lack of capacity building of human resource, low participation of tax payers who are already in the tax net, and the inability to mobilise arrears are some of the weaknesses of the revenue administration.

Tight and disciplined revenue administration is key as the government has projected to achieve 30 per cent to 35 per cent revenue mobilisation growth in the next fiscal year 2013-14, as compared to the current fiscal year.

The government needs to mobilise only Rs 55.15 billion revenue — in the next two months — to meet the current fiscal year’s revenue mobilisation target of Rs 289.60 billion. It has been able to mobilise Rs 234.45 billion revenue against the target of Rs 226.05 billion — by the 10th month of the current fiscal year — swelling the government coffer, though it has been unable to spend on development activities as it has Rs 56 billion in its vault.

The government has mobilised Rs 68.29 billion VAT, Rs 52.12 billion income tax, Rs 46.73 billion customs, Rs 29.05 billion excise, Rs 30.34 billion under non-tax, and Rs 7.92 billion — including Rs 4.02 billion registration fee and Rs 3.90 billion transportation tax — under others to make it a total of Rs 234.45 billion by the end of 10 months of the current fiscal year.

The total revenue mobilisation is 23.35 per cent higher than the same period of last fiscal year 2011-12.

Source: THT

Revenue collection picks up but still short of target

KATHMANDU, May 18, 2012

The government has mobilized Rs 190.08 billion in revenue over the first ten months of 2011/12, posting a growth of 19.6 percent in the same period last year.

As the revenue growth targeted for the fiscal year is 20 percent, the collection is short of the target. “But we are optimistic about attaining the annual target, which is about Rs 242 billion, as the rate of collections that  had slid through mid-January till mid-March has gone up now,” said Finance Secretary Krishna Hari Baskota.

The revenue collection at the end of six months, that is, by mid-January 2012, had touched Rs 111.03 billion, recording an increase of 21.6 percent over the revenue collected in the same period last year.

But the growth trend had suddenly nosedived to 17.4 percent by the end of the eighth month (that is, mid-March). In the ninth month, collections had grown by 18.1 percent and performance has further improved at the end of mid-May.

The breakdown of collections from different sources shows VAT contributed more than 31 percent in the total revenue collected so far. Collections from VAT over the first 10 months of 2011/12 stood at Rs 59.40 billion.

Income Tax was the second biggest contributor and generated Rs 39.35 billion during the period.

Likewise, collections from customs duty totaled at Rs 33.81 billion, while excise duty generated Rs 23.97 billion in revenue during the period. Collections from registration fee and vehicles tax remained less than target and stood at Rs 3.09 billion and Rs 3.18 billion respectively.

Likewise, non-tax sources, generated only around Rs 27.28 billion in revenue.

Source: Republica

Hoteliers disagree to pay house and land tax

KATHMANDU, May 9, 2012

Kathmandu Metropolitan City Office (KMCO) has failed to collect house and land tax from hotels yet again.

Though the office had recently sent letters to hoteliers instructing them to clear house and land tax, it did not yield the desired results. Hoteliers have refused to clear the tax, saying that existing laws exempt them from house and land tax. They argue that KMC has been trying to collect house and land tax as per the House and Land Tax Act 1962.

Although the Act exempts tax for space used by hotels for accommodation of guests, parking and garden, Hotel Association Nepal (HAN) in its reply to the KMCO has stated that all property inside a hotel compound should be exempted from house and land tax according to new definition of hotels introduced in 1998.

KMCO had asked hoteliers to clear tax dues of other property besides the land being used for accommodation, parking area and garden.

“The older definition of hotel includes place of accommodation, parking area and garden as hotel property. The House and Land Tax 1962 was drafted on the basis of this definition. But the definition has already been changed,” HAN President Shyam Sundar Lal Kakshapati said.

The new definition of the government, developed during classification of hotels in 1998, covers swimming pool, restaurants, health club and other amenities as hotel property. However, the House and Land Tax 1962 has not been amended in line with the definition.

HAN officials say the tax bill, as per the KMCO, would come around Rs 2 to 3 million for star hotels. They said it was unfair on the part of the KMCO to send such letters at a time when the government has promised hoteliers exemptions from other taxes as well.

HAN President Shyam Sundar Lal Kakshapati the KMCO cannot collect tax on property owned by hotels. “We are paying business tax as per the law and exiting laws clearly exempt us from property tax,” added Kakshapati.

Rajya Prakash Pradhananga, chief of revenue division of KMCO said: “We are not talking about business tax. We sent the letters to some star hotels to recover property tax that they owe to the KMCO.” He said the problem arose due to ambiguous laws. “Hotels can´t get exemption from land and house tax unless there is amendment to the act,” added Pradhananga.

KMCO has threatened to seal the service and freeze property ownership as per Local Self-governance Act 1999 if hotels failed to clear property tax. The letter also states that KMCO holds the right to auction off the property to recover outstanding dues.

Source: Republica