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

Duty on gold to be hiked to match prices in India

KATHMANDU, AUG 27 - 2013

The government has planned to hike the import duty on gold in a bid to curb possible smuggling to India due to higher prices there. “We are working on a proposal to jack up the duty which we will send to the cabinet this week,” said Rajan Khanal, joint secretary at the Finance Ministry.

Nepali gold traders have been urging the government to raise the import duty from Rs 4,400 to Rs 5,000 per 10 gm after India increased the duty to 10 percent on Aug 13.

“We will propose a tariff which will keep our prices slightly higher than in India,” said Khanal. India has fixed the customs duty at Rs 4,480 per 10 gm.

Nepal increased the customs duty from Rs 3,000 to Rs 3,600 per 10 gm through the budget for the current fiscal year unveiled last month. The difference in import taxes between Nepal and India has made gold cheaper in Nepal by Rs 880 per 10 gm.

The Federation of Nepal Gold and Silver Dealers Association (Fenegosida) said the government should fix the customs duty so that gold is dearer in Nepal by around Rs 1,000 per tola (11.664 gm) to prevent possible smuggling to India and aggravating a shortage in the local market.

Banks supply 15 kg of gold daily to the local market. The shortfall is made up by illegal imports from China. The local market consumes around 30 kg of gold during normal times. The government is planning to increase the supply by 5 kg during festival season when demand surges, said dealers.

“The possibility of the gold supplied by banks being smuggled is low as traders get it in low quantities,” said Mani Ratna Shakya, president of Fenegosida. He added that higher prices in India mean the precious metal flowing south leading to shortages in Nepal.

The recent seizure of 35 kg of contraband gold brought from China and 10 tolas of gold being confiscated from two Indian nationals in Mahottari point to the direction of the illegal trade. Normally, the yellow metal is smuggled to India for two reasons -- the higher prices there and as a way of earning Indian currency.

A dealer said that a smuggler importing gold illegally from China makes a profit of over Rs 360,000 per kg by evading taxes, and if the same gold is smuggled to India, the smuggler can earn another Rs 350,000 per kg.  

Meanwhile, gold prices on Monday rose Rs 500 to Rs 58,900 per tola due to the double whammy of a stronger US dollar and a price hike in the international market. Gold traded at Rs 58,400 per 10 gm in the local market on Sunday.

Gold prices started to soar last week hitting customers planning to buy gold for the approaching festivals. Fenegosida said that gold prices went up US$ 16 per ounce in a week on the world market. It added that the exchange rate of the Nepali currency rose Rs 3 to Rs 103 per dollar further pushing up gold prices.

Source: The Kathmandu Post

Vehicles major contributor to customs revenue

KATHMANDU, AUG 12 - 2013

Imports of automobiles and their parts accounted for 16.54 percent of the government’s revenue during the last fiscal year 2012-13, the department has announced.

The DoC collected a total of Rs 126 billion revenue during the year in customs duty, value added tax (VAT) and excise duty. Out of that figure, Rs 22.11 billion was collected from cars, bikes and chassis, according to the DoC.

In the vehicle import category, car, jeep, van generated the highest amount of revenue totalling Rs 10.2 billion, followed by the bike which accounts Rs 9.8 billion.

Likewise, the government collected revenue of Rs 2.1 billion from the import

of bus and truck chassis. Each year, the import of items such as vehicle and gold contributes huge amount to the government revenue. DoC officials attribute the rise in revenue collection to the growth in import of the automobile products and dollar appreciation.

New vehicles totalling 208,483 units, including 175,381 bikes and 9,595 units of the car, jeep, van were imported into the country in the last fiscal year, according to the Department of Transport Management (DoTM). The registration was up by 22 percent on 170,084 vehicles in the country during the previous fiscal year 2011-12.

Devi Ram Bhandari, spokesperson for the DoTM said that the import and sales had increased after a slowdown for a few years in the local market. “Mainly the business of two-wheelers is growing with the sales picking up,” he added. The automobile products are among the top ten products imported into the country.

Besides the vehicles, high-speed diesel, petrol, LP Gas, MS billet, garment, brown cement and polythene granules feature on the top 10 lists of imported products in terms of revenue collection. The government collected revenue of Rs 9.02 billion from the import of high-speed diesel, Rs 5.94 billion from petrol and Rs 4.13 billion from LP Gas.

According to the annual review report, the country imported agri products and other foodstuffs worth Rs 30.73 billion, up from Rs 19.64 billion in the previous fiscal. Revenue of Rs 1.61 was collected from the import of the foodstuffs. Rice, wheat, maize and potato are the major agri products imported during the last fiscal year.

Source: The Kathmandu Post

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

Sebon proposes tax relaxation for mutual fund investment

LALITPUR, May 7, 2013

In a bid to generate interest of retail investors in the alternative investment instrument, the Securities Board of Nepal (Sebon) -- the securities market regulator -- has proposed exemption of capital gains tax (CGT) on investment of up to Rs 50,000 in mutual funds,

"We have already asked the Ministry of Finance for tax relaxation on investments of up to Rs 50,000 in mutual funds," Sebon Chairman Babu Ram Shrestha told a press conference held in Lalitpur on Monday.

"We hope the new provision will be introduced through annual budget of next fiscal year (which begins in mid-July)."

Mutual funds are investment vehicles that pools as little as Rs 1,000 from investors and invests in a range of securities like stocks and bonds, among others.
Sebon currently allows mutual funds to invest money raised from public in stocks, shares floated through IPO, treasury bills and bonds issued by Nepal Rastra Bank, government-guarantee bonds, bank deposits and money market instruments, among others.

"In a country like Nepal where state-owned market makers are not playing effective role in promoting the secondary market, mutual funds are emerging as viable vehicles that can give a boost to securities business," Shrestha said.

As of now five mutual funds -- Siddhartha, Nabil, Laxmi, NMB and NIB -- have hit the market. Of these, Siddhartha and Nabil have already launched their schemes.
Although the scheme launched by Siddhartha -- the first one since the promulgation of Mutual Fund Regulation -- was fully subscribed, it faced difficulties in pooling investors. However, the scheme launched by Nabil in March was oversubscribed by 3.92 times, indicating growing interest for investment vehicles other than stocks and bonds.

Although the investor interest in mutual fund is increasing, many complain service charges slapped by funds are on the higher side.

The Mutual Fund Regulation allows fund managers to charge a service fee of up to two percent of the net asset value of the fund.

"Yes, the fee is on a higher side and we hope the competition will bring it down," said Mukti N Shrestha, a Sebon deputy director. "But if the fee structure does not change even after launch of few more schemes, we will revise the provision."

Sebon Chairman Babu Ram Shrestha also echoed Mukti.

Investor interest in mutual funds is no doubt increasing. But investors should be careful about putting money in mutual funds as unlike investment in government bonds and debentures, a fixed return is not guaranteed in such schemes. This means whatever profit made by mutual funds will be distributed equally among investors, and in case of losses, investors should be ready to bear those equally as well.

Sebon refutes stock oversupply rumors

The Securities Board of Nepal (Sebon) has refuted claims that its latest regulation that allows conversion of additional 19 percent promoter shares of banking institutions into public shares through stockbrokers would flood the stock market with shares and cause their prices to take a dip.

"Since the central bank´s permission is required prior to selling over two percent of promoter shares, we don´t think shares of banks and financial institutions would flood the market," Sebon Chairman Babu Ram Shrestha told a press conference.

However, stockbrokers blame the change in provision for the latest fall in stock index from around 520 points about two weeks ago to 481.93 points on Monday.
As per the new Sebon provision launched some two weeks ago, banks and financial institutions can float up to 49 percent of promoter shares on the stock market, as against 30 percent in the past.

Although this provision of floating 49 percent of shares to the public was introduced in the past, promoters, previously, were allowed to offload these shares through offer documents, which cost couple of hundreds of thousands of rupees to produce.

The provision to sell promoter shares using offer documents is still intact. But in additional to this, promoters can now sell their shares through stockbrokers.
"But unless new investment avenues open up, promoters won´t offload their shares," Shrestha said, adding, "So far we have not seen huge number of shares being dumped and we probably won´t see such development taking place."

Source: Republica

Govt to register firm, issue PAN from single spot

KATHMANDU, May 19, 2012

Entrepreneurs would soon find themselves free from the need of approaching multiple government offices to get their firms registered and acquire permanent account number (PAN), if things moved on as smoothly as the government has planned.

By just approaching the Company Registrar´s Office (CRO), which is an agency where all businessmen need to visit for registering their businesses, they will be able to list the firm with the tax office and get the PAN while registering the firm itself.

The new arrangement has already been worked out and Inland Revenue Department (IRD) and CRO have already signed a memorandum of understanding to implement it at the earliest, said an official. “We are already in the final stage of implementing this facility,” said Company Registrar Keshav Thapa.

Once in place, the new mechanism will drastically reduce paperwork and hassles for businesses and industries. So far, entrepreneurs first need to register their firms at the CRO and then approach Inland Revenue Office to register the firm with tax and get the PAN.

The new mechanism will reduce the procedures to start a business, which currently comprises 7 procedures, according to International Finance Corporation (IFC).

Likewise, the government is also preparing to launch a licensing electronic portal in a bid to facilitate gathering of information and apply for different types of licenses, permits, related laws and regulations and necessary documents through one window. “We are preparing to launch the portal by the end of May 2012,” said Mahendra Man Gurung, joint secretary at the Prime Minister´s Office.

The government has taken these new initiatives mainly with an aim to project Nepal as easy destinations for doing business, particularly considering Investment Year 2012/13.

Under the reforms aimed at improving Nepal´s performance on Doing Business indicators, which the World Bank Group publishes annually, the government has already reformed registration procedures for approval of licensing and approval of foreign direct investment (FDI) at the Department of Industry.

“Together, these reforms have eliminated seven steps in the FDI approval process,” said Gurung.

Gurung and other officials disclosed these development and unveiled upcoming plans to cut hassles of starting business in Nepal while reviewing implementation of reforms. Office of the Prime Minister and Council of Ministers, Ministry of Industry and Nepal Business Forum Secretariat had jointly held the review workshop this week.

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

Govt hikes gold import duty to Rs 2,300

The government has once again hiked the import duty on gold in a bid to control smuggling of the yellow metal to India.

A Cabinet meeting on Thursday decided to increase the duty by Rs 800 per 10 grams to Rs 2300. The government had last hiked the tax in February—from Rs 1,000 per 10 grams to Rs 1,500.

This is the fourth time in two years that the duty has been jacked up. Two years ago, the duty was at Rs 130 per 10 grams.

The fresh hike in gold import duty is expected to send the price of the precious metal soaring. Gold was traded at Rs 47,495 per 10 grams on Thursday. “The latest duty increment will push the gold price higher,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealer’s Association (Negosida), which determines the gold price in the local market.

After India hiked gold import duty by two folds in mid-March, there was a surge in smuggling of gold from Nepal to India. Traders had been complaining that the difference between duties in Nepal and India encouraged gold smuggling to the southern neighbour, leading to a shortage here.

Gold smuggling is also related to the illicit trade of the Indian Currency (IC) prevailing in bordering areas. Black marketers sell the IC—earned from selling gold in India—at high exchange rates in bordering areas. This is one of the major reasons behind increased gold smuggling, according to traders. “The latest government decision will address gold shortage in domestic market,” said Shakya.

The government has maintained a quantitative restriction on gold import since 2010 after massive imports led to a negative balance of payments. The gold import quota is presently 20 kg daily. Gold traders say as the import duty in Nepal was lower than that in India, half of the 20kg gold was being smuggled to the southern neighbour.

Each time India raises the customs duty on gold imports, Nepal faces pressure to adjust the duty here to control smuggling.

Source: Kantipur

Pokhara Sub-Metropolis Office to collect tax through banks

POKHARA, May 5, 2012

Taxpayers of Pokhara will soon be able to pay tax through banks, a move that aims to make the process transparent and convenient. Prime Commercial Bank is opening a counter in the premises of Pokhara Sub-Metropolis after which tax payers will be able to directly make the payment.

Sub-Metropolis decided to have the counter after repeated complaints from the public regarding irregularities of the employees in tax department of the office. They were charged of issuing fake receipts and of decreasing amounts paid by the taxpayer.

After the agreement with the sub-metropolis office and permission from the central bank, Prime Commercial Bank is bringing the payment counters into operation from mid-May.

Tilak Paudel, Executive Officer of Pokhara Sub-Metropolis Office said taxpayers will no longer have to complaint about the fake receipts. Paudel even claimed that the office was the first in the country to have bank counter for collection of tax. “As all the process will be computerized, the process will be transparent,” added he.
The office collects land, property and business taxes from city dwellers worth around Rs 90 million annually.

The office had taken action against employees involving in irregularities and had also recouped the amount from them in the past.

Under the agreement with the bank, sub-metropolis office will have to open salary account of all its employees and account of consumer committee in Prime Commercial Bank. At present, 355 employees are working in the office and total salary of Rs 4.7 million is paid by the office every month. Likewise, the bank has also agreed to provide interest rate of 8 percent on daily basis in collected tax amount.

“Although we don´t have direct benefit by establishing a counter here, we can directly come in touch with a potential customer through the counter,” branch manager of the bank, Sailesh Shrestha said.

Source: Republica

Govt unveils tax card for enforcement of rent tax

KATHMANDU, MAY 1, 2012
Home owners in cities and urban centers would soon need a separate rent tax card and use it to settle rent, much in the same way as they pay utility bills through cards issued by various utility service providers.

Unveiling the new arrangement Inland Revenue Department (IRD) on Monday said it has made the possession and use of card mandatory for all landlords who enjoy income through rents.

“We are distributing the cards from Wednesday itself. All house owners in the Kathmandu Valley and outside must get it,” said Tanka Mani Sharma, director general of IRD.
Officials said the present campaign aims to motivate the taxpayers to voluntarily comply with the new arrangement. But eventually IRD envisages to make it mandatory, using it as a tool for enforcing rent tax - one of the least complied forms of tax in the country.

“In the medium term, those not possessing the card would be regarded as evading taxes and will be slapped fine,” said a source.

In order to make sure that landlords comply, IRD also issued a new directive. Those possessing the card would need to get it certified and sealed by the tax office once every year, a new provision which has been put in place to ensure compliance of rental tax.

Rental tax has been in place since decades and existing income tax law demands landlords earning rental income by leasing out the space of their building or land to pay 10 percent of the income as rental tax.

However, its compliance has been negligible. According to Sharma, except for the commercial buildings and landlords who have been renting the space to corporate entities and government offices, others have barely complied with the law nationwide.

Despite such situation, officials clarified IRD will not act tough against the non-filers until it bring a large number of rental taxpayers in its net and builds its won database.
To make it easy for taxpayers to get the card, Sharma said IRD has tied up with local bodies and will be distribute the cards from ward offices, taxpayers´ service center and Inland Revenue Offices (IROs) in the Valley and urban centers outside the Valley.

“Land owners in Kathmandu can get the card from 48 outlets, including 35 ward offices and 13 taxpayers´ service centers,” said he. In districts where taxpayers´ services do not exist, they can collect the card from local ward offices, municipality, sub-municipality and IROs.

In the initial phase, IRD plans to bring at least 25,500 rental taxpayers into its fold through the issuance of the card by mid-July, 2012. Of that, it targets to register at least 20,500 rental taxpayers in the Kathmandu Valley alone.

“In the new fiscal year we will also organize temporary camps, if required, in different parts of the country to reach out to the taxpayers,” Sharma stated.

Kedar Bahadur Adhikari, executive director of Kathmandu Metropolitan City (KMC) Office expressed hope that KMC, through the tie up, would also be able to enforce the 2 percent rent tax that it separately charges on the landowners.

Finance Minister Barsha Man Pun, who unveiled the new Directive on collection of rental tax, urged the house and other property owners to act in a civilized manner and pay due tax.

Although he did not categorically answer a question on how the fresh enforcement drive would impact the apartments´ rental charges, he said the rental tax was not new and has been around for decades. “It is just that we are enforcing it in a planned manner now,” said Pun said.

IRD officials, on the other hand, said it should not have any impact on rental charges.

Source: Republica

Govt laxity on buyback facility renewal hits RMG exports

KATHMANDU, Feb 23: 2012

Country´s ailing readymade garment industry has received a new jolt, as the government´s laxity to extend buyback facility, including tax and other incentives pledged to exporters operating with raw materials provided by importers, left a huge volume of raw materials stranded at major import points.

“The expiry of the facility has left a consignment of raw materials (supplied by the importers) worth $100,000 stranded at Tribhuvan International Airport,” Indra Chitrakar, senior staff of Sherpa Adventure Gear.

Sherpa Adventure Gear has been exporting ´Sherpa´ brand of garment under the facility by importing raw materials free of cost from Taiwan, Hong Kong, Japan and China.

“If the government did not act promptly, we will lose business worth around $1 million,” Chitrakar told Republica on Wednesday.

Four other apparels manufacturers, including Ami Apparels and Kathmandu Star Fashion, too have lodged similar concerns at the Ministry of Commerce and Supplies (MoCS).

The government had introduced buyback guarantee facility four years ago and it was subject to renewal every two years. Though the latest tenure of the facility expired two months ago, exporters said MoCS has yet to take initiative to extend the facility.

About half a dozen RMG exporters are enjoying the buyback facility, exporting apparels worth around Rs 500 million to overseas markets every year.

“We had requested the government for extension of the buyback guarantee facility long before it expired. Sadly, our requests fell on deaf ears,” said Uday Raj Pandey, president of Garment Association of Nepal (GAN).

The ministry´s inaction, meanwhile, has put the fate of garment orders worth millions of rupees and jobs of hundreds of workers into uncertainty.

Ami Apparel that operates with 300 workers said lack of timely decision on buyback arrangement has exposed it to a risk of losing exports worth around Rs 80 million. The company has been exporting readymade garments to leading branded stores in India.

“We have shut down our factory temporarily. If the government did not extend the facility, we will be forced to shut it down permanently,” Rajesh Udas, proprietor of Ami Apparel, said.

Ashok Shakya, chairman of Kathmandu Star Fashion, too said the government´s indecisiveness is set to cost his industry business worth Rs 180 million. “We are facing shortage of raw materials. We´ve already informed buyers about the problem here,” he stated.

Kathmandu Star Fashion that employs over 500 people has been exporting garment to Europe and the US.

Shakya further said that Nepali apparels industry will face over 30 percent rise in production cost if the government did not renew the facility.

Under the buyback system, no importer of raw materials was required to keep deposits on imports supplied by the buyer and exporters were provided with bonded warehouse facility even without letter of credit. They were also exempted from paying bank guarantee charge.

Readymade garment was once the country´s largest exports commodity with annual exports crossing over Rs 12 billion in 1999/2000. However, its export has presently dropped to Rs 4.08 billion per annum.

Meanwhile, Lal Mani Joshi, secretary at the MoCS, said that ministry has received complaints over the issue and added that the government would take appropriate decisions within few days.

Source: Republica

Inland Revenue Department (IRD) seeks Rs 2.96b from VAT defaulters

Inland Revenue Department (IRD) has slapped taxes plus fine worth Rs 2.96 billion on 254 firms which were found to be involved in VAT evasion racket by producing fake receipts. Responding to IRD decision, 36 firms approached the IRD for review of taxes and fine slapped on them.

Out of the total 254 cases in which IRD investigation has been completed and tax liabilities fixed, 36 firms has approached IRD seeking review of the tax slapped on them. So, IRD is also simultaneously reviewing the cases as requested by those firms and investigating into more new cases.

Of the total 518 cases under investigation, IRD investigation in 254 cases from its 19 offices across the country has confirmed that total Rs 2.96 billion worth of tax has been evaded in last three years. "Over the two weeks, we have settled 12 tax payers� cases and confirmed the evasion of over Rs 64.3 million," said Rajan Khanal, director general of the IRD.

Administrative review committee of IRD has upheld most of the tax amount fixed by its investigation officials and some cases are under review. As per the existing law, those firms can approach Revenue Tribunal within sixty days if they are not convinced with the IRD decision.

Till the end of August, 24 IRD offices across the country have been investigating into the fake VAT bill racketeering that have inflicted a revenue loss of more than Rs 10 billion on the government.

IRD has been conducting probe into the use of fake VAT bills from its head office and three area offices in Kathmandu as well as offices in Bhadrapur, Biratnagar, Dharan, Birgunj, Hetauda, Bharatpur, Bhairawa, Lalitpur, Nepalgunj, Bhaktapur, Krishnanagar, Butwal, Pokhara, Simra, Janakpur, Lahan, Dhangadhi, Mahendra Nagar and Dang.

According to IRD, Large Taxpayers Office (LTO)-Lalitpur is handling the maximum 152 cases, followed by IRD area office no.1 that is investigating 59 cases. LTO has settled the highest amount Rs 1.06 billion in tax followed by IRD head offices that fixed tax worth Rs 999.1 million so far.

However, IRD office of Janakpur, Lahan, Dhangadhi, Mahendra Nagar and Dang has not initiated any investigation into the cases. IRD�s that started functioning in November 2010 had found widespread use of fake VAT receipts, specially by big business houses posing a serious challenge to the existing tax administration in the country.

Source: Republica

Budget based on 'controlled economy' concept: FNCCI

The umbrella body of private sector, the Federation of Nepali Chamber of Commerce and Industries (FNCCI), has accused that the budget is based on the concept of 'controlled economy.'"Even though the budget raises the subject of liberal economy, it is based on the concept of controlled economy. It has not created private sector-friendly environment. Although it embraces the concept of public-private partnership, it does not encourage the private sector through competition," reads a statement issued by the FNCCI in response to the budget.

"Instead of introducing additional commitments to liberal economy to mobilize domestic and foreign capital, the government is creating a holding company to revive the sick industries rather than hand them over for privatization. This cannot be called as a policy conducive for industrialization," adds the statement.

In a statement issued Monday, FNCCI said though many suggestions put forward by the organisation have been incorporated in the budget, the government still intends to increase its presence in the business sector by resuming its hold on public companies which were in the process of privatisation.

FNCCI expressed dissatisfaction for not addressing its demand to stabilize taxes at least for next one decade, and the failure of the government to implement multi-rate tax regime apropos the Value Added Tax. The FNCCI has demanded its representation in the proposed Central Revenue Board and called for building of infrastructure for Special Economic Zones (SEZs), which have remained on papers despite repeated commitments from the government.

Further accused the government of not acting appropriately on downsizing the imports by encouraging active involvement of the private sector. It said the budget has not addressed the grievances of the industrialists hit by the Koshi havoc.

FNCCI sought support from the government to uplift the industries who were affected by the decade long insurgency due to which they failed to pay back government loans on time. However, talking to reporters on the evening of the budget speech FNCCI chairman Kush Kumar Joshi had said the budget had address most of the demands put forward by the private sector.

Dear Readers and responsible citizens of Nepal, please put your views, what you liked or disliked and what should have been better way for the new act of Budget. The increment of Capital gain tax to 15%... increase in duty for imported vehicles and cut of VAT in hydro sector are these all fair, good or just new government's selfish policies? Please comment.