Govt in homework to tax real estate, transport sectors

Kathmandu, Apr. 1

The National Revenue Advisory Board has started a study to bring all economic activities in the real estate and transportation sector within the tax net.

"The real estate sector should be developed in agency model so that all the activities and transactions are transparent. Currently, the middlemen's income is unknown and it is out of tax net," said Mahesh Kumar Dahal, Chairman of the Board.

The Ministry of Finance had formed the board in 2020 to offer policy level recommendations to the government and resolve the tax-related disputes.

Likewise, another study is launched to find solutions to make transportation business well managed and keep track of the business activities in the sector.

The transportation sector has many entrepreneurs who own one or two trucks, buses or other vehicles. They are out of the taxation system as their business is not registered. Such businesses must be converted into company model and even a single vehicle should be registered if it is used in business, said Dahal.

According to him, if the base of tax could be widened, there wouldn't be a need to raise the tax rates as many businesses and economic sectors are running without the knowledge of the tax administration.

Speaking about the tax relations among the three levels of the governments, Dahal said that there is a need to review the current policies and practices of various levels of the government. "We have recently formed a consultation team to look into the issue of tax duplication. Some local units have imposed double taxation in some sectors while many of them have not implemented rightful taxes of their rights as mentioned in the constitution," he said.

Lack of skills, institutions, teams, laws and understanding regarding the taxes are the causes behind double taxation.

Currently, 7 sub-committees are reviewing the tax provisions in respective economic and business sectors.

An integrated report would be compiled following the submission of the reports by these committees. Then the report would be submitted to the government by mid-May this year so that the recommendations made in the report could be included in the budget of the coming fiscal year 2021/22.

Published in The Rising Nepal daily on 2 April 2021.