Kathmandu, Apr. 26
The Nepal Revenue
Advisory Board (NRAB) has said that the government should aim at collecting
about Rs. 1300 billion in revenue in the coming fiscal year 2022/23.
Chairman of the
RAB Mahesh Dahal said that the revenue ceiling was considered after reviewing
the current status and future prospect. "Through the scientific and
pragmatic point of view, Rs. 1.3 trillion revenue should be the target,"
he said while speaking at a pre-budget discussion organised by the Federation
of Nepalese Chambers of Commerce and Industry (FNCCI) here on Tuesday.
However, he
maintained that the amount could slightly be modified before it is submitted to
the government. The final report will be prepared in a week from now. There is Rs.
1180 billion target for the current fiscal year 2021/22 of which Rs. 811.8
billion (about 69 per cent) is collected as of Monday.
Dahal said that
the country is at the Value Added Tax (VAT) deficit of Rs. 250 billion, and if
this gap could be bridged, the government could be at a comfortable position in
terms of resource management to fund the development works.
According to
him, the country should go for the second-generation reform in the revenue
sector, and need to review the VAT discounts whereby discounts on some goods
and institutions should be curtailed or removed.
He said that the
RAB was for the creation of business and investment friendly revenue policy. "It
is an independent agency that bridges the government with the economic
stakeholders," he said. Likewise, Dahal stressed on the application of
technology in the revenue sector so that the efficiency of both the tax
administration and entrepreneurs increased.
Cut down tax
compliance cost
Speaking on the
occasion, tax expert Dr. Roop Khadka said that tax compliance cost should be
nominal. He also suggested the private sector to cease demanding the
implementation of multiple rates of VAT since it will increase the tax
compliance rate. "Why are you including the institutions like the FNCCI
demanding the multiple rates of VAT? If your demands are met, you have to
maintain robust account system to address the multiple rates," he said.
Similarly, he
said that the VAT discounts on the essential goods that largely used by the
poor are also used by the people of higher class.
"So, it is
difficult to create justice in VAT implementation. Hence, the government should
charge equal tax on the goods and develop social security policy to support the
poor," said Dr. Khadka.
He also pointed
out to the tax loopholes such as exporters don't need to pay tax, they enjoy
zero VAT facility but they pay VAT while procuring their inputs such as
vehicle, machines and furniture, and raw materials.
It has made
Nepali products less competitive in the international markets. Entrepreneurs
will be benefitted if they were charged with the VAT because they would get the
refund of the tax they paid. But the VAT paid in inputs and raw materials is
not refunded.
Likewise,
hydroelectricity generators are paying about Rs. 20 million in VAT while
procuring their equipment. Same is happening with the carpet export, according
to Dr. Khadka.
Sandip Agrawal, Chairman
of Tax and Revenue Committee at the FNCCI, demanded that the government should
provide tax discount to a company if it reinvests 40 per cent of its profits in
business expansion.
He also urged to
clear the cases at the revenue tribunal. Cases equivalent to about Rs. 100
billion are pending at the tribunal. Businesspersons also expressed anger over
the government delay in paying their dues as the former doesn't pay any
interest to the due money even if it paid it years later.
Manoj Adhikari, President
of Nepal Freight Forwarders' Association, asked the government not to charge
TDS on the payment made to the transporters in India and airlines flying to
Nepal while they are not subjected to comply Nepal's tax rules.
Published in The Rising Nepal daily on 27 April 2022.
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