Kathmandu, June 15: With
the controversial decision of defunct Tax Clearance Commission’s (TCC) to
exempt over 1,000 firms from paying billions of rupees in tax, the Finance
Committee of the Legislature-Parliament Thursday directed the Ministry of
Finance (MoF) to initiate the process to amend the Tax Clearance Commission
Act, 1976 so that the country would not incur such a huge amount of revenue in
the future.
The House panel has
asked the concerned agencies to severely punish the individuals, companies and
organizations found guilty on fixation of revenue while waiving off and
recovering tax.
The Commission for the
Investigation of Abuse of Authority (CIAA) is carrying out investigation into
the matters of tax fixation.
“Such guilty should be
severely punished and concerned agencies should recover the evaded tax money at
the earliest,” Committee Chairman Prakash Jwala read the decision.
Most of the lawmakers
recommended for limiting the rights of the TCC, saying that as the Act had
given sweeping powers to the Commission, there had been chances of fixation of
taxes.
According to the Act,
the Commission’s decisions are final and they can not be challenged even in the
court.
The TCC, formed a
couple of years ago, had waived off almost 68.73 per cent of the total
unsettled tax money, Rs. 40.83 billion owed by more than 1,000 firms.
According to the
Auditor General’s Report, the TCC settled Rs. 30.52 billion tax liabilities by
recovering only Rs. 9.54 billion.
The report has
categorically said that the tax liabilities were not due to the poor capacity
of the tax-payers or their bankruptcy but because of non-compliance, therefore
the Commission had promoted the trend to let go the tax evaders from paying their liability to
the state.
Following the arrest of
Chudamani Sharma, Director General the Inland Revenue Department (IRD) and the
member secretary of Lumba Dhwoj Mahat led TCC in 2014, by the CIAA on the
charges of corruption on fixation of taxes, misappropriation of the Commission has
come to the fore one after another.
The AG has recommended
the government to hold responsible the officials of the Commission.
The Committee directed
the tax administration to instantly prevent the IRD from waiving off the taxes
and collect revenue at the earliest.
“The government should
develop a clear standards and directives on waiving revenue in arrears or
clearing taxes and submit it to the Finance Committee. It should also study the
revenue capacity of the country, and initiate timely reforms on tax settlement,
collection and clearance procedure,” said Jwala.
He said that the
committee has decided to direct the concerned government agencies to make
mechanism to stop every possible leakage of revenue from any individual,
company and organization, as well as to develop a system to monitor and
evaluate the tax administration.
Speaking at the
meeting, lawmakers demanded that the individuals or companies that were
exempted from paying taxes should be named and shamed.
“The government has
been exempting large firms from paying taxes while small and medium scale
enterprises have been forced to pay the taxes. Such attitude does not help in
creating business environment in the country,” said lawmaker Bidur Sapkota.
Another lawmaker Udaya
Shumsher Rana recommended reviewing the entire taxation system.
Icha Raj Tamang said
that the taxation laws are not tax-payer friendly, and tax evaders had not been
punished duly for long.
Former Finance Minister
Dr. Ram Sharan Mahat defended the decision of forming the TCC saying that the
sick and bankrupt industries should be recovered.
However, he said that
the sweeping powers provided to the Commission should be curtailed.
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