Treat taxpayers well to improve tax compliance: Dr Mahat

Lalitpur, Aug. 15

High government officials including Finance Minister Dr. Prakash Sharan Mahat have pointed to the need to improve the image of tax administration in the country by being firm in the implementation of tax laws and policies and becoming friendly to taxpayers.

"The tax administration should act in a way it would facilitate the businesses and industries. Show respect to the taxpayers," they said while speaking at a management seminar 2080 organised by the Inland Revenue Department (IRD) in Lalitpur on Tuesday.

Finance Minister Dr. Mahat directed the IRD officials from 84 revenue offices across the country who gathered here to be friendly to taxpayers and provide fair treatment to even those who evade taxes.

Advisor to the Finance Minister, Dr. Posh Raj Pandey, urged the tax administration not to scare people from tax compliance, implement robust information dissemination system to inform people to save themselves from fines.

"Improve your social image. Make impression that you make just and reliable decision," he said.

Stating that he was shocked by reduction of annual revenue target of the last Fiscal Year 2022/23 due to non-collection of taxes, FM Dr. Mahat advised the officials of the IRD to pay serious attention to fulfill their responsibilities. "The ministry would put every effort to address the challenges that come across the tax administration so you need to pay full attention to meeting the annual revenue target for this year 2023/24," said Dr. Mahat.

According to the government and experts, 40 per cent of the country's economy is grey, and bringing it under the tax net would increase revenue collection.

This year's revenue target is Rs. 1422 billion of which Rs. 1305 billion is tax revenue including the customs duty and excise duty.

Dr. Mahat directed the IRD to not to give exemption to those who do not come under the scope of tax by making various excuses stating that if it is allowed to happen, other taxpayers may also elude.

He said that although some individuals and firms are ready to pay more tax, they are reluctant to come under Value Added Tax (VAT). "There are many people who are ready to pay other taxes, but do not want to come under VAT. Why is it a problem to come to VAT?" he asked and suggested the tax officials to find the reasons behind this tendency.

 

Focus on reforms

Dr. Mahat directed them to focus on the reforms in tax administration and generate positive discourse on the economic situation of the country.

Similarly, he expressed his belief that the economy is still not negative and has slowed down a bit, but now there is sufficient liquidity in the banks, and interest rates have gradually declined, so demand will be created and activities will increase.

The Finance Minister advised the private sector not only to talk about negative aspects of the economy, but to discuss positive things. He emphasized that everyone should communicate positive things in order to speed up the economy as the pace is slow. "People are afraid to spend and take loans after the spread of rumours that the economy is on the brink of recession. Therefore, the private sector should be positive about the future prospect of the economy," he said.

According to him, there is a contradiction about protecting domestic industry and facilitating the import trade. So, the private sector should support the government in the drive to support domestic products and industries.

 

Nurture the taxpayers

Finance Secretary, Arjun Prasad Pokharel, directed them to respect and nurture the taxpayers. Meanwhile, he also asked them to discourage non-filing and make an environment including enforcing the policies to motivate taxpayers to clear the past tax dues.

He suggested the IRD to devise a system to implement reform in the tax administration.

"Take note of the provisions made in the budget of the current FY 2022/23, and analyse the reports of the Auditor General and Commission for the Investigation of the Abuse of Authority to find out the missing and leakage-prone areas," he directed the IRD.

He also suggested enhancing the use of information and communication technology and sharing the best practices and experiences.

  

Annual revenue target achievable

Deergha Raj Mainali, Director General of the IRD, expressed his commitment to meet the annual revenue estimates.

He also promised that the complaints and grievances of the private sector businesses would be immediately addressed. Mainali informed that the IRD is studying the matter why revenue generation was dismal while the Gross Domestic Product (GDP) increased.

Likewise, Dr. Ram Prasad Ghimire, Revenue Secretary, asked tax officials to make additional efforts to clear the tax backlog and bring non-filers to the tax net.

Speaking on the occasion, Senior Vice-President of the Federation ofNepalese Chambers of Commerce and Industry (FNCCI), Anjan Shrestha, said that the private sector has a promotion that the coming festival season would not infuse confidence in the market.

According to him, traders have not managed their stocks and opened letters of credit to import goods required for festivals which would have adverse impact on the revenue target.

Shrestha said that the wagon of economy has been stuck in the mud, so the government should unroll ways to pull it out of the mud and lubricate it to make it move forward smoothly.

 Published in The Rising Nepal daily on 16 August 2023.