Entrepreneurs have asked the government to spare them the investigation into the sources of investments in energy, infrastructure, hospitality and manufacturing sectors under the Voluntary Disclosure of Income Sources (VDIS) scheme.
"The government should allow free inflow of investment in productive sectors and energy, infrastructure and hospitality sectors," said Constituent Assembly (CA) member and president of Confederation of Nepalese Industries (CNI) president Binod Chaudhary.
Though the finance ministry has indicated that it will not investigate the sources of investments in productive sectors, the entrepreneurs are asking the government to clearly define productive and unproductive sectors. However, Chaudhary said that they have clearly identified the areas that need more investment and will urge the government to encourage investment in those areas.
Investment in energy sector like hydropower and solar; infrastructure like airports and roads and hospitality sector like hotels and resorts should be encouraged, he added.
At a time when the country is reeling under a daily 16-hour powercut, there is no alternative to massive investment in hydropower. "The state's role should be to push the informal sectors into formal sectors," he said adding that tax exemption for these sectors that are already in the tax net and widening of tax net was the need of the hour.
There are plenty of other sources that are not in the tax net and which need to be brought in it. "Instead of widening the tax net, the government is pressurising the investors who are already in the tax net," leading figures of the business community alleged.
Earlier, the government had extended the VDIS deadline of February 11 till another month after the entrepreneurs and the government came to an agreement on defining productive and unproductive sectors and creating an investment-friendly environment.
As the new deadline of March 13 nears, a growing uneasiness in the business community is developing on the contentious issue of probe into sources of investment.
The umbrella organisation of Nepali private sector also organised a press meet warning of protests if the government tries to investigate investment sources.
However, Chaudhary was of the view that protest should be the last resort. "If all other options fail, only then we will think of protests," he said adding that such decisions which weakens the business fraternity should not be taken in haste. "Finance Minister Dr Baburam Bhattarai is still not convinced, therefore we think there is need for further talk," he added. "Taking to the streets will be the last resort."
Earlier also, the entrprenuers had warned of protests if the government did not extend the VDIS deadline. The government extended the deadline by another 30 days after it exceeded its revenue target of Rs 1 billion and collected Rs 1.42 billion.
Collection exceeded the target due to support from the industrialists, claimed the entrepreneurs. "If we had not extended support, how could the government have met its target?" queried Nepal Chambers of Commerce (NCC) president Surendra Bir Malakar, warning of protests again if the government started probe into investment sources.
Although the finance ministry is planning not to investigate into the investment sources of hydropower projects and industries employing more than 500 workers so as to discourage investment in unproductive sectors, the entrepreneurs want the government not to investigate the sources of all their current investments.
Only 11 days remain for the new deadline to expire but the entrepreneurs and government both are adamant on their respective stances, setting the stage for a tussle as the government has declared that it will take action against those who do not abide by the new deadline of March 13.
"The finance ministry is preparing a manual for action against those who do not agree to come under VDIS," confirmed Krishna Hari Baskota, acting revenue secretary at the finance ministry.
Those, who do not comply with the new deadline will be brought to book, he said adding that any property that has no valid source of income has to be declared under VDIS and 10 per cent tax on it has to be paid to legalise it.
The VDIS scheme is not the brain-child of the present finance minister Dr Bhattarai as earlier governments have also floated the scheme to collect tax and legalise the illegally amessed property. In 2058 (2002) also the then finance minister Dr Ram Sharan Mahat had floated the scheme and collected Rs 350 million revenue. Around 1,568 people across the country had then declared their property and paid tax.
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