Government honours taxpayers, Vijaya Kumar Shah highest taxpayer

The government has honoured the largest taxpayers in 16 different categories, on the occasion of closing ceremony of Tax Week.

Finance Minister Dr Prakash Sharan Mahat today honoured the largest taxpayers from various sectors at the closing ceremony of the Tax Week organised on the occasion of the National Tax Day 2080, at the Inland Revenue Department (IRD). 

The liquor king Vijaya Kumar Shah -- founder and group chair of Jawalakhel Group of Industries (JGI) -- became the largest individual income taxpayer for second consecutive year, though it is the third time Shah has been honoured.

Nepal Telecommunications Company (Nepal Telecom) became the largest institutional income taxpayer for the fiscal year 2078-79 BS (2022-23), according to the IRD.

Though, the IRD has been celebrating the Tax Day on Mangsir 1 (November 17 this year) since last 12 years, the department has missed the day this year, and organised the felicitation programme on the last day of the Tax Week, today. The director general of IRD Dirgha Raj Mainali and revenue secretary Dr Ram Prasad Ghimire were absent at the programme, as both of them are out of country.

Likewise, Dabur Nepal, Asian Paints, OBC Foods and Feeds Company, Chhimek Microfinance Financial Institution and Global IME Bank are also honoured for being the largest taxpayers in different categories.

Life Insurance Company Nepal, Nobel Medical College, Manakamana Darshan and Bhatbhateni Super Market are also the largest taxpayers.

The government also honoured Nepal Stock Exchange (Nepse) and Bhotekoshi Hydropower Company among the medium taxpayers category, ranging from Rs 500 million to Rs 1 billion.

The government also honoured IME Ltd and Surya Nepal was also honoured for paying the highest income tax, value added tax (VAT), excise duty and paying VAT of five years on time. 

The government also decided to provide a special identity card -- for a period of one year -- for the largest taxpayers, according to finance secretary Dr Krishna Hari Puskar Karna. "The process of distributing identity cards to the largest taxpayers will start today," he said, responding to the vice chair of Surya Nepal -- which has been recognised with two felicitations -- Rabi KC, who asked the government to let them have special pass to enter the Singh Durbar, the seat of power. 

The largest taxpayers for fiscal year 2022-23

Highest Income Tax Payer (Institutional): Nepal Telecom

Highest Income Tax Payer (Individual): Vijaya Kumar Shah (Jawalakhel Group of Industries)

Highest Inland Taxpayer: Surya Nepal

Highest VAT Payer: Surya Nepal

Export Trade: Dabur Nepal

Special Industries: Asian Paints

Agriculture and Livestock Industries: OCB Foods and Feeds

Cooperatives/Microfinance: Chhimek Laghubitta Bittiya Sanstha

Banks/Finance institutions: Global IME Bank

Insurance: Life Insurance Corporation (Nepal)

Health/Educational Institutions: Nobel Medical College and Teaching Hospital

Tourism: Manakamana Darshan

Commodities Trade: Bhat-Bhateni Supermarket and Departmental Stores

Medium Scale Taxpayers: Nepal Stock Exchange (Nepse)

Energy: Bhotekoshi Power Company 

The largest individual taxpayers

2012 -- Prithvi Bahadur Pandey

2013 -- Siddhartha SJB Rana

2014 -- Siddhartha SJB Rana

2015 -- Dr Upendra Devkota

2016 -- Siddhartha SJB Rana

2017 -- Siddhartha SJB Rana

2018 -- Siddhartha SJB Rana

2019 -- Siddhartha SJB Rana

2020 -- Vijaya Kumar Shah

2021 -- Siddhartha SJB Rana

2022 -- Vijaya Kumar Shah

2023 -- Vijaya Kumar Shah

मागमा आएको संकुचनले राजश्व संकलनमा दबाब

नीजि क्षेत्रले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेको जनाएको छ । 

राष्ट्रिय कर दिवस २०७९ को अवसरमा अर्थ मन्त्रालयका राजश्व सचिव रामेश्वर दंगाल र आन्तरिक राजश्व विभागका महानिर्देशक रितेशकुमार शाक्यसँग अन्तरक्रिया गर्दै नेपाल उद्योग परिसंघले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेको जनाएको हो । परिसंघ सचिवालयमा आयोजित “परिसंघमा परिचर्चा” कार्यक्रममा बोल्दै परिसंघका अध्यक्ष विष्णुकुमार अग्रवालले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेका कारण त्यसको समग्र असर अर्थतन्त्रले भोगिरहेको बताए । उनले अर्थतन्त्रमा देखिएको समस्या समाधानका लागि ब्याजदर घटाउने, समग्र माग बढाउने खालको नीति अलम्बलन गर्नुपर्नेमा जोड दिए। 

परिसंघले गरेको सर्वेक्षण अनुसार उद्योगको प्रकृति अनुुसार ८० प्रतिशतसम्म मागमा संकुचन आएको देखिएको उनको भनाइ थियो । अर्थतन्त्रमा संकुचन बढ्दै जाँदा उद्योगसँगै राजश्व पनि थप प्रभावित हुने र त्यसको प्रत्यक्ष असर पूँजीगत खर्चका लागि सरकारलाई रकमको अभाव हुन सक्ने उनले बताए। 

उनले बहुदर भ्याट प्रणाली लागू गर्न आवश्यक रहेको स्मरण गराउँदै भारतलगायत अन्तर्राष्ट्रिय बजारमा प्रतिस्पर्धी गराउन पनि बहुदर भ्याट प्रणालीको विकल्प नभएकोमा जोड दिए ।  

राजश्व सचिव रामेश्वर दंगालले राजश्व संकलनमा गिरावट आउँदा त्यसले वित्तिय चाप पारेको स्विकारे । अर्थतन्त्रमा परेको दबाबबारे निजी क्षेत्र जानकार रहेको भन्दै उनले राजश्वमा योगदान दिन उद्योगी व्यवसायीलाई आग्रह गरे । अर्थतन्त्रमा स्थायित्व ल्याउने गरी मौद्रिक नीतिले औजार प्रयोग गर्दा बजेटले लिएका उद्देश्य हासिल गर्न दबाब परेको पनि सचिव दंगालको भनाइ थियो । उनले राजश्वमा दबाब पर्दै गए आन्तरिक ऋण उठाउनुपर्ने र त्यसको प्रत्यक्ष असर निजी क्षेत्रमा जाने लगानी योग्य तरलतामा थप दबाब पर्ने पनि बताए। 

आन्तरिक राजश्व विभागका महानिर्देशक रितेशकुमार शाक्यले निजी क्षेत्रलाई दोहोरो कर नपरोस् भन्नेमा सरकार सचेत रहेको भन्दै कर अधिकारी र करदाताबीच भौतिक सम्पर्क नै हुन नपर्ने गरी कर प्रशासनमा सुधार गर्न लागेको जानकारी गराए । यसले कर प्रशासन र निजी क्षेत्रप्रति लाग्ने आरोप सहनु नपर्ने उनको भनाई छ । निजी क्षेत्र नफस्ट्याई सार्वजनिक क्षेत्र पनि अगाडि बढ्न नसक्ने समते उनले बताए। 

उक्त अवसरमा नेपाल उद्योग परिसंघका उपाध्यक्ष राजेश अग्रवालले उद्योगहरु फस्ट्याउन नीतिगत स्थिरता आवश्यक रहेको बताएका थिए। आर्थिक ऐन र औद्योगिक व्यवसाय ऐनका व्यवस्था एक आपसमा बाँझिदा औद्योगिक प्रबद्र्धनमा असर परेको बताउँदै उनले तयारी वस्तु र कच्चा पदार्थ अन्त शूल्क लगाउँदा राम्रो वातावरण नबनेको बताए। यस्तै उनले तीन वटै तहबाट कर संकलन भईरहेकोमा त्यसमा सुधार ल्याउन एकद्धार प्रणालीबाट मात्रै कर संकलन गर्न सुझाव दिए । 

छलफलमा उद्योगी व्यवसायीहरुले कर तथा राजश्वका विषय, अर्थतन्त्रमा सुधार ल्याउन चालिनुपर्ने कदमका विषयमा सुझाव एवं जिज्ञासा राखेका थिए ।

Consumers have to pay extra to watch FIFA World Cup

Nepali television viewers have to pay extra to watch the world cup football unlike previous years, according to an apex court decision.

The Supreme Court today issued a ruling in support of imposing extra charges on customers to give them access to the live broadcast of the FIFA World Cup 2022.

An advertising agency, Media Hub had earlier claiming that it has obtained exclusive broadcast rights to the FIFA World Cup, has decided to collect Rs 565 extra (including VAT) per set-top box stating that domestic advertisements do not cover their costs. 

But advocates Kishor Poudel and Anupam Bhattarai filed a writ petition stating that Nepalis didn’t have to pay extra to watch previous World Cups. They also claimed that the additional fees this time was unlawful. On November 8, a single bench of Justice Prakashman Singh Raut has issued the interim order asking the concerned not to charge the customers until the final verdict is made.

But justice duo Prakash Kumar Dhungana and Manoj Kumar Sharma today said that there is no need to continue the short-term interim order issued on November 8. “Watching the World Cup football by paying extra is not a regular but an optional issue for the viewers,” reads the Supreme Court verdict. The matches will be shown live on Himalaya TV.

There also appears to be an option in the agreement between Himalaya TV and Media Hub that some important matches would be broadcast free of cost, which means that customers, who do not pay extra too can watch at least four important matches. 

“We welcome the court’s verdict,” said marketing director at Media Hub Siddhartha Dhital. “All the work for broadcasting the world cup matches had been halted after the court’s interim order,” he said, adding that they will now work 24/7 to ensure the broadcast. 

The 2022 FIFA World Cup – to be hosted by Qatar – kicks off from November 21, and will continue until December 18. A total of 64 matches will be played during a month-long championship. The first match will be played between the host Qatar against Ecuador. Worldwide, billions of soccer fans watch the live coverage of the four-yearly football extravaganza on TV.

According to Dhital, Worldlink and Vianet Communication, two of the leading internet and television services providers, have already signed agreements with Media Hub to broadcast the matches.

Claiming that Media Hub has bid for the broadcast rights for around Rs 250 million for the month-long event, Dhita,l said that an additional Rs 150 million will be spent for promotion and technical support. 

For the first time in history, a Middle Eastern country is hosting the World Cup football. 

According to the international media reports, the Qatar World Cup will be the most expensive event as it will cost around $220 billion to Qatar, some 20 times more than the cost of last World Cup in Russia. Criticising the high prices of the tickets to the World Cup matches football fans around the world accused FIFA.

The most expensive tickets on general sale for the December 18 final at Lusail Stadium cost 5,850 Qatari riyals (£1,179), which is 46 per cent higher than the £807 ticket price for the 2018 final match that France won.

Reuters reports that While fans in Russia paid an average of 214 pounds for a seat, tickets to matches in Qatar cost an average 286 pounds, according to a study by Keller Sports.

World Bank highlights resource gap to maintain federalism

The World Bank (WB) has concluded resource gap to maintain the three-tier government. Releasing a report, 'Public Expenditure Review (PER) Report on Fiscal Policy for Sustainable Development', the multilateral development partner also said the government should also introduce five key reform measures to support fiscal sustainability and its transition towards green, resilient, and inclusive development.

The World Bank, in its report, has also identified five top priority reform measures. It has suggested on encouraging the update of sub-national spending responsibilities through the intergovernmental grants system.

Supporting exports and job creation through reforms to import duties, strengthening domestic revenue including a review in VAT exemptions, enhancing public capital spending by rolling out the National Project Bank and providing fiscal incentives for a green growth transition are among measures that World Bank has recommended to achieve the goal.

The World Bank has also stated that Nepal has made significant strides in implementing fiscal federalism but excessive dependency of the sub-national governments on the intergovernmental transfers and revenue sharing, which accounts for around 30 per cent of the annual budget, to fulfill their financial demands.

“While federalism is helping bring policymaking closer to the people, it has also increased fiscal spending and exacerbated by the Covid-19 pandemic led to a sharp rise in fiscal deficits and public debt,” the report reads, stressing the importance of strengthening investment processes and fiscal policies for green growth, and fiscal policy reforms to enable Nepal to use its green electricity surplus to mitigate air pollution to protect the health of people and the economy.

With the country’s transition to federalism, expenditure responsibilities have been devolved to subnational governments that are predominantly financed through intergovernmental transfers and revenue sharing. These now account for between 8 per cent and 9 per cent of GDP per year (or close to 30 per cent of the annual budget). 

“This report provides an analytical basis to inform our reform efforts to strengthen federalism and create fiscal space to support our new focus on a green, resilient, and inclusive development (GRID) model,” finance secretary Madhu Kumar Marasini said, adding that it complements our ongoing efforts to refine the fiscal transfer system put in place the systems for monitoring and reporting for a more results oriented and accountable delivery of local services.”

Likewise, World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervosthis said that the human development PER, both of which will help inform the design of World Bank support to Nepal, including through our ongoing support through our various Development Policy Credits."

SC seeks Rs 5 million bail from former IRD chief Sharma

 The Special Court today asked for Rs 5 million bail from former director general of the Inland Revenue Department (IRD) Chudamani Sharma, who has been accused of revenue leakage worth over Rs 1 billion.

After a hearing, a division bench of judges Abdul Aziz Musalman and Justice Nityananda Pandey issued the verdict.

The Commission for the Investigation of Abuse of Authority (CIAA) had filed a case against three persons including Sharma at the Special Court on June 23 accusing them of corruption. The CIAA had sought to recover a total of Rs 1.33 billion from the accused.

Sharma, who has been accused of one of the largest corruption scandals in Nepal's history, was under investigation for possessing property amassed through alleged corruption. The two other accused including Tax Settlement Commission (TSC) chairman LD Mahat and the TSC member Umesh Prasad Dhakal, who also cleared an amount of Rs 5 million each to be released on bail on Sunday.

They have been accused of the abuse of authority by making the taxpayers submit less than the actual amount, causing a huge amount of revenue leakage to the state.

Government extends deadline to file tax to July 9

A day after the Supreme Court's verdict,  the government today extended the deadline to submit tax details and settlement of tax dues to July 9.

Citing the ongoing prohibitory orders imposed across the country, the Inland Revenue Department said that the deadline has been extended according to the decision of Finance Ministry.

The Supreme Court has yesterday decided that the Finance Minister, according to the Economic Act 2077, can extend the deadline for tax settlement, and the court need not decide on it.

Issuing a public notice today, the Inland Revenue Department (IRD) said the new deadline will be applicable in clearance of value added tax (VAT), income tax, excise duty, education service fee, telephone ownership fee and telecommunication service charge.

The private sector has been asking the government to extend the tax payment period citing their inability to file tax due to the prohibitory order.

Earlier, last year, the Supreme Court had issued an interim order to the Finance Ministry not to collect VAT or impose fine on taxpayers for not paying taxes during the period of the ongoing prohibitory orders.

The government to check the spread of coronavirus imposed lockdown on March 24, 2020 across the country. Them also when the government tightened the tax noose, advocates Srijana Adhikary moved the the Supreme Court, which issued a showcase notice not to collect tax in the time of lockdown. The Supreme Court had, then ordered the government not to collect tax before the lockdown is completely lifted. It had ordered the government to allow 30 days after the complete lifting of the lockdown time to the taxpayers to pay their dues.

Citing difficulties in managing its financial resources, the Finance Ministry also went to the Supreme Court demanding that the court vacate its order. The government argued that it was collecting only around Rs 15 billion a month from the customs and a few billion rupees from other internal revenues, though it spends around Rs 40 billion to meet basic liabilities. On June 15, 2020, The Supreme Court turned down the government’s request to review its interim order that was against the decision of the Finance Ministry’s notice to the taxpayers.

This year too, during the second wave of coronavirus, the government imposed prohibitory order, and the economic activities have been stalled. The private sector has been asking the government to postpone the tax filing dates, and not impose fines during the prohibitory times.

DRI files cases against five firms for using fake VAT bills

 The Department of Revenue Investigation (DRI) today filed cases against proprietors of five firms on a alleged charge of making revenue leakage by using fake value added tax (VAT) bills.

According to the DRI, these firms are found to have evaded rs 410 million revenue. Of them, the DRI has sought to recover Rs 41.64 million from proprietors – including Kamal Bahadur Raut of Raut Trade Concerns in Triyuga Municipality-12 in Udayapur. Likewise. proprietor of PRK Trade International Lahuman Majhi of Tamakoshi Rural Municipality in Dolakha has been accused of evading revenue worth Rs 55.68 million. “Three individuals including proprietor of Creta Enterprises Nabikarik Ansari of Belawa Rural Municipality-3 in Parsa have also been accused of making revenue leakage worth Rs 82.46 million,” a press note of department reads.

The DRI also filed a case at the High Court in Patan against proprietor of Minaja International Ram Babu Sahani in Parwanipur of Bara district to recover Rs 21.91 million. “Raman Construction in Raghunathpur of Dhanusha has also been accused of evading revenue of Rs 208.76 million,” the press note reads, adding that the department has sought to slap these firms and their proprietors with fines equivalent to the embezzled amount and the jail terms according to the law.

DRI files cases against six firms for evading Rs 4.18 billion in taxes

In the past three days, the Department of Revenue Investigation (DRI) has filed cases – in Patan High Court – against six firms on the charge of fake Value Added Tax (VAT) bills. They have been alleged to be involved in using fake VAT bills and smuggling of the goods to evade the taxes worth Rs 4.18 billion, according to a press note issued by the department.

Unique Wide International Pvt Ltd operating in Kathmandu Metropolis-1 has been charged for using fake VAT bills to evade the taxes amounting Rs 378 million. The company purchased the fake VAT bills from proprietor of New Unique International Bhuvan Pandey, according to the department, which sought to recover the amount from the duo and the jail penalty as per the rule. The department on Monday filed the case against the owner of Unique Wide International Pvt Ltd and New Unique International and a chartered accountant for dodging revenue and using fake VAT bill, the press note reads, adding that Jeevan Basnet – the owner of these firms that dodged the revenue and Bhuwan Pandey is the chartered accountant, who supplied fake bills to these firms.

“These firms dodged VAT worth Rs 124.22 million, income tax worth Rs 228 million and capital gains tax worth Rs 25.74 million,” according to director general at the department Dirgha Raj Mainali.

The department has sought to confiscate Rs 378 million from them and a fine equivalent to that amount as per the Revenue Leakage (Investigation and Control) Act, he said, adding that the department has so far filed cases worth around Rs 8 billion against people in fake VAT bill scandals for irregularities. “We are investigating fake VAT bills worth around Rs 14 billion.”

Likewise, the department today filed a case against High Tech International – that operates in Sorhakhutte of Kathmandu as it was found to have evaded taxes of Rs 2.42 billion through smuggling of goods. The department has accused the firm of not making the customs declaration of most of the imported goods and evaded taxes through under invoicing.

The department also sought to recover Rs 1.39 billion from three firms – JSS Mobile and Services Pvt Ltd, Shree Shyam Impex and Shree Shyam Baba Enterprises – which are operating their businesses in Sanepa of Lalitpur district. They have also been charged for smuggling of goods hurting the state treasury.

The department said that its team confiscated hard cash of Rs 9.90 million earned from smuggled gold in Bhairahawa, in a separate incident. The department has charged proprietor of Sony Jewelers Sunil Sunar and his helper Amit Pariyar and started further investigations.

Tourism and aviation sector incurs Rs 34 billion loss

The tourism and aviation sector has incurred around Rs 34 billion during the period of lockdown, according to a report.
A committee including representatives from Nepal Tourism Board (NTB) and Civil Aviation Authority of Nepal (CAAN) reported that the industry might have incurred an average of Rs 10 billion loss per month. “The loss is projected to swell by an extra Rs 7 billion as of July 22,” the committee formed by the government to study the loss incurred by the sector due to lockdown following Covid-19 outbreak.
The tourism and aviation sector has been hit hard by the global travel restriction, which has brought the tourism and aviation business to a halt.
The report has been handed over to National Planning Commission (NPC) by the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) today. The government has set up a Rs 50 billion fund – according to the budget for the next fiscal year – for the Covid-19 affected tourism industry and small and medium enterprises (SMEs). The fund will be set up for the sectors to provide loans at five per cent interest rate for both operation of industries and payment of salaries to the workers. The budget for the next fiscal year 2020-21 has allocated Rs 200 million to work on the rehabilitation programme and on the concept of sustainable tourism development.
Nepal Tourism Board (NTB) has also prepared and issued an ‘Operational Guideline with Health Protocol for Tourism Sector’ for the reopening of the tourism industry. They will need to implement workplace safety protocols, which could include providing masks, maintaining social distancing, physical workspace modifications, and screening and tracing protocols, according to the guideline.
Speaking at a press conference today, minister for Culture, Tourism and Civil Aviation Yogesh Bhattarai said that the tourism businesses have to open with enough safety precautions. “We have issued the protocol for the tourism industry to make the businesses safe and reliable,” he said, adding that the protocol for the aviation sector is also ready. “The airlines operators along with airport operators will follow them when the service resumes.”
The government has extended the time for filing the VAT for hotels to four months, he said, adding that the ministry has also recommended a 75 per cent discount on aircraft parking fee and 50 per cent discount on acquiring license and license renewal fee.

After huge pressure, government extends tax clearance date till June 21

The government has backtracked from its earlier decision – within 24 hour – on payment of individual and business taxes and deferred the deadline to pay taxes and submit tax details by 15 days to June 21 after a huge pressure from the private sector and the main opposition Nepali Congress (NC).
According to the new notice by the Inland Revenue Department (IRD) published today, the deadline is extended keeping in mind the nationwide lockdown and risk of coronavirus transmission. The government has imposed the lockdown till June 14 – by extending it for the eighth time since March 24 – to contain the spread of coronavirus. And the department yesterday published a notice ordering businesses and individuals to clear their tax dues by June 7 as in the normal times. The department – in the notice – asked businesses and individuals to submit the second instalment of income tax of the current fiscal year by mid-June and value added tax (VAT) and excise duty till mid-March and mid- April, respectively, by June 7. “The failure to meet the deadline for filing tax returns and clearing tax dues of previous months will result in charges,” the notice read.
But the notice only infuriated private sector, citizens and main opposition party. The main opposition party Nepal Congress – issuing a press note signed by party president Sher Bahadur Deuba – has urged the people to gently disobey the government diktat to clear tax by June 7, as the country is still under lockdown since last 72 days bleeding the economy. Nepali Congress alleged that the government has been terrorising private businesses, labourers, and farmers with tax compliance instead of introducing a special relief package to them.
The businesses have remained shut for almost two-and-a-half months since March 24, and the movement has been curtailed by the government, which is forcing the people to pay tax by June 7 within lockdown period, said an angry entrepreneur. The lockdown has been imposed till June 14.
After the criticism from different sectors of the society, the department in its new notice today said that the deadline to submit tax details, income details and payment of taxes has been extended to June 21. The department has extended the deadline to pay value added tax, excise duty, tax deducted at source (TDS) under income tax, education service tax, telephone ownership fee, and telecommunication service fee to June 21 from the previous deadline of June 7, according to a notice issued today by the department.
According to the revised decision, businesses and individuals are now required to submit the second installment of income tax of the current fiscal year by June 29, the new notice reads, adding that VAT and excise duty need to be submitted by June 21.
This is the third time that the government has extended the deadline to pay taxes as the country continues to remain in lockdown to prevent the spread of Covid-19, which has claimed nine lives and infected over 2,300 people across the country till date.
The infuriated private sector representatives – including Federation of Nepalese Chambers of Commerce Industry (FNCCI), Confederation of Nepalese Industries (CNI), and Nepal Chambers of Commerce (NCC) – has criticised the government decision for exerting undue pressure on the private sector to clear taxes despite the continuation of lockdown.
The deadline extension followed a request from the private sector representatives to the finance secretary Shishir Kumar Dhungana during a meeting with Finance Ministry officials today morning. “The government decision to extend the deadline is a move towards a positive direction,” senior vice-president of the FNCCI Shekhar Golchha said, adding that the private sector has asked that the deadline be extended till the end of current fiscal year, until mid-July. “Most of the businesses are not in a position to pay taxes immediately as there is still a lack of cash flow due to the fact that the markets are closed.”
The VAT and excise duty are taxes that the business people have collected in the market but they have already been spent. “So, they need to raise cash from the market to pay the tax authority,” he added.
The government, on the other hand, is under pressure to mobilise revenue as the government coffer is almost empty, and from the beginning of the new fiscal year 2020-21, the government may not be able to pay salary to government staff due to huge deficit in revenue mobilisation because of its failure in collecting taxes.
According to the Finance Ministry, the government has only collected Rs 657 billion so far, against a target of Rs 967 billion by mid-June. “Though Dr Yuba Raj Khatiwada is the second lucky finance minister to present three budgets in a row – after 1990 – he has failed, for the second consecutive years, to mobilise the revenue and also spend budget,” sources at the Finance Ministry claimed that the stronger government – in the history of Nepal – led by KP Oli has failed to create business friendly environment and promoted ‘some businessmen’ for the benefit of the party. “The stable, stronger and powerful communist government is promoting crony-socialism rather than taking care of people, which has resulted in the revenue deficit since last two fiscal years after Khatiwada took charge of the Finance Ministry.”

Trade deficit drops but government struggles to meet revenue target

Though, the trade deficit has decreased – as it has wished – it failed to meet the revenue mobilisation putting the Finance Ministry under pressure to manage resources.
The Department of Customs data reveals that the trade deficit – in the first five months of the current fiscal year – has widened by only 6.3 per cent to Rs 533.64 billion as the export jumped by around 27 per cent to Rs 47.61 billion, whereas imports fell by 4 per cent to Rs 581.25 billion. “Processed soybean oil and palm oil have knocked juice, jam and footwear off the list of largest exports to India, pushing the exports up,” the department data reveals. However, Nepal does not produce any soybean or palm oil, and traders import crude oils from Brazil, Argentina, Ukraine, Indonesia, Australia and other countries which they process and export to India without paying a penny in tariffs.
Under the South Asian Free Trade Area (SAFTA) agreement, zero tariffs are levied on goods exported from underdeveloped countries like Nepal, and Nepali traders have been importing crude palm oil from third countries by paying minimum customs duty, and then exporting the finished product to India free of customs duty.
The government, but, failed to meet revenue mobilisation target also due to low imports as the revenue from imported goods shrank by Rs 6 billion between mid-July and mid-December. The department's data reveals that the government collected import taxes worth Rs 150.81 billion, down by Rs 5.52 billion from Rs 156.33 billion collected during the same period last year.
The government has set a target of collecting 45 per cent of the total targeted tax revenue through tariff on imported goods. In the first five months, customs offices collected only 34 per cent of the annual target to collect Rs 447.59 billion from import tariffs. “Out of the total import taxes, the government has targeted to collect Rs 196.62 billion in value added tax (VAT), Rs 187.30 billion in customs and Rs 63.67 billion in excise imposed on the imported goods. But according to Financial Comptroller General Office (FCGO) data, the overall tax mobilisation – as of December – stood at a mere 31.24 per cent of the targeted tax revenue of more than Rs 1 trillion.
In the last fiscal year 2018-19, the government had set revenue collection target at Rs 945 billion, which was later revised to Rs 860 billion. However, the government even missed the revised target by almost Rs 25 billion, according to the FCGO data.
And this fiscal year too, finance minister will fail to meet revenue mobilisation target also due to his own policy to discourage imports of luxury items and automobiles.

Varun Beverages pays Rs 1.6 billion to prevent arrest of its officials

The bottlers for Pepsi in Nepal Varun Beverages today deposited Rs 1.6 billion as bail amount in order to prevent the arrest of its officials charged in a fake value-added tax (VAT) bill case.
The Department of Revenue Investigation (DRI) had on Tuesday filed a case against seven current and former officials including Amit Gupta, Rabikanta Jayapuriya, Rohit Kohali, Prabin Kumar Agrawal, Binod Kumar Singh and Ashok Kumar of the multinational company for evading tax worth Rs 649.6 million by producing fake VAT invoices.
The department has sought Rs 1.6 billion bail for seven incumbent and former officials of Varun Beverages, confirmed the department that has claimed that a consortium of banks led by Standard Chartered Bank has provided the bank guarantee on behalf of the company. “The department had interrogated four officials including Binod Kumar Singh and Ashok Kumar Singh before filing the case,” it said, adding that the department’s probe revealed that the company used to issue cheques in line with the fake VAT bills, only for the other parties to return the amount after charging eight per cent commission on the value of fake VAT bills.
Since a year, the department has prepared tax evasion cases worth Rs 12 billion against 130 of the 981 companies under investigation.

Department of Revenue Investigation moves to court against Varun Beverages

The Department of Revenue Investigation (DRI) has today filed a case against Varun Beverages Nepal charging the multinational company of evading tax of Rs 649.60 million through the use of fake value added tax (VAT) invoices.
Filing a case at Kathmandu District Court today against seven former and present directors of the multinational company, the department has sought around Rs 1.95 billion in principal and penalties. “The department is seeking to recover Rs 649.60 million in principal, along with a fine that is double the principal amount or nearly Rs 1.30 billion, from the company,” the department informed, adding that it has also urged the court to consider up to three year jail term, according to the a provision in the Revenue Leakage Investigation and Control Act-1995. “The department filed a case against Amit Gupta, Ravikanta Jaipuriya, Rohit Kohli, Prabin Kumar Agrawal, Vinod Kumar Singh and Ashok Kumar and the company itself.”
The multinational company Varun Beverages has been in the business of carbonated and non-carbonated beverage products including Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon and Mountain Dew in Nepal. The company operates plants in Kathmandu and Nawalparasi districts. Last year, Varun Beverages invested Rs 2.39 billion in a second production plant at Ramgram-10 of Nawalparasi district. In the fiscal year 2017-18, the multinational company earned a net profit of Rs 4.83 billion. It has been operating in six countries including Nepal, India and China.
The department has investigated the multinational company for four months on a tip-off that the company was engaged in VAT bill scam amounting to millions. According to the section 4 (A) and (B) of Revenue Leakage Investigation and Control Act-1995, the department has already seized the bank guarantee of Rs 1.60 billion of Varun Beverages before the case was filed at the Kathmandu District Court.
During the investigation, the department discovered that the company had been issuing fake VAT bills while conducting business with its business partners between fiscal years 2013-14 and 2018-19, the department claimed, suspecting that the multinational company has evaded VAT amount worth Rs 253.40 million and Rs 396.15 million in income tax and dividend during the five years. “The Rs 1.95 billion that the department is trying to recover is by far the largest amount in terms of VAT bill scam.”
Lately, the government has been failing to meet the VAT target since the beginning of the current fiscal year putting the Finance Minister under tremendous pressure. The department – under the Finance Ministry – has been active in investigation of fake VAT bills as one of the key resources of the government earnings, VAT has been witnessing regular fall. The VAT and income tax shortfall in the first four months of the current fiscal year 2019-20 stood at around Rs 21 billion, according to the Financial Comptroller General’s Office (FCGO). “The government – during the first four months between mid-July and mid-November – has collected Rs 104 billion revenue, which is 83.2 per cent of the target.”
Of the annual revenue mobilisation target of Rs 506 billion for the current fiscal year, the target for the first four months was Rs 125 billion but the government witnessed a shortfall of around Rs 21 billion.
With the government getting tough with tax evaders, the department has intensified its drive against defrauding firms. Thus, the department has registered 28 cases against 76 individuals related to VAT and income tax scams and sought recovery of Rs 10.29 billion in principal and fines in the first four months of the current fiscal year. Likewise, the department has filed cases against 515 individuals on VAT and income tax scams – till date – and sought nearly Rs 37 billion in principal and penalties, along with three-year imprisonment of the accused.
Meanwhile, the government is also in the process of amending the Revenue Leakage Investigation and Control Act-1995 to curb tax evasion and money laundering. The amended act has already been passed by the lower house of parliament.

DRI files cases against 50 tax evaders

Over the first four months of the current fiscal year, the Department of Revenue Investigation (DRI) filed cases against 50 – firms and individuals – on charge of revenue evasion.
Most of the cases are related to the use of fake value added tax (VAT) bills and evading excise duty and customs duty, according to the director general of department Dirgha Raj Mainali. “The department took action against 15 firms that were found using fake VAT bills to evade taxes,” he said, adding that the department is investigating many defrauding firms over the past year. “The department has been investigating against 25 cases related to the use of fake VAT bills by the big players that are suspected to have evaded large amount of taxes.”
The department last month investigated four cases related to evasion of taxes worth Rs 360.27 million, whereas the department last week had filed cases against 26 tax evaders. “Of them, some 25 traders are facing action for submitting fake VAT bills to evade taxes, while one is involved in smuggling of gold,” he added. “Proprietor of Lumbini Pan Masala and Tobacco Products Abdullah Musalman and proprietor of NS Traders and Suppliers Dujman Thapa were found to have evaded taxes worth Rs 13.25 million by using fake VAT bills.”
Likewise, the department filed case against proprietor of Prabha Enterprises Ram Prasad Chaulagain and proprietor of PC Traders Ram Krishna Dhakal for evading taxes amounting to a combined Rs 8.67 million under the same charge.
In a separate case, some 21 traders, including Binod Kumar Agrawal from Dhobighat, Lalitpur, and Bikas Agrawal from Hattiban, were also found to have evaded taxes amounting to Rs 1.29 billion. “The accused allegedly issued fake VAT bills through 13 different firms,” claimed the department that is responsible for investigating revenue theft.

Revenue mobilisation target falls short

The government failed to meet the revenue mobilisation target due to shortfall in value added tax (VAT) and income tax in the first four months of the current fiscal year.
The Inland Revenue Department (IRD) – In the period between mid-July and mid-November – has mobilised Rs 104 billion revenue, which is only 83.2 per cent of the target. “Of the annual revenue mobilisation target of Rs 506 billion – for the current fiscal year 2019-20 – the target for the first four months was set at Rs 125 billion.
The department informed that it is also unable to meet the revenue mobilisation target for excise duty, health service tax and education service fee. “However, the collected amount was an increase of 23 per cent against the department’s revenue mobilisation in the same period of last fiscal year,” the department informed, claiming that the department is continuously identifying the lapses and initiating reforms for revenue mobilisation.
The IRD had formed the study team in July to identify the lapses in tax mechanism, and recommend it.
The department is also gearing up to provide the facility of 10 per cent cashback on electronic payments to promote the digital payment system and also the formal channel for trading.
The department is also gradually implementing its five-year (2018-19 to 2022-23) tax reform strategic plan to make the revenue administration more stronger ans transparent.

Only 10 per cent of Nepalis pay tax

Though the government claims to have reformed tax administration and expanded tax net, only 10 per cent Nepalis pay tax.
According to the Inland Revenue Department (IRD) director general Binod Kunwar, only 2.96 million Nepalis are under the tax net, including income tax and value added tax (VAT). The population of Nepal has around 3 million population, according to the Central Bureau of Statics (CBS).
“In the last fiscal year, some 2 million Nepalis were under the tax net,” he said, adding that some 800,000 tax payers have been added in the current fiscal year. “The ‘Pan for All’ programme has encouraged more Nepalis to come under tax net,” he claimed, adding that the government has also made PAN mandatory for all working Nepalis to get their salary paid. “Likewise, there are some 2339,000 taxpayers under the value added tax (VAT) net.”

Some 900 firms under DRI scanner for ‘tax evasion’

According to Department of Revenue Investigation, more than 900 firms are under investigation for purchasing and using fake value-added tax (VAT) bills. “These firms were delivering goods and services to government agencies, contractors, multinational companies, hydropower companies and hospitals, depriving the government of its revenue,” according to director-general of the department Dirgharaj Mainali.
More than 100 companies that sold fake bills are currently under the scanner, he said, adding that it had earlier filed cases against 39 individuals for printing and selling fake VAT bills. In March, the department had registered a case for the first time against 24 individuals. An additional 15 individuals were dragged to the court in June.
“The combined value of the fake VAT bills under investigation is around Rs 11 billion,” Mainali said, adding that the alleged VAT scam may be the biggest one yet in terms of both value and the number of firms involved. “The department today also filed a case at the Kathmandu District Court against proprietor of Lucky AS Enterprises Sunil Kumar Gautam for evading taxes worth Rs 99.56 million through alleged submission of fake VAT bills.
According to the body responsible for investigating revenue theft, it is the third case filed by the department in the last 10 days against people submitting fake VAT bills. “The alleged tax evasion in the three cases is cumulatively worth Rs 342.85 million,” a press note issued by the department reads.
The department – on November 12 – registered a case at the Kathmandu District Court against proprietors of Huspy Care International and Shree Shyam Traders for dodging taxes worth Rs 111.98 million. Likewise, the department – on November 5 – had filed a case at the same court against the proprietors of Nepal Donghua Construction Engineering Company, charging them of evading both VAT and income tax worth Rs 131.31 million.
After targeting the sellers of fake bills, the department is focusing now on investigating and filing cases against the firms that purchased and used them to evade tax, Mainali said, adding, “By showing higher expenditure on fake purchases, they also paid less income tax.”
Earlier, in the fiscal year 2010-11, the Inland Revenue Department (IRD) had built up cases to recover Rs 6.69 billion in back taxes from 518 firms. Many of these cases remain undecided but the Supreme Court is going to be decided very soon.

Central bank to launch real time gross settlement system by mid-September

The central bank is launching the real time gross settlement system – to help ease settlement of online payment – in mid-September. “The central bank plans to launch the real time gross settlement system on September 15,” confirmed the central bank.
The real time gross settlement system is a fund transfer system in which money is moved from one bank to another in real time and on a transaction by transaction basis, which means there will be no waiting period. The real time gross settlement transactions can also be carried out between individuals via a legal framework. It is typically used for high-value transactions or urgent transactions that require and receive immediate clearing, according to the central bank.
“Once the system is activated, digital payment service providers will be incorporated in the system and they will be issued a separate licence to operate in the country,” according to the central bank. “Currentlym several digital payment service providers have been operating without being linked to the country’s payment system – which has led to revenue leakage and misappropriation of foreign currency – in the absence of a real time gross settlement system.
According to the central bank, real time gross settlement helps prevent risk by integrating digital payment settlement in its account before payment is passed to the collecting bank.
The central bank had – in April – banned accepting payment via AliPay and WeChat Pay – China’s most popular mobile payment platforms – as they have not been registered with the central bank. The central bank has termed the payments illegal as they were not incorporated in the country’s tax system, and Nepal was losing foreign income due to illegal use of these payment applications by Chinese tourists.
The central bank has after the incident is working – in collaboration with the Nepal Telecommunications Authority (NTA) – to introduce regulatory policies for digital financial service providers. The real time gross settlement system will help monitor all the payment systems, and payments of value added tax (VAT), income tax and excise duty can be made digitally.
Though, the payment system was under full control of banks and financial institutions (BFIs) until 2009, the operation of eSewa digital wallet in 2009, has changed the scenario of payment as customers can pay, send and receive money from their mobile phones and also over the internet even without a bank account. Apart from eSewa, there are many digital wallet products including Khalti, IME Pay, 4Enet Pay and I-Pay, currently.
Globally the central banks are facing the challenge to devise a mechanism to track payment settlement due to increasing number of digital payment service providers. Nepal Rastra Bank (NRB) – the central bank of Nepal – also was forced to bring Nepal Payment System Development Strategy with the aim of launching the real time gross settlement system.
Though, Nepal Clearing House was established as a public limited company in December 2008 to digitise cheque clearing services, it also looks after multiple payments, clearing and settlement systems. Apart from facilitating electronic cheque clearing services, it provides automated clearing house services in the form of the Interbank Payment System (IPS).
Fllowing the implementation of the real time gross settlement system, the clearing house will serve as an intermediary to enable banks to initiate and process transactions between the real time gross settlement system and its internal system, the central bank claimed, adding that the real time gross settlement system will help minimise systemic settlement risk in particular.

NAC introduces promotional airfare for Osaka flights

Nepal Airlines Corporation (NAC) has introduced a promotional airfare for flights to Osaka in Japan.
As the national flag carrier has already announced its plan operate regular flights to Osaka from August 29, the NAC has offered a promotional airfare for marketing purpose. According to the corporation, passengers flying to Japan can buy one-way ticket at Rs 36,999 – under the promotional scheme – while the charge for round-trip passengers has been set at Rs 72,814, including value added tax (VAT).
Earlier, NAC had fixed Rs 45,000 for one-way and Rs 77,000 for round-trip for Osaka flight.
“The promotional airfare has slashed the normal fare by Rs 8,000 for passengers travelling in Kathmandu-Osaka route, the airlines said, adding that the promotional airfare for the Kathmandu-Osaka route is being offered for a limited time only.
The promotional airfare will last till the festival of Dashain. After that the airfare will be revised again, he added. The national flag carrier is preparing to operate Osaka direct flights three days a week — Tuesdays, Thursdays and Saturdays. It takes around six-and-a-half hours to reach Osaka from Kathmandu.
Earlier, NAC had initially planned to operate Osaka flights from July 14 but the commencement date was postponed to August due to poor response from passengers.
NAC had, earlier, operated commercial flights in Kathmandu-Osaka route twice a week in between 1994 and 2007. But iut was halted due to lack of aircraft and human resources.
The NAC is also resuming direct flights to Osaka of Japan after a hiatus of 12 years. Japan Civil Aviation Bureau (JCAB) permitted the NAC to resume its flight to Osaka after Nepal and Japan signed Exchange of Notes on revising the Air Service Agreement (ASA) earlier this year.
The NAC has been operating scheduled flights to New Delhi, Doha, Dubai, Hong Kong, Kuala Lumpur, Bangkok, Mumbai, and Bangalore with the fleet of two Airbus A320-200s and two Airbus A330-200.

VCTS, to check revenue leakage, comes into operation

The government has brought Internet-based vehicle and consignment tracking system (VCTS) into implementation from today to track all parties involved in business activities, ranging from importers to consumers.
Finance Minister Dr Yuba Raj Khatiwada inaugurating the modern system amid a ceremony in Kathmandu today, said that the system, which will also be linked with the customs, all transportation companies, importers or entrepreneurs must have to make entry of their goods and consignments in a centralised website before transportation of goods from one destination to another inside the country with the enforcement of the tracking system. “The digital measure is aimed at combating revenue leakage,” he said, adding that the Internet-based entry will be required only for wholesale entrepreneurs.
According to Department of Revenue Investigation (DoRI) – with the implementation of the tracking system – importers and entrepreneurs will be able to get real-time update of the movement of their consignments. “The tracking system will ensure greater transparency in import business, check smuggling of goods and discourage the use of fake Value Added Tax (VAT) bill,” the department said, adding that the department will remove its all 10 check-posts across the country after the implementation of the new system.
The private sector leaders, however, said that they need some time for adaptation to the new system, though the VCTS is beneficial for truckers and entrepreneurs as it will end the hassles emanating from manual checking of documents during transportation. “Since Nepal does not have a reliable Internet system yet, the immediate and full-fledged implementation is doubtful,” the private sector said, urging the government to roll out the system in a gradual way.
However, the government has made the system mandatory. The department has warned that it will fine up to Rs 50,000 for those who violate the provision of mandatory entry of consignments in the website after three months of the new system coming into operation. However, the second time offender of the rule will face a fine of up to Rs 100,000.