Himalayan News Service

Kathmandu, February 17:

Tax officers who have been working in Large Taxpayer Office (LTO) have received manuals to expedite their work about managing ‘large taxpayers’ accounts to ease procedural problems in tax collection and increase revenue mobilisation.

As per the manual prepared by DANIDA RAS project and LTO jointly, donors have suggested Inland Revenue Department (IRD) to establish a formal way of sharing useful information about exercises between LTO and local Inland Revenue Offices (IRO).

IRD must, in a period of one year, pass over the responsibility of large taxpayers excises to LTO, says a recently distributed report to tax officers. According to the recommendations made by DANIDA, LTO must instruct local IRO’s to fax large taxpayers bank vouchers and VAT or income tax declarations immediately (same day) to LTO. The suggestion includes that the LTO must keep the functional structure recommended by IMF and DANIDA RAS project and not move subparts of audit (verification of refunds and TDS) to service and collection sections.

LTO must be authorised to have computer access to all large taxpayers with a turn over of more than Rs 130,000,000. The experts have recommended that LTO chiefs and staff must also be allowed to recommend moving of taxpayer from one segment to another, referring to their experience obtained when performing audit, collection or service at the taxpayer premises in the previous year. As per the recommendations, LTO and IRD must select taxpayers for auditing in the fiscal year 2004-05. However, despite LTO being established during February 2003, it has not been properly working.

According to the experts’ recommendations in the working manual of tax officers, it has been mentioned that an in-depth audit is identifying the possible risk areas that could lead to incorrect declarations of tax and VAT (risk analyses). The possible risks are difficulties in understanding rules and regulations, errors in a certain line of business, differences seen between bookkeeping and the declarations, comparing the stock in trade with the total sale, among others.

Similarly, tax officers have also been suggested to abide by a code of conduct, expedite tax collection work effectively, maintain data in a systematic way, make the documentation system more simple and other mechanisms friendly for taxpayers.

The report states that some of the working manual recommendations are the same as those made by International Monetary Fund (IMF) in their report and not yet carried out by LTO.

Experts in the LTO informed that despite various mechanism and measures being adopted to improve revenue administration, nothing has changed in the way audit is done. Claus Boldt, who was a short-term advisor at DANIDA RAS Project, has said in the report the number of 120-150 taxpayers pre-selected for audit by IRD on a yearly basis, leave very few resources vacant for performing service and collection. Boldt categorically mentioned in the report that LTO has not yet performed any proper collection, prevention, enforcement or service toward large taxpayers at all, as LTO had only five tax officers until November 29, 2004.