Nepal | September 17, 2019

Biometric system for VAT enrollers in the offing

Umesh Poudel

Kathmandu, June 10

Starting next fiscal which begins on July 17, the government is introducing a biometric system for already listed as well as new value added tax (VAT) consumers, for transparency in the taxation system.

Finance Minister Yubaraj Khatiwada, while announcing the federal budget for next fiscal, had said that VAT enrollers would have to compulsorily get registered at the biometric system of the concerned tax office.

“The biometric system will ensure that a single person or a company is unable to have multiple VAT accounts,” said a high-ranking official at the Ministry of Finance (MoF).

This means that from next fiscal year, VAT enrollers must update all information, including finger prints, retina scans, company details, at the biometric system.

Moreover, officials claim they will be able to gauge the capacity of the VAT enroller based on the documents they provide, meaning suspicious cases could be put in the ‘watchlist’.

According to the ministry, new VAT enrollers will have to be registered in the biometric system from next fiscal, while the old enrollers will be given a year to get themselves registered.

“Some business houses have been practising unethical business by getting VAT accounts under their workers’ name. They import a large consignment using that account and then close the account within a few months,” the MoF official said, adding that such fraudulent practices came to light only after a number of such cases were filed in the court.

As per the official, the new requirement will ensure that such cases are completely eliminated, as only genuine businesspersons will be able to get the VAT accounts.

Earlier, the finance ministry had directed the Inland Revenue Department to develop an integrated framework for the new system.

As per MoF, the new system will be integrated with the Permanent Account Number as well. The ministry plans to interlink the biometric system with all banks and financial institutions authorised to provide VAT transaction and Employment Provident Fund, among others, to maintain transparency in tax.

The MoF official said that the ministry has allocated necessary budget for installation of biometric system in all tax offices across the nation.

“We have started to do the homework for acquiring goods and necessary materials for the purpose,” he informed.

A version of this article appears in print on June 11, 2019 of The Himalayan Times.

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