FNCCI apprises FM of impact of VAT increment
Himalayan News Service
Kathmandu, January 19:
A delegation of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) today met deputy prime minister and finance minister Bharat Mohan Adhikari and apprised him about the consequences of hike in value added tax (VAT) rate.
Binod Bahadur Shrestha, who led the delegation, said that the government’s recent move is impractical, particularly at a time when the economy is passing through a critical phase. “Despite our repeated requests for some relief measures to rescue the economy, the hike in VAT rate by 30 per cent has been announced which will hit the country hard,” he said.
Referring to the hike that will encourage illegal trade and tax evasion, Shrestha urged the finance minister to review the government’s decision as soon as possible. He also lamented that the government has ignored other alternatives to raise additional funds by means of expanding tax net and controlling revenue leakages.
“The government needs to improve administrative capability and initiate effective means to control revenue leakage, from which it can meet its additional demand of funds,” he said. Shrestha also expressed serious concerns over the government’s unilateral decision to hike the tax rate without consulting the private sector. In reply, Adhikari admitted that the hike in VAT is an obligation in order to meet the increased liability. He, however, assured that the government would soon form a special committee to examine the adverse impact.