KATHMANDU, July 6

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the largest private sector umbrella body, has called on the government not to raise tax rates in the next fiscal year, citing most of the businesses are yet to recover from earthquakes of April and May.

The appeal comes a day after a High-Level Tax System Review Commission, formed under Rup Khadka, recommended imposition of reconstruction tax of up to two per cent to finance reconstruction in the aftermath of the quakes.

“The government should not increase tax rates in the next fiscal to facilitate firms and manufacturing units to resume operation in full capacity,” FNCCI President Pashupati Murarka told an interaction held in presence of Finance Minister Ram Sharan Mahat today.

The newly-elected FNCCI president also urged the government to introduce an asset declaration regime, so that the government can create record of assets owned by the public. “But such regime should not levy extra cost on those who disclose their assets,” Murarka said.

He also asked the government to raise the threshold of value added tax (VAT) from Rs two million to Rs 10 million.

Responding to requests made by the FNCCI, Finance Minister Mahat said the government was trying to address the problem related to asset declaration by adopting a measure that does not raise eyebrows of international bodies like Financial Action Task Force that creates global standards for fighting financial crime.

The minister also said the government was willing to increase VAT threshold but on condition that a ‘transitional arrangement’ be first put into place so that ongoing investigations over cases related to mismatches in VAT paid at customs point and VAT imposed on customers could be amicably settled.