Financial ordinance expected on January 14
Kathmandu, January 7:
Customs duty on the import of raw material and secondary raw material should be fixed at minimum possible rate to support domestic industries, which are battling an unfavourable environment in the country, urged industry experts.
Speaking at a press meet organised by the Federation of Nepalese Chamber of Commerce and Industries (FNCCI), experts and businessmen aired their views for the making of Finance Ordinance 2006 which is set to be announced on January 14.
Vice-president of FNCCI, Diwakar Golchha said, â€œTo make Nepal an attractive destination for investment and render its industries competitive, the rate of customs duty on the import of raw material and secondary raw material should be kept as low as possible.â€
He added that the implementation of VAT at the grass root level has not been effective, leading to illegal transactions such as smuggling, import of under-valued goods. Ineffectiveness of the VAT regime has also forced the government to opt for a high tariff regime.
â€œThe size of the economy should grow once the VAT system becomes effective. The export industry must prove to be the point of thrust for the growth of the economy,â€ said Golchha. In the case of readymade goods, reduction in import duty should be fixed, keeping in mind the state of such goods being produced in Nepal.
FNCCI also made suggestions on income tax, custom and excise duty. It said, to increase income tax base, the retailers registered under VAT should be given discount on their income tax.
Cottage industry products like pashmina and carpets should be given discount on income tax. Industries established in rural regions should be given discount on income tax for 15 years, expect those that have already been put under the black list.
The added 1.5 per cent income tax on account of security should be lifted. It also suggested agricultural products should be made VAT-free and bank guarantees should be returned from the custom offices themselves, for export-oriented industries.
The FNCCI also urged the government to fix a 2.5 per cent import duty on the import of industrial machineries. A revision in the regulation of Custom Act to make it time-bound and practical has also been suggested.
On the excise duty front, the government has been urged to immediately implement the provision of sticker. Local breweries should be given permission to brew alcohol of all categories.
Speakers, on the occasion, urged the government to save domestic industries as they are the backbone of the national economy. â€œThe local industries are hit hard due to the ongoing crisis,â€ they said.