Kathmandu, July 17

The government is mulling over forming a permanent tax settlement commission to look into tax-related disputes.

The Ministry of Finance (MoF) is gearing up to form the aforementioned committee, which would not have the authority to settle the tax disputes, but would look into the cases and give its recommendations to Federal Revenue Board, which will take the final decision.

In the draft bill of the Federal Revenue Board, which has been forwarded to Nepal Law Commission, MoF has proposed to form a permanent commission. “We plan to table the bill at the Parliament within this quadrimester.” Shishir Kumar Dhungana, revenue secretary at MoF said.

After facing criticisms due to functions of Tax Settlement Commission, MoF is considering new legal provisions for settlement of disputes on tax issues. “Forming tax settlement commissions time and again has drawn controversies, so the government wants to form a long-term commission which will have strong legal base,” Dhungana added.

Till date, the government has twice formed Tax Settlement Commission as per the provision of Tax Settlement Commission Act, 1976. The latest commission, which had formed under the leadership of chartered accountant Lumba Dhwaj Mahat in 2015 has been highly criticised. Umesh Dhakal held the post of the member and Chudamani Sharma, director general of the Inland Revenue Department division, was the member secretary in the commission.

The 54th report of the Office of the Auditor General (OAG) had also flagged the decisions taken by the commission. OAG report had revealed that the commission had settled the cases of tax disputes worth Rs 30.52 billion, with exemption rate as high as 68.73 per cent.

Subsequently, the Commission of Investigation of Abuse of Authority (CIAA) has filed a case in the Special Court on Sunday against the members of commission, who have been accused of embezzling Rs 10.2 billion.

Today, the Finance Committee of the Legislature-Parliament also directed the government to scrap the Tax Settlement Commission Act, 1976.

“As the system of self-assessment on tax has already been established with the introduction of Income Tax Act, 2001, the Tax Settlement Commission Act, 1976 is no longer necessary. So, the committee directs the government to scrap the latter,” Prakash Jwala, the committee chair, said.