Kathmandu, March 10
After eating at Fire & Ice, a Thamel-based restaurant famous for its pizzas, ask for a bill and you will get a printed invoice which includes the list of items you have consumed, their prices (exclusive of taxes), and the grand total. The invoice neither mentions the name of the seller nor the seller’s tax registration number. It also does not provide a breakdown of taxes that are applicable, although the grand total includes service charge and value added tax.
If you pay cash, you’ll have to walk away with that invoice. But if you pay through a card, you’ll get a genuine tax invoice, which contains the name of the seller, seller’s tax registration number and breakdown of taxes that have been levied. Generally, restaurants like Fire & Ice levy 10 per cent service charge and 13 per cent value added tax on sales. Service charge is distributed among employees and employers of restaurants. But VAT goes to the state coffers. So, if the invoice does not mention the name of the seller and seller’s tax registration number, possibility of the restaurant owner pocketing the VAT paid by the consumer cannot be ruled out.
If restaurant owners pocket VAT, it’s tantamount to daylight robbery. The owners collect money from consumers promising it will be deposited in the government’s account, but in reality the fund stays with them. So, VAT fraud is far severe a crime than, say, income tax evasion, where individuals avoid paying the portion of income that they themselves have earned.
“These types of malpractices are rampant in the market,” said Bishnu Prasad Nepal, director general of the Inland Revenue Department, without naming businesses. “That’s why we have ramped up market monitoring.”
Earlier, a ride-sharing company called Tootle had also found itself in soup after it was found that it had not deposited VAT collected from consumers in the state coffers. Nepal said sellers would never dare to violate laws blatantly if consumers started asking for genuine invoices.
VAT-compliant businesses must issue their invoices based on the template provided by the government. Such invoices must contain bill number, permanent account number, sellers’ and buyers’ names, breakdown of taxes and taxable amount. Sellers can also issue “abbreviated tax invoices”, which allow sellers to issue bills without mentioning taxes that have been levied. But such invoices should also include seller’s name and permanent account number. “If the bill inclusive of VAT does not contain these details, then the seller will be fined,” said Nepal. The taxman can fine sellers between Rs 1,000 and Rs 20,000 for each offence related to VAT evasion.
Annamaria Forgione, director of Fire & Ice, refused to comment on the issue when contacted over phone.
A version of this article appears in print on March 11, 2019 of The Himalayan Times.