Kathmandu, May 23

Revenue Consultative Committee (RCC) under the Ministry of Finance (MoF), which provides recommendations on tax policy measures, has suggested the finance minister to introduce a raft of reforms on administrative front to enhance capacity of enforcement agencies so they can properly enforce tax laws and provide efficient service to taxpayers.

Submitting its report to the minister today, the RCC has recommended a number of reforms needed in the system, including effective utilisation of information technology, to facilitate taxpayers while filing their taxes, among others.

According to the RCC, a taxpayer has been spending 342 hours in a year filing taxes. Even after the enforcement of electronic filing system, a taxpayer still needs to visit the tax office 34 times in a year, as per the committee.

“Simplifying the tax filing procedures could also encourage more people and firms to file their taxes,” said Laxman Aryal, joint secretary at the Revenue Division of MoF and convener of the RCC. Simplification in tax system and procedure is critical to increase the revenue base, he added.

Simplification in procedure, as per him, will give necessary impetus for investment-friendly environment and reinforce the tax system as well. “We have witnessed compliance gap in our tax system rather than shortcomings in the policies,” said Aryal.

The RCC has recommended for the removal of the value added tax (VAT) refund in cell phones, flour, edible oil, among others. The discount schemes that have been announced through the financial bill have also been misused, as per the RCC.

It has, in the mean time, recommended a few steps to boost productivity. The committee has proposed only one per cent customs tariff on agriculture inputs, VAT rebate in premium of livestock insurance, among others. It has also recommended some measures to control revenue leakages.

RCC has also recommended forming a Revenue Board and setting up a permanent mechanism for the tax dispute settlement for the formulation, simplification and enforcement of tax policies and regular settlement of disputed tax amount.

Receiving the report, Finance Minister Bishnu Prasad Paudel expressed commitment to bring useful and possible measures recommended by RCC through the fiscal bill 2016-17.