Nepal | May 29, 2020

Scrapping transport syndicate to bring ‘billions’ under tax net

Annual transactions in public transport sector stand at over Rs 200 billion

Himalayan News Service
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Kathmandu, April 20

The recent happenings in the country’s transportation industry show that the long-prevailing syndicate system in Nepal’s public transportation sector will end finally.

As the government this time seems to be more committed to scrapping this anti-competitive practice from the country’s public transportation sector, ending the monopoly of transporters in the public transportation sector shall not only ensure the sector’s healthy growth but will bring Nepal’s public transportation sector — which has transactions worth billions of rupees annually — under the income tax net of the government.

As per the Department of Transport Management (DoTM), there are hundreds of transport bodies (transport committees and associations) registered as non-profit associations at the District Administration Offices (DAOs). However, though these transport bodies are functioning as commercial organisations and making huge profits, they are beyond the income tax net of the government.

As transporters have been running their businesses under transport bodies which are registered as non-commercial organisations, the government has been losing huge revenue out of the income that transporters have been recording every year.

Currently, transporters are paying only vehicle tax, infrastructure tax and route permit fee to the government.

Different studies and surveys carried out by the government have shown that public transportation in Nepal records annual transactions worth more than Rs 200 billion.

However, the government has recently made it mandatory for transport bodies to register as companies at the Office of Company Registrar (OCR) by deciding not to renew the registration of existing transport bodies. Once existing transport bodies start functioning as commercial associations by registering themselves at the OCR, they will be liable to pay all necessary taxes, including income tax to the government.

Moreover, DoTM has introduced a rule under which income tax clearance certificate of the government is mandatory for any transport body to renew the registration of their organisation.

“As transport companies now have to register themselves as companies, it will certainly bring their business under the government scanner. This will also directly increase the revenue of the government,” said an official at the Inland Revenue Department, seeking anonymity.

Once transport bodies are registered under the OCR, it is also expected to help the government to maintain clear database of the public transportation sector, including the number of employment that the sector is providing and its contribution to national economy.

Most importantly, bringing public transportation sector under the tax net will ensure the growth of government revenue,especially in the backdrop of government facing crunch of financial resources to implement the federal mechanism effectively.


A version of this article appears in print on April 21, 2018 of The Himalayan Times.

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