Kathmandu, November 22

Stakeholders have emphasised on the need to improve tax system in Nepal to expand the tax net.

Speaking at a programme organised to mark the closing ceremony of National Tax Week today, they said that tax-paying system incorporates numerous procedural hurdles and other difficulties which discourage potential taxpayers.

“The government should encourage taxpayers by improving the taxation system of the country, which is full of contradictions, manual functioning and complexities,” said Saurabh Jyoti, president of Tax and Revenue Committee of the Federation of Nepalese Chambers of Commerce and Industry, adding that government should bring unified Tax Act which facilitates potential taxpayers and encourages them to pay taxes to the government.

Echoing Jyoti, Sher Bahadur KC, president of Nepal Bar Association (NBA), said that the government should not only try to impose existing policies, but should also ease taxation system of the country through policy reforms to raise tax compliance among taxpayers.

Meanwhile, traders have charged the government of collecting taxes under different headings that ends up exceeding the tax limit proclaimed by laws and policies. According to them, tendencies of some government officials and offices to collect taxes exceeding the limit set by laws is one of major reasons behind people’s unwillingness to come under the tax net.

“In the name of meeting revenue target of the government and other reasons, government offices are slapping unnecessary taxes on traders that exceed the limit set by country’s policies,” said FNCCI President Pashupati Murarka.

For the same reason, Murarka said that taxpayers are scared to visit Revenue Offices of the government. “The government offices should be responsible and transparent in themselves before attempting to increase tax compliance from taxpayers,” he added.

According to Murarka, government has also failed to assure people that the taxes collected from them are invested for the development of the country. “Unless people are assured of quality expenditure of their taxes from the government, they will not be encouraged to pay their taxes,” Murarka said.

Addressing the discussion programme, Dhani Ram Sharma, deputy director general of Inland Revenue Department (IRD), said that stability in tax laws and policies is required to reform taxation system in the country. Informing that IRD is working to make reforms in tax system of the country from its side, Sharma said, “Besides others, tax laws should be simple, stable, incentivising and promote economic activities in the country to expand tax net.”