Kathmandu, October 9
The government has expressed concerns over the increasing number of credit filers under the value added tax (VAT) and urged Inland Revenue Department (IRD) to inspect the market to cross-check stock of traders.
According to Ministry of Finance, out of the total 176,000 taxpayers registered under the VAT net, around 50 per cent are credit filers. As per the VAT rules, traders can file VAT credit until the imported goods are sold out. Revenue collection under VAT, which is the major contributor in revenue, has been weak since last fiscal as the number of non-filers, zero filers and credit filers is on the rise.
“Only around 16 to 17 per cent of the taxpayers registered under VAT net file the tax,” said Shanta Raj Subedi, finance secretary.
Speaking in the programme organised in the Ministry of Finance to launch a book titled ‘Performance of Value Added Tax in Nepal’ written by Finance Secretary Subedi, he said that proper enforcement of VAT is critical for the country’s tax system.
While it has been two decades since VAT was enforced in the country, the government is still facing challenges in enforcement of proper billing and controlling the leakage.
Increasing number of credit filers is a threat to the VAT system because the traders may not be filing the VAT despite clearing their stocks of the imported goods. The IRD has been told to intensify the market monitoring and slap penalty if the taxpayers are unable to show the stock. Traders need to debit the VAT to the tax office after collecting VAT from the consumers.
Subedi’s book was launched by Finance Minister Gyanendra Bahadur Karki.
A version of this article appears in print on October 10, 2017 of The Himalayan Times.