Anil Kumar Sinha

Kathmandu:

On January 14th 2005, the finance minister promulgated the new finance ordinance. It wrote off an iniquity that had harmful implications and had been in effect for the last three years.

Nepali tax laws would have treated the legendry golfer Tiger Woods if he had won a tournament in Nepal and a gambler who had won a jackpot in a local casino equally, while they were in Nepal. In the previous finance ordinance it had been stated that the prize money won by a world-renowned player in any sport would be treated alongside the gambler who struck the jackpot.

Incomes of both were treated as ‘incomes from a sudden event’. When a player competes with other players in an internationally recognised tournament, he does three things. He hopes to win the game, introduces the game to common people and attracts a lot of sport tourists. The previous finance ordinance regarded even such a prize money as if it was a sudden gain, sheer luck, without any effort. I have not been able to convince myself that efforts of renowned players who visited The Gokarna Golf Club for the recent tournament there, should be compared with the income of a gambler. Both incomes attracted a tax of 25 per cent on gross. This tax was not originally envisaged in the prevailing tax laws. After a great deal of effort and investment from donor organisations, the new Income Tax Act 2058 (2002) came into effect from 1st April, 2002.

Even though it became effective on April Fool’s day, no one thought through all the foolish implications. The Act only included three aspects as the sources of income, they were the income from remuneration, business and investment. Prize money or the luck of a gambler did not fit in any of the three categories. As an afterthought, someone introduced a new source called ‘sudden income’. Originally I thought it was a mistake in print and possibly the tax was only on the sudden windfall receipts without any effort or specific skill, but later realised that it was an unequal ‘equality before the eye of the law’.

Nepal is in need of new investments and has high potential to introduce sports tourism. I saw this provision as one of the worst discouragements. In the present context, the participation of a renowned player in a tournament in Nepal is more our need than in the interest of the player. It was the right time to see that sports sponsors are not burdened with financial liability. It certainly is in the interest of the country to provide incentives to people who have potential of bringing many people from abroad to watch their game and achievements.

Thankfully, the team the current finance minister changed the status between the chievement of a gambler and an international player. The new promulgation waives off tax on national and international awards in the field of literature, art, culture, sports and journalism.