Kathmandu, June 20

Taxpayers registered in the value added tax (VAT) net in the large tax payers’ office (LTO) are now connected to the central server of the Inland Revenue Division (IRD). The invoice generated by 15 taxpayers have started being automatically uploaded simultaneously to the central server of the tax administration.

According to Yagya Dhungel, spokesperson for IRD, the Division will connect hotels, automobile dealers and department stores in this system, which was launched in November last year. Major auto dealers, star hotels and big department stores registered at the LTO have already entered this system.

As per Dhungel, this system was recently launched in Pokhara too and will be expanded throughout the country. Tax offices under the IRD have been urged to execute the system for the big taxpayers gradually in the aforementioned sectors. After covering these sectors the remaining sectors will be covered, he said.

The IRD has introduced this system to minimise the compliance gap in VAT. Billing enforcement was considered the major challenge in VAT system, which was introduced two decades back. VAT has been contributing the highest amount among all revenue sources.

Lack of billing, fake VAT bill and evasion of VAT have posed a threat to the VAT system.  The tax administration is simultaneously intensifying market monitoring to control such ill practices.

A total of 196,000 taxpayers are registered in VAT. Out of them 30 per cent of them are non-filer and 50 per cent are credit filer and zero filer, according to Dhungel. Only 15 to 18 per cent submits VAT to the government.