However, it vowed not to spare investments made in real estate and the housing business nor professionals and commission agencies, if they do not take advantage of the voluntary declaration of income scheme (VDIS) and legalize their property through payment of 10 percent tax.
The assurance from the prime minister came on Wednesday, when a delegation from the private sector met him to demand that the government not scrutinize sources of income that has already been injected in different sectors of the economy.
The private sector had complained that the decision of the government to dig out sources for undisclosed income had adversely affected the investment climate and discouraged investors.
“We are glad the prime minister listened to our genuine demands and promised not to seek the sources for incomes ploughed back into the industries and productive sectors,” said Surendra Bir Malakar, president of Nepal Chamber of Commerce.
Talking to myrepublica.com, Malakar, who was also a member of the delegation that met PM Dahal, said the PM did not fulfill all their demands though.
“He (PM) said the government will not hear our amnesty demand in the case of real estate dealers, professionals and commission agents. Instead, he said the government will take strong action against players in those fields who do not comply with VDIS,” said Malakar.
During the meeting, PM Dahal had also requested the private sector not to misconstrue the government’s announcement and sully the investment climate.
With the understanding reached on Wednesday, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and other business associations have claimed that their differences with the government over VDIS have ended.
The private sector representatives even made a commitment to the PM to make VDIS successful. “We will now appeal to all businessmen to correct their tax behavior and comply with the scheme,” said Malakar.
The government had announced VDIS in this year’s budget in October, 2008 in a bid to give an opportunity to people who have amassed property without paying the taxes due to pay the taxes now and legalize their property.
It promised not to seek the sources of income thus disclosed, in a bid to lure people to come into the tax net. As for people who refuse to take advantage of the scheme, it has warned of tougher action like confiscation of property and fine and penalty of up to100 percent.
The Inland Revenue Department (IRD), meanwhile, said that some 2,400 people have disclosed their property under VDIS so far, contributing to government revenue to the tune of more than Rs 1.15 billion.
As of Wednesday, property worth Rs 11.50 billion has been legalized under VDIS, said Bishnu Nepal, director at IRD, adding that more people were expected to disclose their property over the remaining two days of the scheme.
VDIS is scheduled to end on March 13. IRD has said it was preparing to take strong action, including confiscation of property, against tax evaders who do not comply with the scheme, once the program ends.
milan@myrepublica.com
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