KATHMANDU, June 29: Stock brokers have halted the trading of shares in the stock market to protest against the Inland Revenue Department's order to register themselves for value added tax (VAT).
The brokerage firms did not carry out transactions of securities in Nepal Stock Exchange (Nepse) on Thursday. In its recent letter to two brokerage firms, the IRD had asked them to clear their VAT overdue of last four years following assessment of their tax liabilities, fine and accrued interest.
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Issuing a statement on Thursday, Stock Brokers Association of Nepal (SBAN) said that the transactions were ‘automatically halted’ as there has been policy uncertainty and practical difficulty over the tax policy in the wake of taxpayer service offices' decision to determine VAT and instruction to register themselves for VAT.
Arguing that VAT is not its members’ liability, the umbrella organization of 58 brokerage firms said trading of shares in the secondary market will be halted until the issue is resolved and the policy uncertainty over VAT is addressed.
The IRD recently carried out VAT assessment of two brokerage firms, determined the tax liabilities for them and ordered them to get registered for VAT. Priya Raj Regmi, President of the SBAN, said that brokerage firms had not so far collected VAT from clients, therefore they could not file the overdue VAT as determined by the IRD.
“We have been undergoing through full audit regularly. And, VAT has never been an issue so far. Now, it suddenly comes up. Theoretically, it's the consumers who have to pay VAT. Yet, there is policy ambiguity and uncertainty over the VAT,” said Regmi.
“Since the IRD has ordered only these two firms to get registered for VAT, they have to issue VAT bill for each transaction from tomorrow if there is trading. If they will issue VAT, what other brokerage firms are going to do? There is a lot of uncertainty and lack of policy clarity whether to issue VAT bill or not or who will have the liability for VAT. So brokers will not carry out trading until this policy uncertainty is addressed,” he added.
