Although the government has set a moderately ambitious target, it has not expanded tax net substantially. "Rather, the government will work on identifying new areas for taxation in 2013/14," Finance Minister Shankar Prasad Koirala said, presenting the budget for 2013/14 in Kathmandu on Sunday.
Given the government´s target to mobilize a large chunk of money through revenue, the new revenue policy has made very little change in tariff and duty structure. However, FM Koirala said that it has marginally raised excise duty on alcohol, beer and cigarette. [break]
The government has put focus on improving tax system in the country to expand the tax net. "We will focus on developing electronic systems to collect business information in a bid to expand tax net and bring all the businesses under the purview of tax," Koirala said.
Highlighting the importance of the private sector to drive the country´s economic growth, Koirala said the new revenue policy is investment and private sector friendly. "The new revenue policy will create favorable environment to lure new investment from private sector. Tax system will be made transparent and equitable," Koirala said.
In a bid to encourage private sector to inject fresh investment, the budget has committed to protect and promote manufacturing industries by providing them different incentives on import of raw materials and environment friendly goods.
Koirala has proposed to start voluntary tax compliance campaign for the private sector in order to meet revenue target. "I will focus on attracting domestic as well as foreign investment in the country and eventually increase revenue collection," said Koirala.
The budget has decreased the customs service duty from Rs 600 to 100 per letter of credit (LC), which is collected for export of goods. "I have also removed export duty on 26 goods except those listed in the sensitive list," Koirala said.
Additionally, the budget has committed to modernize customs offices and simplify the customs clearance process. "The government will focus on developing institutional capacity of different responsible agencies engaged in controlling revenue leakage," the budget speech reads. "There will also be a strong coordination among agencies to curb revenue leakage in the fiscal year 2013/14."
Koirala also said the government will waive off fine and interest amount for tax defaulters if they clear their outstanding dues by mid-December.
The government has also decided to 50 percent discount on customs duty to media houses on import of newsprint. Similarly, the government will slap just one percent customs duty on import of bicycles.
Koirala also said the government will also form a high level commission to study whether or not the current rate of value added tax (VAT), income tax and excise duty are appropriate.
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