KATHMANDU, Nov 23: The government is preparing a draft of unified tax code and aims to finalize it by the end of Fiscal Year 2017/18 after holding needful consultation with stakeholders including the private sector.
The new code aims to simplify all tax laws and procedures and facilitate taxpayers.
Speaking at an interaction organized jointly by the Confederation of Nepalese Industries (CNI) and Society of Economic Journalists (SEJON-Nepal) in Kathmandu capital on Wednesday, Revenue Secretary Shishir Kumar Dhungana said that the ministry was working on unified tax code as part of reforming the country's taxation system. He also said that the government wants to put in place a taxation system that prioritizes expanding the tax net and economic growth.
Amid concerns of the private sector that the focus of the government has been only on filling the state coffers, he argued that the government was also spending on productive sectors.
“The main responsibility of the Finance Ministry is to collect revenue and arrange resources for the country,” said Dhungana. “There might not be efficient in operation or allocation. But, we do not invest only after weighing on the return on investment. We spend on productive sectors, social welfare and the overall development of the country,” he added.
Earlier, speaking at the program, CNI President Hari Bhakta Sharma said that the government has failed to accelerate public spending and economic development in line with the revenue growth. According to Sharma, the uncertainty in tax policies has also discouraged investment and expansion of businesses in the country. “The policy that comes today under a finance minister does not get continuity when the next finance minister comes in. We should have tax certainty in the country as well as simplification of tax laws and rules,” he added.
Revenue Secretary Dhungana, however, denied Sharma's assertion that there is a lot of tax uncertainty in the country. “There is not any uncertainty in the tax rate because we have kept the tax rates unchanged for many years,” Dhungana said.
Also speaking at the event, CNI Vice president Satish Kumar Moore said that the businesses should not be burdened with additional tax in the new federal structure. “There is a lot of concern about how the state restructuring will impact businesses and taxation. We think that there should not be additional tax burden on businesses,” added Moore.
'READY TO RETHINK CORPORATE TAX RATE'
Revenue Secretary Dhungana also said that the government was ready to rethink corporate tax rate provided that it scales up economic activities in the country. Currently, business firms pay corporate tax rate ranging from 20 percent to 30 percent. “Globally, there are talks on reducing corporate tax rate. We are also ready to review the corporate tax rates if it helps in generating significantly more economic activities in line with the global tax regime,” he added.
RS 820 BILLION NEEDED IMMEDIATELY FOR LOCAL UNITS
Revenue Secretary Dhungana said that an estimated Rs 820 billion is needed immediately to resume services at the local units under the new federal structure. “This budget is needed immediately to start services at local units across the country. We are very worried about this liability which accounts for nearly 59 percent of the current budget,” said Dhungana.
The government is transferring a total of Rs 225 billion, or 17.6 percent of the total budget, to local units as per the budget announcement made by the Finance Ministry.