Taxpayers enjoyed Rs 45.78b worth of tax waivers, discounts in 2013/14: Report
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Municipalities without facilities
KATHMANDU, April 15: Office of the Auditor General (OAG) has questioned the rationale of tax waiver and discounts worth Rs 45.78 billion provided to different firms and individuals in the last fiscal year.
OAG has also said that the government agencies even do not have details of recipients of such facility.
In its report published on Sunday, OAG said the rationale of such facility cannot be established as it is yet to get supporting details of tax waivers and discounts.
Waivers and discounts have been provided different individual and institutional taxpayers on income tax, customs tax, Value Added Tax (VAT) and excise duty. "However, Ministry of Finance (MoF) has not maintained integrated details of such waivers," reads the report.
Such discounts and waivers also include VAT reimbursement worth Rs 7.29 billion on import of ghee, oil and mobile phones.
The report also said tax discount provided to Salt Trading Limited to import sugar for smooth supply during Dashain festival in the last fiscal year cannot be justified as it had negative impact on domestic sugar mills. The state-owned trading received tax discounts worth around Rs 100.3 million on import of sugar.
Similarly, OAG has also said justification behind providing tax waiver worth Rs 4.12 billion on import of maize seed and soybean to prepare cattle feed is also not convincing. OAG also said reimbursement of VAT and customs duty worth Rs 1.28 billion provided to cooking oil manufacturers on import of mustard, soybean and sunflower seeds has not made any positive impact. The logic behind such facility was to make local cooking oil producers competitive and replace imports of cooking oils.
Pointing out chances of misuse of construction equipment and construction materials imported on tax facility, OAG has said that there should be a proper equipment and material identification to provide such discount and tax waiver on import of equipment and construction materials used in generation, transmission and distribution of hydropower projects. Hydropower and transmission line developers enjoyed tax facility worth Rs 1.45 billion in the last fiscal year. Such facility is provided only on items not produced in the country.
In its report, OAG has also said that tractors imported for agricultural purpose have not been utilized for the stated purpose. The government had provided tax facility worth Rs 214.6 million on import of tractors in 2013/14.
OAG has asked the government to monitor import of equipment and construction materials made by donor-funded projects and maintain database of such equipment to make sure that equipment and materials imported under tax facility is not misused.
The government waived of taxes worth Rs 764.8 million on import of goods in master list of donor-funded projects in the last fiscal year.
OAG has urged the government to provide tax waiver on import of LP gas for household consumption only. The government provided Rs 3.19 billion worth of tax waiver and discount on import of LPG gas in 2013/14.
Likewise, OAG has concluded that reimbursement of 60 percent of VAT on transfer of cellphones from one trader to another cannot be justified. Such tax facility was introduced to stop illegal import of cellphones. But it has not been found effective.
Cellphone traders received VAT reimbursement worth Rs 399.6 million in the last fiscal year up from Rs 304.41 million of 2012/13, according to the report.
