Stakeholders urge govt to conduct proper study before revising tax rates

Published On: June 6, 2024 09:15 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, June 6: Stakeholders have demanded the government to maintain consistent taxation policy to improve confidence of investors towards the economy.

Through the announcement of the budget for fiscal year 2024/25, the government has revised taxes on a number of items including essential foods and industrial raw materials. This has dragged the government into controversy.

Speaking at a meeting of the House of Representatives, lawmaker Gagan Thapa said there should be a consistent taxation policy for at least 10 years. “Taxes are not issues to be decided on an ad hoc basis, rather there should be a thorough study while implementing them. The random change in taxes invites suspicion over the government’s intentions,” Thapa said.

Through the budget, the government has imposed 10 percent advance income tax on import of pulses and legumes, advance income tax of 2.5 percent on imported paddy, doubled the customs duty on imported raw material for steel manufacturing and raised taxes on electric vehicles (EVs) by 20 percent.

While the previous government had imposed low import tax on imported EVs, the present government has revised the earlier provisions. Similarly, the government has also removed value added tax being imposed on imported onion and potatoes. Likewise, the government has also revised last year’s taxation policy on sponge iron and iron billet.

Chandra Prasad Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry, said the changes in income tax, customs duty, excise duty and value added tax have created uncertainty among traders and industrialists. “Lack of policy inconsistencies has not only affected the entrepreneurs, but also affected the credibility of the country in the international market,” he added.

Dhakal said the government might face a huge setback of getting low revenue collection if it changes tax rates frequently. He urged the government to carry out a detailed study about the consequences while revising the tax rates.