Tanka Mani Sharma, director general of Inland Revenue Department (IRD), told Republica that process had been initiated to categorize taxpayers into three groups -- large, medium and small -- and make three separate administrative structures for them accordingly.
“As our experience shows that all kinds of taxpayers can´t be dealt by a same office, we need to establish separate authority for each category. Only then we will be able to lay special focus on certain group of taxpayers,” added Sharma.
The government has categorized taxpayers having annual turnover of more than Rs 400 million as large taxpayers. It has opened Large Taxpayers´ Office (LTO) to oversee them. However, other taxpayers have not been categorized.
At present there are around 700 large taxpayers that contribute around 50 percent of total revenue collection. Similarly, around 2,000 firms have been contributing nearly 25 percent of the total revenue. Three districts in the Kathmandu Valley have been collecting more than 75 percent of the total revenue.
There are more than 70,000 taxpayers in the Kathmandu Valley and only 5-60 taxpayers are overlooking them because of human resources crunch.
“We can increase revenue mobilization by strengthening revenue administration and putting in place stronger investigation mechanism,” said Sharma.
The government is pursuing the system of self assessment of tax by taxpayers themselves in a bid to make them more responsible toward their tax liabilities.
“Contribution of tax collected through revenue investigation is hardly 4 percent as remaining amount comes from self assessment of tax by taxpayers themselves,” Sharma added.
The IRD is also devising measures to make taxpayers more responsible toward their moral duties to support government in mobilizing more revenue.
“Though tax payers are investing billions of rupees in different businesses, some of them still lack business ethics,” Sharma said, adding: “We will soon formulate policies that make them more responsible toward the state.”
Though taxpayers have been given full authority to collect VAT on behalf of the government, large number of taxpayers has been found misappropriating VAT inflicting huge revenue loss on the state.
IRD assesses tax in additional suspected frauds
KATHMANDU (REPUBLICA): Since the revelation of high profile VAT and income tax fraud by 518 taxpayers three years ago, the IRD has completed investigation of additional two groups of taxpayers into the suspected tax evasion.
According to IRD assessment, Rs 4.16 billion is to be recovered from 377 firms out of the 495 cases under investigation.
In other similar investigation, IRD has assessed that tax worth Rs 357.6 million is to be recovered from 263 cases out of a total of 1,533 cases under investigation. “We estimate to recover Rs 3 billion from the total 1,533 cases.
The IRD estimates to recover Rs 6.97 billion from 518 cases of revenue evasion that was unearthed some three years ago.