FNCCI asks govt to hike VAT threshold to Rs10m

FNCCI asks govt to hike VAT threshold to Rs10m

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has asked the government to hike the threshold for filing value added tax (VAT) to Rs10 million from the current Rs2 million.

The move follows the private sector’s longstanding demand that the threshold should be removed or increased so that a more level playing field would be provided to traders who conduct business by paying VAT.

Submitting a set of suggestions for the budget on Monday, the FNCCI asked for an upward revision of the threshold through the budget for the next fiscal year. Saurabh Jyoti, president of the FNCCI’s Tax and Revenue Committee, said the government should revise the VAT ceiling in order to minimise cases of mismatch.

Likewise, the FNCCI urged the government to allow businesses outside the tax bracket to be registered under VAT if they so desire. The umbrella organization of the business community also demanded that the deadline to adjust VAT mismatch be extended. The government has asked enterprises to adjust their mismatch by the end of this fiscal year.

FNCCI President Pashupati Murarka said lack of legal provision allowing settlement of VAT mismatch had resulted in unpaid taxes. “The law allows enterprises registered under PAN to make settlement of the mismatch but not those registered under VAT,” he said.

The entrepreneurs also urged the government to come up with an export promotion package through the budget. Their demands include increasing cash incentives for exporters, simplifying the process to receive export subsidies, promoting collective trademarks in the international market and formulating and implementing a master plan to promote 10 specific goods in 10 new export destinations respectively.

Carpet exporter Anup Malla said they were expecting a complete export promotion package in the new budget. “Due to lack of export promotion, most factories have been operating at only 7-10 percent of their capacity,” he said.

Likewise, traders have urged the government to redefine sick industries and provide them an easy exit. Presently, production plants remaining closed for the past three years or operating at less than 30 percent of capacity are considered to be sick industries.

“If such industries do not have chances of being revived, they should be allowed to be shut down without undergoing many legal obligations,” said Shiva Shankar Agrawal, president of the Industries Association, Morang.

The private sector has also asked the government to increase the income tax ceiling, deduct renovation expenses from rental tax and scrap the provision of paying tax while transferring more than 50 percent of the ownership.

Meanwhile, Finance Minister Ram Sharan Mahat said the government would consider long-term benefits instead of being revenue-oriented in the upcoming budget. “While increasing the VAT threshold, it is important to consider how to provide an exit to businesses that are not under VAT,” he said.

Source: eKantipur