Borrowers show inflated accounts to take credit

KATHMANDU, AUG 17: 

An official at Finance Ministry has revealed that even large taxpayers create inflated accounts to obtain loans from banks. 

Speaking at a programme organised by the Inland Revenue Department, joint secretary at the ministry Shanta Raj Subedi said that the ministry has found three parallel accounts of a single firm. “Firms prepare different accounts to take loans from banks, and to submit to the tax administration against their real account,” he said, cautioning the banks to be aware of the trend. 

He suggested banks to consult the tax administration if they receive a loan proposal which is suspicious. Banks will be at risk if they do not check the credibility of the accounts of the borrower, he said. 

Finance Ministry has started investigating the trend of inflated accounts, he further said, adding that more than 20 accounts submitted by firms who wanted to take loans have been found to be fake so far.

In the programme, deputy director general at the Inland Revenue Department Madhu Kumar Marasini said that the trend of avoiding tax compliance is high in the country. 

A total of 539,014 firms and persons are in the income tax net according to official data of the department, he said. “But, the number of borrowers for commercial purposes is more than 700,000,” he said, adding the data clearly shows the situation of revenue gap in the country. High compliance cost against revenue is a challenge to the tax administration, he revealed. The average cost is high to small taxpayers as compared to large taxpayers, he said. 

IRD will introduce a five-year strategy plan and three-year reform plan for the modernisation of tax policy and collection, he informed. The strategic plan is aimed at making the tax administration more effective for internal revenue mobilisation, professional services, innovation and economic growth, he said.

Similarly, reform plan will address dozens of issues including commitment of tax administration to communicate and consult with taxpayers, stakeholders and partners and to provide easily accessible service, he added.

Source: THT