Contribution of income tax, VAT up, customs revenue down

KATHMANDU, March 3: Revenue regime has changed over the past few years with inland revenue, including income tax and Valued Added Tax (VAT), surpassing mobilization of customs duty.

Collection of income tax and VAT has improved over the past few years. Statistics show collection of income tax and VAT has surpassed customs revenue for the consecutive years and in the mid-term review of the current fiscal year as well.

In the first six months of the current fiscal year, income tax contributed 20.96 percent in total revenue collection. Contribution of VAT and customs tax stood at 29.36 percent and 19.88 percent, respectively. Share of VAT in total revenue mobilization was 20.12 percent in the previous fiscal year.

Unveiling the mid-term review report of the budget for fiscal year 2013/14 on Friday, Finance Minister Ram Sharan Mahat termed the declining share of customs duty in total revenue a positive development. “We should widen tax net to increase inland revenue collection and further reduce share of customs duty in total revenue,” he had said.

The government took the initiative to reduce the share of customs revenue in total revenue collection after Nepal became the member of World Trade Organization (WTO) in 2004. According to WTO, member countries have to bring down customs duty below 15 percent of total revenue collection by 2015.

Contribution of income tax increased to 20.96 percent in the mid-term review from 15.9 percent of 2005/06. However, the share of VAT has remained constant over the past three years at around 30 percent. Likewise, excise duty collection has also improved over the years from 10 percent of 2005/06 to 13.10 percent in the mid-term review.

The government mobilized Rs 32.48 billion in the first six months of the current fiscal year, which is behind the target of Rs 32.55 billion sect by the government.
The collection, however, is up by 19.99 compared to total collection in the same period last year.

Source: REPUBLICA