DoC to expand list of goods for MRP declaration
KATHMANDU, AUG 08 -
In a bid to discourage under-invoicing of imported goods, the Department of Customs (DoC) is all set to expand the list of products whose maximum retail price (MRP) are required to be declared to 10.
The department’s move is aimed at boosting revenue collection that took a beating in the last fiscal year. “We will impose the MRP declaration rule on additional goods within the next four months,” said Tankamani Sharma, director general of DoC.
The department is currently in the process of determining the additional products. “We are currently working on the criteria for fixing MRP of certain products,” said Sharma. Products having a significant market share and whose price fluctuation is more predictable will be added to the MRP declaration list.
As customs duties on most of the imported goods are imposed based on their cost price, under-invoicing is a ploy of importers to evade tax. Since importers actually pay more amount than that declared at custom points, the difference between the retail price and the price declared becomes huge. The reason behind retailers’ reluctance to issue Value Added Tax (VAT) receipts to customers, according to tax officials, is under-invoicing.
Once the MRP declaration provision is imposed, both importers and retailers will find it hard to manipulate customs rules and cheat customers. “The main purpose of putting in place the MRP declaration provision is to discourage under-invoicing,” said Sharma.
Rampant under-invoicing of imported goods at custom points has emerged as the main reason behind the latest tax evasion episode in which businesses were found to be using fake VAT receipts.
Customs officials say under-invoicing is rampant in imports from the third countries and imports from India and China without opening the Letter of Credit (LC). Readymade garments, cosmetics, marble, shoes, watches, sports goods are among the items that are generally under-invoiced. Officials say most of the branded items are under-invoiced.
After finding that importers are not submitting details to tax offices, the Department of Customs (DoC) is issuing import identity cards to importers. The rationale behind this move is to monitor importers’ activities and improve tax compliance. “The new ID cards will help us control some importers’ tendency to import goods once and not submit any details to government agencies to evade income tax,” said Sharma. “Instead, they register another firm and start importing.”
The number of importers is estimated to have reached 35,000 as of the last fiscal year from 28,000 in 2008. “We will provide ID cards to them within 2-3 months,” said Tankamani Sharma, director general of DoC.
The department plans to hold discussions with the private sector in this regard following which working procedure will be prepared for issuing the ID cards. The budget for the current fiscal year has sought to introduce such a system.
DoC also plans to add more customs agents and enforce a code of conduct for them. There are currently around 250 active customs agents although the registered agents are 400, according to DoC. “The increase in the number of custom agents will reduce the service cost,” said Sharma. “It will also end monopoly of some agents.”
Source: Kantipur
In a bid to discourage under-invoicing of imported goods, the Department of Customs (DoC) is all set to expand the list of products whose maximum retail price (MRP) are required to be declared to 10.
The department’s move is aimed at boosting revenue collection that took a beating in the last fiscal year. “We will impose the MRP declaration rule on additional goods within the next four months,” said Tankamani Sharma, director general of DoC.
The department is currently in the process of determining the additional products. “We are currently working on the criteria for fixing MRP of certain products,” said Sharma. Products having a significant market share and whose price fluctuation is more predictable will be added to the MRP declaration list.
As customs duties on most of the imported goods are imposed based on their cost price, under-invoicing is a ploy of importers to evade tax. Since importers actually pay more amount than that declared at custom points, the difference between the retail price and the price declared becomes huge. The reason behind retailers’ reluctance to issue Value Added Tax (VAT) receipts to customers, according to tax officials, is under-invoicing.
Once the MRP declaration provision is imposed, both importers and retailers will find it hard to manipulate customs rules and cheat customers. “The main purpose of putting in place the MRP declaration provision is to discourage under-invoicing,” said Sharma.
Rampant under-invoicing of imported goods at custom points has emerged as the main reason behind the latest tax evasion episode in which businesses were found to be using fake VAT receipts.
Customs officials say under-invoicing is rampant in imports from the third countries and imports from India and China without opening the Letter of Credit (LC). Readymade garments, cosmetics, marble, shoes, watches, sports goods are among the items that are generally under-invoiced. Officials say most of the branded items are under-invoiced.
After finding that importers are not submitting details to tax offices, the Department of Customs (DoC) is issuing import identity cards to importers. The rationale behind this move is to monitor importers’ activities and improve tax compliance. “The new ID cards will help us control some importers’ tendency to import goods once and not submit any details to government agencies to evade income tax,” said Sharma. “Instead, they register another firm and start importing.”
The number of importers is estimated to have reached 35,000 as of the last fiscal year from 28,000 in 2008. “We will provide ID cards to them within 2-3 months,” said Tankamani Sharma, director general of DoC.
The department plans to hold discussions with the private sector in this regard following which working procedure will be prepared for issuing the ID cards. The budget for the current fiscal year has sought to introduce such a system.
DoC also plans to add more customs agents and enforce a code of conduct for them. There are currently around 250 active customs agents although the registered agents are 400, according to DoC. “The increase in the number of custom agents will reduce the service cost,” said Sharma. “It will also end monopoly of some agents.”
Source: Kantipur
