FNCCI asks government to keep tax rates unchanged

KATHMANDU, July 7:

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has demanded that the government keep tax rates for the coming fiscal year unchanged. The apex body of Nepali private sector has also urged the government to create investment-friendly environment.

Handing over its suggestions for the upcoming budget to Minister for Finance Ram Sharan Mahat on Monday, FNCCI President Pashupati Murarka said they have not demanded the government to reduce tax rates. "We have only asked the government not to make surprise changes in tax rates," he added.

In its seven-page suggestions, FNCCI has insisted that it is not appropriate time to raise tax rates as there is some slack in economy and also industries are yet run at full capacity after the devastating earthquake of April 25.

The government is likely to raise tax rates on some luxury items and levy reconstruction tax on income and corporate tax. However, the private sector has argued that it is not the appropriate time to raise tax rates as the economy is slowly recuperating after the earthquake.

"Rise in tax increase will only erode purchasing capacity of people and slow economic recovery," Murarka said.

The private sector has urged the government to improve service delivery and reduce discretionary authority of government officials. "Several issues have remain unresolved for months due to discretionary authority of government officials and lack of clarity in laws," Murarka added.

Gyanendra Lal Pradhan, chair of Energy Committee of FNCCI, said government officials were dilly-dallying on genuine concerns of hydropower developers. "Our files remain stuck at the Ministry of Forest and Environment for months without any specific reason. Such act dampens investors' confidence," added Pradhan. He also asked the government to bring programs to encourage investors.

"The devastating earthquake has left many hydropower investors discouraged. The government should encourage them by introducing different incentives for them," he said, adding that it would immediately generate 25,000 jobs in quake-hit districts where many hydropower projects are based. "We are not demanding the system of Singapore or any developed country; we are only requesting the government to learn from Ethiopia where investors get license within four days and bank financing in less than two months."

Among others, FNCCI has demanded that the government raise Value Added Tax (VAT) threshold to Rs 10 million, raise income tax threshold to Rs 400,000 for individuals and Rs 500,000 for couples. Similarly, it has proposed to the government to levy 5 percent tax on first Rs 100,000 above the tax bracket, 10 percent on additional Rs 200,000, 20 percent on additional Rs 500,000, and 25 percent on more than Rs 500,000.

FNCCI has also demanded the government reform evaluation of goods at the customs points at realistic price rates and scrap reference prices. It has also requested the government to make needful amendment to existing laws for creating investment-friendly environment in the country.

Presenting budget for 2014/15, Minister Mahat had announced plan to make amendment to over three dozen laws.

NEPALI INDUSTRIES SHOULD BE COMPETITIVE

Receiving the suggestions, Minister Mahat said domestic industries should enhance their competitiveness.

He also said the government has already introduced that allows government offices to buy Nepali goods even if their price is 15 percent more competitive than foreign goods. "If Nepali industries cannot be competitive despite this facility, then there is serious problem," he said, adding that the government was introducing similar provision for projects running under grants and loan assistance of donor agencies.

Source: Republica