FNCCI concerned about reports on VAT refund facility misuse

KATHMANDU, JUN 12 -

The Federation of Nepalese Chambers of Commerce and Industry ( FNCCI ) on Tuesday expressed concern about media reports that the value added tax (VAT) refund facility provided to ghee and oil producers have been misused.

Stating that publication of such “one-sided” reports in the media “without knowing the real situation” might be harmful for the private sector, especially at a time when the government is preparing an annual budget for the next fiscal year.

“The FNCCI is always of the opinion that wrong doers should be brought to book,”

said FNCCI Acting President Bhaskar Raj Rajkarnikar.

“But the illogical and fake information disseminated with ill-intention would put the entire industrial sector in trouble.”

Rajkarnikar said the government should adopt a multi-rate VAT policy as per the nature of industries so as to prevent any misuse in the future. “The present threshold of VAT also has been problematic,” he said at a programme hosted jointly by the FNCCI and Nepal Vegetable Ghee and Oil Manufacturers’ Association (NVGOMA). “There should not be any threshold at all, or the threshold should be increased to Rs 10 million a year.”

NVGOMA President Bikash Dugar said the VAT refund facility is very important for the producers as local products cannot compete with Indian imports if the incentive is scrapped.

In a bid to make the local ghee and oil producers competitive against Indian products, the government has been providing a 50 percent VAT refund on the import of raw materials necessary for the production of ghee and oil.

According to the Association, only 16 industries out of 21 established are currently in operation. “These industries have a total investment worth around Rs 20 billion and employ more than 8,000 individuals,” Dugar said.

He said the Indian producers have to pay only 4 percent VAT, while local industries have to pay 2.5 percent excise duty and 6.5 percent VAT. “Our products are already less competitive compared to Indian products.  And, such rumours in the media will even spoil our competitiveness, making it difficult for our industries to survive.”

Source: The Kathmandu Post