Professional bodies unwilling to reveal details to IRD

KATHMANDU, JUN 05 -

The Inland Revenue Department’s (IRD) efforts to bring high earning professionals under the tax net have run into difficulties as their associations have been unwilling to provide details of their members.

The IRD had written to the Nepal Bar Association (NBA), Medical Council, Veterinary Council, Institute of Chartered Accountants of Nepal (ICAN) and the Department of Cooperatives, among others, a month ago asking for particulars of their members. However, the IRD said they have not fulfilled its request.

“We are really shocked with the unprofessional behaviour of most of the professional organisations from whom we have asked for details of their members,” said a senior IRD official who did not want to be identified. “Our aim is to compare the number of professionals who are registered with the tax office and those who are not.”

The IRD had sought to list the members of professional bodies with the aim of starting a campaign to bring more professional firms and individuals under the tax net by making it mandatory for them to obtain a permanent account number (PAN) and register with personal income tax (PIT). 

The IRD is now planning to assign its own staff to collect information from professional associations. “We are now engaged in preparing a working procedure on the process of how to deploy tax officers to collect information on the number of professionals and how they can be brought under the tax net at the earliest,” said Tanka Mani Sharma, director general of the IRD. “Once this is done, we will send the tax officers into the field within a week.”

Professionals including medical professionals, engineers, auditors, lawyers, artists, consultants, brokers, professors and contractors, among others, are the major targets of the planned campaign. According to the IRD, some 22,000 professionals have been brought under the tax net so far.

Meanwhile, professional organizations said they had not disclosed the requested details to the IRD as they were unsure about its legality. Bijaya Mishra, general secretary of the Nepal Bar Association (NBA), said that though his association had received a letter from the department, it had not responded to it as the association is not sure if it is legal to reveal details about its membership.

“If the law permits us to do so, we will respond to the department,” added Mishra. He said that more than 50 percent of the law practitioners had registered with the tax office. He added that the rest had not registered as their income was below the threshold for paying tax. “More than 80 percent of our professionals do not earn high enough to obtain PAN and PIT,” he said.

Meanwhile, Damodar Gajurel, president of the Nepal Medical Council (NMC), said they hadn’t heard from the department. Auditors make up the highest number of professionals to come under the tax net with 6,070 professional firms and individuals registered at PAN and PIT. They are followed by 5,640 researchers and consultants. According to the IRD, 552 brokerage firms are registered with PAN and PIT. In terms of individuals, some 1,700 medical professionals have come under the tax net while the number of auditors registered with the tax office is 40.

Professionals under tax net

Institutional

Lawyers     608

Auditors    6,070

Brokers    552

Consultants, Engineers        2,230

Advertisers        2,200

Researchers, consultants        5,640

Medical professionals        1,000

Individual

Medical professionals        1,700

Engineers        200

Auditors        40

Lawyers        250

Consultants        300

Artists        500

Source: The Kathmandu Post