Progress in investigation of bills mismatch cases slow

KATHMANDU, JAN 10: 

Little progress has been made so far by the tax administration in the investigation of some 44,000 firms which were brought under the scanner on suspicion of being involved in evading Value Added Tax (VAT).

The Inland Revenue Department (IRD) — the tax administration — had started investigations of those firms in May last year after a mismatch was revealed in their financial transaction records.

The department is focused on meeting the revenue target, said deputy director at Inland Revenue Department Bishnu Prasad Nepal, adding it is collecting information regarding the progress on the investigation from concerned Inland Revenue Offices.

Entrepreneurs who were under scanner had openly asked the Finance Ministry for an opportunity of self-declaration.

The Finance Ministry has not asked IRD to update the progress regarding the investigation of mismatch cases so far, said secretary at the ministry Shanta Raj Subedi, adding that the investigation is a little bit different. 

“Prominent organisations of private firms — Federation of Nepalese Chambers of Commerce and Industry, and Nepal Chamber of Commerce — have asked the ministry to provide the businesses an opportunity to declare the tax citing that the mismatch occurred due to an ‘error’ rather than ‘intention’,” Subedi said. “The ministry is still considering whether to provide that opportunity.”

He, however, said that the investigation process by the tax administration is continuing.

The tax administration had said that Permanent Account Number (PAN)-registered firms were involved in evading VAT though their yearly transaction was worth more than Rs two million.

A majority of traders and firms in the country are taking consumers for a ride to evade VAT by not issuing invoices to limit their transaction amount within Rs two million, IRD had revealed, adding that the trend of hiding the actual transaction amount had become chronic.

According to the department, firms had submitted false statements regarding their income and transactions to conceal their actual transaction. 

The department, while doing a system cross verification, came to know that there were mismatches in the transaction account of companies when it found that the companies that had claimed to have bought from certain firms had never bought anything from them.

If the firms are found guilty they will then have to pay 13 per cent value added tax and 25 per cent income tax and an equal amount in fines.

Source: THT