Revenue Dept acts tough on professionals

KATHMANDU, SEP 26 -

The Inland Revenue Department (IRD) has asked the offices under its jurisdiction to issue letters to professionals who have not yet registered with the tax regime and those failing to comply with the tax provisions.

The department’s latest move came amid complaints that a majority of professionals like doctors, engineers, chartered accountants and lawyers have remained out of the tax net despite making huge earnings.

IRD Director General Tanka Mani Sharma said that Inland Revenue Offices (IROs) have been instructed to bring those not yet registered with the tax under the tax net.

“I have told IROs to ensure that those failing to submit tax details on time follow the timetable and to investigate on those who furnished incorrect tax details.”

The IRD has given those not yet registered with the tax to do so

within mid-January 2014. Those failing to produce tax details have until mid-October this year to furnish those details. Sharma said the IRD was forced to take such measure as the professionals have been relunctant to comply with the tax regime.

Of late, the revenue administration has adopted a tough approach against the professionals, with the Department of Revenue Investigation raiding on the law firm of prominent lawyer Shambhu Thapa and other professionals. Thapa blamed the Commission for Investigation of Abuse of Authority (CIAA) for instigating the tax offices to take action against his firm for his firm stance against the appointment of CIAA chief Lok Man Singh. An IRD official also admitted that the CIAA has shown a great interest on tax evasion cases. “With the CIAA keeping a close eye on us, we have been encouraged to act tough against tax evasions,” said the official on condition of anonimity.

Amid controversy over the raid on Thapa’s law firm, the IRD had recently warned of taking stringent measures against the professionals failing to come under the tax net and those failing to pay adequate tax . However, Sharma tried to clarify the recent crackdown on professionals as a regular function of the IRD. According to the IRD, lawyers are among the professionals least registered with tax .

While the number of practicing lawyers in Nepal is estimated to be more than 10,000, only 1,000 have taken permanent account number (PAN). And only 100 law firms have registered under the value added tax (VAT) net, say IRD officials. However, the number of doctors, auditors and engineers with PAN are relatively higher. As of the last fiscal year, a total of 2,500 engineers have taken PAN, while the number of doctors, auditors with PAN stand at 7,600 and 7,000 respectively, according to the IRD.

“Although the number of doctors registering with PAN is higher, they have not paid adequate tax with a majority of them just paying 15 percent income tax ,” said Sharma. He also said the IRD had received complaints that certain auditors have been taking money from other tax payers and paying tax in the name of their clients, leaving them exposed to risks.

Source: The Kathmandu Post