KMC looks to widen tax net with discount offers

- GAURAV THAPA, Kathmandu

Aug 4, 2015-

In a city where 60 percent of taxable components are outside the official tax net, the Kathmandu Metropolitan City has come up with a discount scheme for defaulters of municipal taxes.

A meeting of the Metropolis Council, which reviews KMC’s performance and makes major policy decisions, last month decided to provide 10 percent discount on house rent tax, business tax, vehicle tax and entertainment tax for the period till mid-January of the fiscal year 2015/16. The same discount scheme is also available for house and land taxes for the period till mid-September. Likewise, the KMC is providing 50 percent waiver on penalties on unsettled taxes from previous years.

“We plan to raise Rs300 million rupees in unpaid taxes from this scheme,” Chief of KMC’s Revenue Department Dhurba Kafle said. “We have found discounts to be effective incentives to bring people under our tax net.”

The KMC is entitled to collect tax on business, house rent, vehicles, entertainment, house and land from businesses and homeowners in the city. According to a tentative assessment, the KMC should generate Rs3.40 billion in tax revenue if all people in Kathmandu pay their taxes. However, the city authority hardly collects half of that amount. The KMC raised Rs869 million in tax revenue last year against its target of Rs1.33 billion.

Kafle said that the KMC has three approaches to make people pay their taxes. First, to raise awareness, under which it would distribute brochures around the city. Second approach is to launch a campaign where discounts similar to the current one, would be offered.

If people still do not clear their dues, the KMC takes a third approach which, according to Kafle, is a “force model” where the KMC cuts off services, like waste disposal, to the defaulters or takes direct action.

Last year, the KMC punished select businesses based in Bhrikutimandap, RB Complex and Baneshwor Byapar Sangh, among others, by freezing their bank accounts and non-movable assets. The move paid off as others started paying their taxes fearing municipal action.

But many continue to default on taxes despite being repeatedly punished by the KMC. Kafle said that Kathmandu Mall, Sanskriti Sansthan, Kathmandu Plaza, Kathmandu Business Park, Malla Hotel, Yak and Yeti Hotel, Hotel Shanker, Hyatt Regency, Everest Hotel and Soaltee Hotel are among those who have never paid their house and land taxes. He said they have restricted land transaction of those businesses for two years but to no avail.

Kafle said that the KMC is coordinating with the Department of Commerce, Inland Revenue Department, Office of Company Registrar and other agencies to bring them under its tax net.

The KMC expects to achieve its revised tax revenue target to Rs1.59 billion on the back of the scheme. Several companies and individuals owe the KMC an estimated Rs6 billion in tax arrears.

Published: 05-08-2015 08:22

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment