Print Edition - 2018-06-22 | MONEY
Taxman to apply VAT regardless of turnover
Jun 22, 2018-
The Inland Revenue Department (IRD) has put more than 30 goods and services in the mandatory list of value added tax (VAT).This means VAT will be imposed on the listed goods and services regardless of the turnover. They include products like furniture, hardware, software and automobiles, among others. Currently, business firms need to pay 13 percent VAT only if their turnover exceeds Rs5 million annually.
Businesses firms that take loans of more than Rs1 million annually have to register for VAT. Likewise, any person who imports goods worth Rs10,000 or more per annum for business purposes has to get the transaction registered for VAT.
Under the new provision, any of these specified businesses will have to pay VAT even if their turnover is below the prescribed threshold, the IRD said.
IRD spokesperson Yagya Prasad Dhungel said they had issued a public notice ordering these businesses to register for VAT regardless of their turnover. “As many of these businesses have been found to be evading VAT citing their small volume of transactions, we have brought all these businesses into the tax bracket,” Dhungel added.
The government introduced VAT in 1998. It is one of the major sources of government revenue.
According to the IRD, VAT accounts for 29 percent of the government’s total revenue collection.
The tax authority has also planned to impose VAT on the business transactions of persons who obtain bank loans for business purposes. Although the IRD had asked such borrowers to register for VAT by amending the VAT regulation in 2015, it failed to implement the provision effectively.
Any person who takes a business loan from any bank of more than Rs1 million annually has to be registered for VAT. Persons conducting business transactions without registering with VAT may be ordered by the tax officer to register within 30 days, according to the amended regulation.
Dhungel said they would implement the provision effectively. According to him, they have already sent an official letter to Nepal Rastra Bank to implement the provision.
As per the IRD, it came up with the measure after a number of borrowers were found to have registered their firms just to obtain loans from banks. “By bringing these firms under VAT, we expect to help check possible misuse of the bank loans,” Dhungel said.
Published: 22-06-2018 08:36