Action against defaulters continues

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KATHMANDU, Feb 15: On the second day of action initiated against taxpayers suspected of evading taxes today, the Inland Revenue Department (IRD) carried out three raids, out of the planned six raids.

Officials at the IRD confirmed that the raids were made, but declined to disclose the names of persons and places where the action was taken. However, today’s raids were carried out against businessmen involved in transfer of money through the hundi system.

The raids were carried out on the basis of the heavy telephone charges and the frequency of the businessmen’s trips abroad.

The department had carried out similar surprise checks on Thursday on three such places. With the three raids today, the total number of raids carried out by the IRD reached six.

The raids in the two days were carried out in the Baneshwor, Tripureshwor, Indrachowk and Maharajgunj areas. According to sources, the raids will be continued till mid-March and the next month will be spent on investigations for further proceedings.

The IRD has also sent letters to thousands of suspected tax evaders asking them to disclose their property, or face severe consequences, sources disclosed.

The raids are being carried out on the basis of the potential defaulters’ list prepared by the IRD, which include professionals, businessmen and politicians, among others. The list initially comprised of around 1000 tax defaulters who had failed to submit to the VDIS.

However, as of late, 500 defaulters have already showed up at the department and settled their dues. The department now plans to carry out at least 200 raids during the period.

The investigation team has seized land ownership certificates, vehicle registration books, cheque books to unearth the volume of transaction and bank passbooks, among others, for assessing the value of undisclosed property.

The source added that unless these items are evaluated, whether the taxpayer is defaulter or not cannot be established and punitive measures prior to that cannot be taken.

The action of the IRD officials follows the recent expiry of the extended deadline for the Voluntary Disclosure of Income Scheme (VDIS), which was announced by the government with aims to bring all taxpayers under the tax net.

While those who voluntarily disclosed their property during the VDIS period were charged at the rate of ten per cent on accumulated property, defaulters will be charged with 25 percent tax on the undisclosed property, as per the Income Tax Act and fined extra for defying law.

The investigation officers have the authority to probe in the tax related matter and raid the business premises including private houses, which is in line with the governing regulations.

According to sources, actions have been initiated against those potential tax evaders whose names have repeatedly been filed up by informers. The IRD has a list of 150 such persons, the sources added.

The basis for raids and other forms of actions were finalised by the meeting of the IFC held on Wednesday. The IFC had appointed the investigation officers and formally transferred them the authority for taking actions against the tax defaulters.

The government had announced the VDIS to grant opportunity to the defaulters to disclose their property by Jan 13. The deadline was later extended till February 12 at the request of the business community.

The government managed to mobilise revenue totaling Rs 605.0 million from the disclosure of property worth Rs 6.05 billion from the potential tax payers through the VDIS.

HTI fails to woo investors

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KATHMANDU, Feb 15: The government’s privatisation plans has faced a major setback with no private party turning up to purchase the financially bankrupt Hetauda Textile Industry that the government had closed down last year.

The Privatisation Cell at the Ministry of Finance (MoF) had recently invited bids from the private parties for the sale of the country’s largest textile factory. However, even as the last date for the acceptance of the proposals expired today, not a single proposal was filed.

"The zero-response from the private sector for the HTI is a big setback to the government’s privatisation plans," said a high-ranking official at the ministry, talking to The Kathmandu Post today.

The Privatisation Cell now is faced with no choice but to extend the deadline for the submission of the proposals. According to the source, the last date for submitting the proposals is likely to be extended by at least one and half months.

However, the source said that no changes would be made in the conditionalities associated with the bidding procedures.

The government had taken a hard decision while closing down the HTI last year, by first laying off all its employees before its privatisation. The government subsequently had paid out Rs 250 million to settle the unpaid wages and allowances of almost 1100 workers.

While the latest fiasco comes as a blow to the government’s plans to accelerate the privatisation process that has slackened in the last few years, officials say that some private parties had enquired for the takeover of the HTI.

"Though no proposals were filed before the expiry of the deadline for its submission today, various private parties have lately shown some interest," said the source.

The government is under intense pressure of the donor community to sincerely carry out the promised reforms, which includes the privatisation of most state-owned enterprises.

The Cabinet last October had decided to call tenders for the privatisation of the HTI, which was established 25 years ago with over Rs 200 million investment.

However, as of today, the net worth of the factory is in the negative with liabilities standing at around Rs 500 million. The total government investment so far has crossed Rs 340 million.

Govt constitutes NITDC and NITCC

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KATHMANDU, Feb 15: The government has constituted National Information Technology Development Council (NITDC) under the chairmanship of Prime Minister as provisioned in the Information Technology (IT) Policy 2000, with a view to expedite the development of IT.

The government announced the formation of the 22-member NITDC Wednesday, which has a provision of nominating a total of nine officials from the private sector.

According to Rebati Raj Kafley, spokesperson at the Ministry of Science and Technology (MoST), the government has nominated IT experts Professor Jagannath Shrestha, Professor Devi Dutta Poudel and Suresh Kumar Pudasaini as the members of the Council.

Similarly, Sanjeev Raj Bhandari, Allen Tuladhar and Brijesh Shrestha have been nominated as members from the private sector involved in the IT.

Atma Ram Ghimire, General Secretary of Computer Association of Nepal (CAN), who has been appointed to the post of Executive Director of National Information Technology Centre (NITC), is ex-officio member secretary of the Council.

The NITDC has Minister for Science and Technology as vice-chairman and has secretaries from Finance; Industry, Commerce and Supplies; Law, Justice and Parliamentary Affairs; Water Resources; Science and Technology; Education and Sports and Information and Communications ministries as members.

Similarly, Vice-chairman and one member of National Planning Commission (NPC), President CAN, President Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Chairman of Nepal Telecommunications Authority are the members of the Council.

The government also formed National Information Technology Coordination Committee (NITCC) under the chairmanship of Minister for Science and Technology on the same day.

The 14-member NITCC has NPC member as vice-chairman and two vice chancellors of universities as members, who are yet to be nominated, according to the Ministry sources.

The government has nominated Muni Shakya and Suresh Kumar Regmi as the members of the Committee from IT experts and Atma Ram Ghimire, Executive Director of NITC is ex-officio member secretary of the Committee.

Umbrella Act to ensure financial health

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KATHMANDU, Feb 15: Nepal Rastra Bank (NRB) officials speaking at an interaction programme on draft bills of Banks and Financial Institutions Act (BFIA) 2002 said that the proposed bill would help to safeguard the financial health of the financial institutions by enhancing their accountability, credibility, and transparency.

The programme was organised by Banking Promotion Committee, Bank Regulation Department of the NRB, with an aim to sort out the shortcomings of the draft and incorporate recommendations for ensuring its practicality.

BFIA is an umbrella act, which the central bank has been preparing since last three years, to govern all the public deposits mobilising financial institutions.

Speaking on the occasion, Dr Ram Babu Pant, Deputy Governor, NRB, said that the bill would be submitted to the parliament in the ongoing session for approval. "The new Act has made an special emphasis in redefining the role of promoters," he said.

After the enactment of the bill, segregated financial institution acts such as Commercial Banks Act, Finance Companies Act, Development Banks Act, Agriculture Development Bank Act and Nepal Industrial Development Corporation Act would be scrapped, said Pramod Karki, Joint Secretary at the Finance Ministry.

Governor Dr Tilak Rawal said, "BFIA will curb anomalies and hassles seen in the sector due to desegregated acts in place, as it will be ‘one window act’ and eliminate the dual registration process of the financial institutions."

Referring to the current economic scenario, Dr Rawal reiterated that economic fundamentals were intact and there was no need to panic. The current inflation rate is 2.9 per cent, which is on a lower side in comparison to what is was during the same period last year. Also, the foreign currency reserve is sufficient to meet imports for a year, he said.

Although the position of Balance of Payment is not that good, the economic indicators are stable, he said. "However, given the current scenario NRB cannot guarantee that these fundamentals will remain favourable in days to come," Dr Rawal cautioned.

Speaking on the occasion, Rajan Singh Bhandari, Executive Director of Bank Regulation Department, NRB, highlighted the salient features of the Act.

"All the financial institutions will be registered in the NRB, which is unlike the governing regulations whereby they must be registered at the Registrar Office as well," he said. All the financial institutions must make public issue and collect the full value of the shares prior to its operations.

The act has categorised the financial institutions into four types, including commercial banks, finance companies, co-operatives and institution engaged in micro-finance and development banks. "These institutions can be upgraded or downgraded from one group to the other based on their capital base, profit position and performance through the years," he said.

The Act has also stipulated specific criteria while appointing board members of the financial institutions and bars retired government employees from taking charge at least for one year after they quit the government service.

Unlike the governing regulations, the Act allows the commercial banks to procure its own shares on approval of the central bank. "However, the recommendations of the experts and men in the field will be incorporated before forwarding it for approval and these provisions are likely to change," Bhandari added.

Interaction on WTO held

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KATHMANDU, Feb 15: Participants in an interaction programme held here today on World Trade Organization (WTO) expressed the views that the business community is not aware of the pros and cons of the global trading regime.

Speaking at the programme organised jointly by the Ministry of Industry, Commerce and Supplies and the United Nation Development Programme (UNDP), Rajendra Kumar Khetan, second vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said that entrepreneurs are still unaware of the multilateral trading system.

Suggesting on the need to identify areas of competitive and comparative advantages before joining to the WTO, Khetan stressed on the need to inject more capital, improve technology and enhance competence and skills of manpower to face the challenges of WTO.

As the existing laws are not compatible with the WTO rules and are not enough, they should be amended and new laws formulated, he said.

Prachanda Man Shrestha, Joint secretary at the Ministry, speaking about Nepal’s accession process to the WTO, said that the time for joining the WTO depends on the negotiating partners who have shown interest to do business.

Dr Posh Raj Pandey, Chief Nepal’s WTO Accession Project, shed light on various issues of the global trading regime, basically with a view to inform the journalists about the basics of the WTO.