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Kathmandu Monday January 14, 2002 Magh 01, 2058.
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VOLUNTARY DISCLOSURE OF INCOME SCHEME EXPIRES
Govt contemplates crackdown on defaulters
By Bhaskar Sharma
KATHMANDU, Jan 13: The government is bracing to take serious action against
all tax defaulters who failed to disclose their tax returns during the Voluntary
Disclosure of Income Scheme (VDIS) which expired today. Only Rs 360 million in taxes were
collected during the entire scheme period, much of it in the last few days.
A high level source at the Finance Ministry told The Kathmandu Post that
legal action will be taken against all tax defaulters. "The action will be initiated
on the basis of a profile created by the Inland Revenue Department (IRD). Big taxpayers
who have defaulted their taxes will face the heat first," said the source.
The IRD is now to launch sweeping investigations to unearth undisclosed
income and property. "The government’s announcement on VDIS was an indication of
its tolerance before hardening its stance to dig out hidden income and wealth. Now they
(defaulters) have to face severe legal consequences," the source added.
Though the VDIS expired today, individuals and businesses in Kathmandu can
still benefit from the scheme till tomorrow when the IRD office is slated to open to
compensate for Sunday, a public holiday.
Finance Minister Dr Ram Sharan Mahat during his budget presentation for the
current fiscal year had urged tax defaulters to voluntarily disclose their sources of
income by January 13 or face in-depth investigation that may even result in the
confiscation of their properties.
He had announced the revenue raising scheme promising that tax defaulters
would be given amnesty and no inquiry would be made on their sources of income and
property earned before mid-July 2000 if they declare their self assessed value of their
property at the price of July 16, 2001.
Speaking to The Kathmandu Post today, Dr Mahat claimed that most big
taxpayers have cleared their taxes. However, he asserted that legal action would be
initiated against those who failed to abide by the government’s directives.
"Those people who have not cleared their taxes, despite the opportunity provided to
them, would be strictly dealt with," Dr Mahat said.
Taxpayers caught evading taxes and failing to file their income statement by
today will have to clear their taxes at the rate of 25 per cent along with the additional
late fine. The taxpayers filing tax returns within the deadline were taxed only at the
rate of 10 per cent.
Officials at the IRD said that it has prepared a list of over 500 potential
defaulters based on transactions of past 10 years on real estate, vehicles, mobile
telephone bills and other capital assets. The individuals in the list are suspected of
owning assets disproportionate to their sources of income.
The department prepared the list by asking relevant offices such as the Land
Revenue Office, Nepal Telecom Corp and others. The offices provided the department with a
list of people who have respectively conducted real estate transactions and pay more than
Rs 24,000 in telephone bills. A list of mobile phone users and vehicle owners are also
included.
Also included in the list are professionals such as doctors, engineers,
lawyers and auditors. The department is also collecting the information of government and
non-government employees, social workers, teachers, businessmen, industrialists and the
leaders of the political parties and others.
Tax evasion in Nepal is endemic, thwarting the government’s attempt to
raise revenue. The VDIS scheme aimed to correct that. And even Dr Mahat expressed
satisfaction over the latest tax mobilisation and property disclosure. With one day
extension in the deadline for the Kathmandu valley, today being a holiday, revenue is
likely to increase further, he said.
However, the scheme was not without controversy. Private sector
entrepreneurs, including the apex body of the business community Federation of Nepalese
Chamber of Commerce and Industry (FNCCI), had strongly flayed the campaign. However, the
Finance Ministry source said that the private sector at the late hours cooperated with the
government’s campaign. "And the results were satisfactory," he said.
Property worth Rs 3.6 billion was disclosed during the VDIS period.
Finance Minister Mahat also informed that the government is mulling to
introduce new tax proposals to further strengthening the tax administration. The thrust
would be to control revenue leakage and to bring the potential taxpayers under the tax
net. However, care will be taken to ensure that taxpayers are not burdened at a time when
the economy is fledging through a slowdown, he asserted.
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