Economy News The Rising Nepal (Daily)

BY A STAFF REPORTER

Kathmandu, April 13:Many export-oriented industries are in a position to be closed down as the government has not refunded the money held as the"duty draw back" owed to them since a long time, the industrialists have said. Such industries are liable to pay value added tax (VAT), customs and local taxes while importing raw materials and the system of refunding the same, at a later date, to the concerned industries is referred to as duty draw back

The industry people claim that the amount to be paid according to the export rate has exceeded one billion rupees.

In this regard, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Pradip Kumar Shrestha has said that due to the tendency of keeping the duty draw back as revenue, many export-oriented industries are on the verge of closing down.

"The Ministry of Finance had allocated 10 million rupees in the budget for duty draw back, but with the exports picking up the projected amount is insufficient to meet the requirement of the refund to be made. This is the basic problem." FNCCI president said.

"Procedural difficulties have added to the problem. The industries pay customs, VAT and local taxes on imported materials at different entry points, but to get the refund it has to be approved by the one-door committee which works within the limits prescribed by the Finance Ministry. It takes years for the decision to be made. Shrestha adds that it sometimes even takes four or five years to get back the duty draw back just because some insignificant document is missing.

Bharat Bahadur Thapa, Director General of the Department of Industry, and coordinator of the decision making body one door committee on duty draw back matters, accepts that the industrial sector has been affected due to procedural difficulties and that a huge amount has yet to be refunded.

He further added that FNCCI is also represented in the committee. "They can ask their representative on the regularity of the meetings", he said

On the question of "pending files", he said that the adequate basis and evidence have to be presented for getting a refund. "It is right that the procedures are complex but no one can claim refund on the basis of incomplete documents."

"In recent times, we too have felt that the problem of duty draw back has become more complex. Therefore, there is unanimity that instead of being only tax-oriented or business-oriented, a comprehensive solution to the problem must be sought. And we have initiated steps in this direction. Talks are underway between the Finance Ministry and the committee," Thapa further elaborated.

Vice-president of FNCCI, Rajendra Khetan also spoke of the large amount owed to industries in the form of duty draw back. He said that one can imagine the plight of the industrialists when so much amount is blocked for many years. The state must provide incentives and privileges for boosting the industrial sector but it’s just the opposite here."

Lokman Singh Karki, Joint Secretary at the Finance Ministry and the chief of the Revenue Division, said that the Ministry has not been miserly in refunding the duty draw back.

"The industrialists must not judge by the allocation in the budget for duty draw back but whether the Ministry has provided the amount according to the demand or not. Has the Ministry blocked the refund if the procedures have been followed?" Karki asks.

"The government has always followed the policy of encouraging export-oriented industries. An example of this is levying only 5 per cent as revenue rate on exportable items. The Finance Ministry has already given Rs. 50 million as advance for duty draw back. It is another matter if the entrepreneurs want facilities but the one-door system is a legal one," Karki said.

"Despite all this, the Ministry has positive thoughts on freeing the industrial sector from the procedural difficulties of the duty draw back and its effects. The coming budget may reflect on a new system in this regard." He said.

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