Threshold defining large taxpayer raised to Rs 400m
KATHMANDU, Nov 1: The government has increased the minimum turnover that defines any industry and firm as a large taxpayer to Rs 400 million from Rs 250 million.
The ceiling has been raised considering the service delivery capacity of the Large Taxpayers´ Office (LTO) and also the demand of the entrepreneurs, particularly the large tax payers based outside the Kathmandu Valley, said the new Finance Secretary Shanta Raj Subedi.
Under the existing arrangement, the government has entitled large taxpayers with special services facility as its gesture of appreciation for contribution they make in the national treasury and country´s development.
But as the number of large taxpayers jumped to 722 from 522 just over the past year, LTO having capacity to best serve only around 400 large taxpayers had been facing difficulties in fulfilling its job.
Beside, owing to increased business activities in bordering cities, the number of large taxpayers outside the Kathmandu Valley has been growing more rapidly. As LTO is based in the Kathmandu Valley alone, large taxpayers outside the Valley were facing inconvenience for the tax related services as they were required to come to Kathmandu every time for filing their taxes and getting other services.
As a result, business community have been demanding with the government to either open the LTO services unit in major cities outside the Valley so that they could get tax related services locally or revise the turnover threshold upward so that they are evicted from the LTO net and could continue dealing with local the Inland Revenue Offices.
Federation of Nepalese Chambers of Commerce and Industry had pushed the Ministry of Finance to raise the threshold to Rs 500 million. “But we have reset it at Rs 400 million. Hopefully, this will ease the operations of both the LTO and taxpayers,” said a senior official at Inland Revenue Department (IRD).
The government preferred to hike the slab mainly because the other option of opening the LTO service units outside the Valley was not possible in the present regime of one-third budget. “So, we chose to eject some of taxpayers from LTO net by raising its threshold,” said the source.
With the decision, the IRD officials said some 125 industries and firms would now be evicted out of the large taxpayers´ net. “We are yet to get the exact number, but roughly it is expected to remain at around 600,” said Bishnu Nepal, deputy director general of IRD.