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The
eight-member panel — led by a noted economist Prof Dr
Madan Kumar Dahal comprising Tul Raj Basyal, senior
economic advisor at the MoF, senior government officials,
experts, and the representatives from private sector —
has been given three months period to submit its final
report to the government.
Nepal
introduced VAT in November 1997 replacing four different
taxes including the Sales Tax, Contract Tax, Hotel Tax and
Entertainment Tax. At present, VAT is the largest
contributor to the government's coffer amounting for more
than 30 per cent of the total revenue.
The
latest move is thought to widen the tax net as well as
decrease the tax burden on agro-business. Under the dual
rate system, the government is likely to decrease the VAT
on agriculture produce and related products, while keeping
the rate static on manufacturing goods and services.
It
is also expected to address the private sector's demand to
review the VAT rate on some consumer goods and
agro-produces. The government faced a strong opposition
when it imposed VAT on agro-produce like mustard oil and
wheat flour (maida).
The
rate of VAT was fixed at 10 per cent, when it was first
introduced and amended VAT Act 2005 raised the rate to 13
per cent with effective from the fiscal year 2005-06.
Currently VAT is levied at 13 per cent and in certain
cases, the rate may be zero and certain goods and services
are exempted from VAT. The tax is collected at every state
of selling goods and services.
The
collection of VAT is on a steady rise since its inception
a decade ago with the collection standing at Rs 18.90
billion in the fiscal 2004-05, Rs 21.93 billion in 2005-06
and Rs 26.55 billion in 2006-07. The number of taxpayers
under VAT system is estimated at around more than 200,000.
Source
:
Himalayan
Times - Kathmandu, Nepal, dated 28/11/2007
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