E-Kantipur

KATHMANDU, NOV 01 -

The disclosure of names of some firms that are being probed in the Value Added Tax (VAT) evasion scam has created confusion instead of bringing to an end the curiosity surrounding the much-talked-about scandal.

The confusion because the report prepared eight months ago and made public on Sunday contains names of those taxpayers who have either already got a clean cheat from the Inland Revenue Department (IRD) or have already paid fines slapped by the IRD.

It has also raised a question on whether the Finance Ministry erred by making the names public when investigations are still on. Some ministry officials also say the probe may also be affected as the firms under the scanner may not cooperate.

The VAT Report shows four firms under the TM Dugar Group under the investigation category. The IRD investigation, according to Finance Ministry officials, however, did not find these four firms involved in the use of fake VAT bills. The report has also named three firms—M Trade House, Usma Traders and Nistha Traders. According to Finance Ministry sources, the ledgers of these three firms were seized in order to probe the involvement of other firms in the fake VAT bill use.

These three firms that bought goods from companies that used fake VAT bills have not been found involved in tax evasion, according to Finance Ministry sources.

When the report was prepared, the IRD had identified 385 firms that were registered with the sole motive of issuing fake VAT bills.

The IRD had started the probe by seizing ledgers of 52 firms/companies that used the fake VAT bills issued by these 385 firms. There was enormous pressure on the Finance Ministry to disclose the names of the firms being probed.

However, the ministry had resisted the pressure and even told the Parliament’s Public Account Committee (PAC) that it was unable to provide the details as the VAT Act and the Income Tax Act required it to maintain secrecy and not disclose such details except

to designated officials. However, when fingers were pointed at the ministry,

it had agreed to make the names public through the PAC once the investigation is complete. “We had to made the report public after the NIC directed us to make it available within 15 days,” said a ministry official.

After the National Information Commission (NIC) directed the Finance Ministry to make public the report, appendices 1, 4 and 7 has been made available. “Had the NIC directed making public the names of all the firms found involved in VAT evasion, it would have made the whole picture clear,” said a high-level official at the Finance Ministry.

The Nepali private sector’s apex bodies are yet to come up with their official positions on the disclosure of the names. However, some segments of the sector argue that the government, by making public the uncompleted probe report, has breached an understanding between the taxpayers and the government. “As per the Income Tax Act and the VAT Act, the government was supposed to protect taxpayers’ secrecy, but it failed to do so,” one leading businessman said.

The Federation of Nepalese Chambers of Commerce and Industry  (FNCCI) has said it will come up with its official position on Tuesday. However, FNCCI President Suraj Vaidya said the probe has led to the private sector to opt for fair business practices.

“With the government holding the names, there was an impression that all businessmen are thugs,” Vaidya said. “Now, when the report is out, it shows that not all of us are in the same category.”

Vaidya, however, pointed out that reforms cannot be brought about by taking action against one side. “Revenue administration is also equally responsible, it should also be reformed,” he said.

Posted on: 2011-11-01 09:25

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