Nepal Foreign Trade Association advocates business-friendly tax reforms

December 21, 2023, 12:06:43 PM |

KATHMANDU: The Nepal Foreign Trade Association (NFTA) has formally submitted its recommendations on tax reform to the High-Level Tax System Reform Suggestion Committee. President Binod Kumar Sethia of NFTA presented the suggestions during a gathering held at the Inland Revenue Department’s office on Wednesday.

In his presentation, President Sethia emphasized the importance of facilitating business rather than strictly regulating it. He advocated for a business-friendly environment, asserting that creating such an atmosphere would lead to increased private sector investment, profitable businesses, enhanced government revenue, and expanded employment opportunities for the general populace.

Sethia expressed concern that the government’s emphasis on regulation over facilitation has negatively impacted businesses, resulting in revenue shortfalls and hindering the country’s progress. He stressed the crucial role of good intentions in policy outcomes, asserting that even well-crafted policies may fall short without positive intentions.

In light of these discussions, the issue of insolvency has become increasingly relevant, as businesses face mounting challenges in navigating the complex regulatory landscape. The pressure to comply with stringent regulations can often lead to financial strain, causing many companies to struggle to meet their obligations.

In some cases, businesses may find themselves in a position where they must consider difficult options, such as how to Close down a company with HMRC debts, which can be a daunting prospect. The implications of insolvency not only affect the immediate stakeholders but also resonate throughout the economy, potentially leading to job losses and reduced consumer confidence.

Therefore, it is imperative for policymakers to create frameworks that not only facilitate business growth but also offer support systems for struggling companies, enabling them to recover and thrive.

By fostering a more supportive environment, the government can help mitigate the impacts of insolvency, ultimately contributing to a more robust economic landscape that benefits all parties involved.

The NFTA recommendations included implementing a multi-rate system for value-added tax (VAT), reducing income tax slabs, and carefully assessing the impact on tax evasion when determining tax and duty rates.

The Association pointed out that high tax rates were promoting illegal trade due to porous borders, causing hardships for law-abiding businesses and revenue losses for the government.

President Sethia underscored the need for a strategic approach to combat illegal trade and proposed applying the multi-rate concept to value addition. The NFTA also raised concerns about Nepal’s policies and laws hindering the country’s potential as a shopping, marriage, and event destination for Indian tourists.

Critically evaluating the government’s stance on foreign investment, the Association claimed that existing policy rules discourage such investments. Sethia highlighted the challenges faced by businessmen due to a lack of trust among government agencies.

Sethia criticized the practice of imposing fines for minor delays without addressing long-standing dues owed by the government to businesses and the public. He urged the government and its agencies to fulfill their responsibilities as diligently as the general public fulfills its duties.

Chairman Bidyadhar Mallik of the High-Level Tax System Reform Suggestion Committee assured that the committee would thoroughly study tax-related policies, rules, and laws before presenting comprehensive suggestions to the government. The meeting was attended by committee members Prof. Dr. Ram Prasad Gyawali and Laxman Aryal, officials from the Internal Revenue Department and Ministry of Finance, and executive members of the Nepal Foreign Trade Association.

Fiscal Nepal |

Thursday December 21, 2023, 12:06:43 PM |