The government’s refusal to extend the tax clearance deadline has met with sharp criticism from the private sector. Issuing a notice on June 2, the Inland Revenue Department (IRD) directed taxpayers to clear the dues by June 7 and failure to pay the taxes within the deadline will result in fines for taxpayers. The notice infuriated business community members who have not been able to run their businesses since the beginning of lockdown on March 24. They have labeled IRD’s directive to pay tax dues and submit tax details as government’s dishonesty at a time when economic activities across the country have stopped for the last 70 days.  

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has asked the government to extend the tax clearance deadline saying that the extension would provide justice to the country’s business community members who have faced enormous business loss due to the lockdown. FNCCI Senior Vice President Shekhar Golchha urged the government not to add to the woes of businesspersons who have not received support they have sought from the state. “Business community members in other countries have received various types of support. In our country, the budget has failed to address our problems,” said Golchha, adding, “We urge the government not to hurt the business community if it cannot provide support to us. Taxes will be collected if the lockdown is lifted and business transactions are resumed.”  

In a meeting with the high-level coronavirus response committee of the government on Tuesday, representatives of private sector said that they are unable to pay taxes in the current situation.

But officials at the Ministry of Finance (MoF) have dismissed the calls of the private sector to extend the tax clearance deadline. “The deadline was extended for June 7 from its original date of April 7. So, there won’t be further rescheduling,” said Revenue Secretary Ram Sharan Pudasaini. “The government has not levied new taxes. We have just asked business owners to clear their dues,” he added. According to Pudasaini, taxpayers have been provided the facility to pay taxes and submit their tax details online. IRD officials say that all taxpayers are required to pay their dues and file tax details by June 7 to avoid penalties. “Businesses need not to pay taxes if they haven’t earned anything and there should not be hue and cry when the government is asking them to submit their tax details online,” said Binod Bahadur Kunwar, director general at IRD. According to him, the expansion of internet throughout the country has made it easier for online transactions and the department is even ready to coordinate with local administrations across the country to help taxpayers to reach tax offices.

In a letter sent to revenue secretary Pudasaini on Tuesday, FNCCI has asked the ministry to extend clearance of income tax, VAT and excise duty and tax filing to mid-July to boost the confidence of all entrepreneurs and businesspersons at the time of economic crisis.

Another private sector body Nepal Chamber of Commerce (NCC) has also urged for tax payment deadline extension. NCC in a press statement said that the lockdown which has crossed 70 days has brought businesses to a very situation and that issuing deadline to pay dues and file tax details would be very discouraging for the private sector mired in crisis. Meanwhile, the Nepal Foreign Trade Association (NFTA) has also expressed its dissatisfaction over the notice issued by IRD. “It is not appropriate to ask businesses to pay taxes at a time when all other transactions except essential ones have been halted for so long,” reads a statement signed by NFTA President Madan Mittal.

No Shortage of Money for Recurrent Expenditure

While it has been said that the unwillingness of the government to extend the tax clearance deadline is because of the shortage of cash to pay salary to its employees, the Financial Comptroller General Office (FGCO) has said that the government currently does not have any problem regarding the recurrent expenditure. “There are no issues in mandatory liability payments such as employee pension, social security allowances, retirement clearance, principle and interest payment of foreign loans, and salary and allowance payments of security personnel and teachers,” said Financial Comptroller General Gopi Nath Mainali.