Rs 800 million is new threshold for large taxpayers

Aug 12: The government has restructured tax collecting entities and redefined the threshold of large taxpayers to those doing an annual transaction of Rs 800 million or above to make the existing Large Taxpayers Office (LTO) lean and thin. 

The changes are made to provide special service and care for the large taxpayers and also halve the number of the large taxpayers, which currently stands at 1200, according to government officials. 

Enterprises and businesses having annual transactions between Rs 400 and 800 million and few sectors like banking, manufacturing, and construction with transaction above Rs 250 million are now transferred under a newly set up entity -- Medium Level Taxpayers Office (MLTO) -- for paying taxes. This will be effective from Bhadra 1 (coming Friday) of the Nepali calendar. 

All the taxpayers categorized between Rs 50 and Rs 400 million, which were currently overseen by the tax offices of areas 1, 2 and 3 in Kathmandu, are now handed over to the upgraded inland revenue offices across the country as per the specified working areas by the government.

Setting up of the MLTO was considered a feasible option instead of making the LTO officer larger, according to government officials. The LTO office had started serving about 250 taxpayers in 2008, which grew to over 1200 as of today. 

According to the last week’s cabinet decision, over one and half dozen tax service offices including the 13 of Kathmandu valley have now been upgraded to inland revenue offices. 

Spokesperson of the Inland Revenue Department (IRD) Yagya Dhungel said that the current restructuring and changes were aimed at making smooth service delivery and putting large taxpayers under special focus. Joint secretary Jhakka Prasad Acharya has already assumed the post of Chief Tax Administrator at MLTO while the process of file transfers between the Large Taxpayers Office and MLTO is underway. 

“Tax collection under the new federal structure will begin from August 17 or Friday, after completing all homework,” said Dhungel. The MLTO office, which will handle over 500 taxpayers, is set up at Babarmahal and all the taxpayers across the country will have to pay taxes through this office. 

Taxpayers can assess their tax records on their own, submit tax details, and pay taxes through any branch of the several banks specified for tax collection, without coming to these offices (LTO and MLTO) in Kathmandu. These two offices are based only in Kathmandu. 

“This restructuring move is welcome as it will lower the burden of LTO,” said Pashupati Murarka, former president of Federation of Nepalese Chamber of Commerce. “But the establishment of the proposed MLTOs only in Kathmandu is not enough.” 

He said: “Such MLTOs should also be opened in other trade centers like Pokhara, Biratnagar, Bhairahawa, and Birgunj for effective service delivery to the taxpayers of MLTO range.”

This restructuring also coincides with the hike in tax rates in several goods and services as well as new tax rates imposed mainly on consumption by the government led by a near two-third majority of Nepal Communist Party. However, government officials deny any linkage of the restructuring to changes in the tax rates.

This article was taken fromMy Republica. There is no any involvement of Nepal Tax Online in preparation of this news.

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