29 November-5 December 2013 #683

Where’s the Rs 11 billion?

Nepali Times caught up with Tanka Mani Sharma, director general of Nepal’s Inland Revenue Department, to talk about the discrepancies in the tax system.

Nepali Times: What are your findings on tax evasion?

Tanka Mani Sharma: First, we investigated 528 companies and found that they still owed us Rs 7 billion in taxes. 495 other firms we investigated in our second study revealed a Rs 4 billion deficit. And after our third inquiry we found that 1,544 more companies had not paid Rs 350 million.

Are all of the firms guilty?

All the companies we investigated have evaded tax in one way or the other. Not all of them forged bills but they certainly did lie while filling up their income tax details.

Doesn’t this prove that our tax system is weak?

Our system although scientific has its share of weaknesses. Our laws have given the taxpayer initial responsibility of filling in their income tax details, which means they can dictate how much tax they pay to the government. It is just that our tax system expects honesty from the private sector, which our investigations show is largely missing.

Do you mean the private sector betrayed the government?

Yes, private companies have sort of trampled on our trust. But still the government believes in the private sector.

Are you not going to make improvements in the system?

The beauty of the voluntary tax system is that you get to be clean from day 1 if you pay taxes regularly. But if the system catches discrepancies in your application, it means you can lose up to 80 per cent on your profits.