They say taxes and death are both inevitable. Now, if the tax office has its way you will have to clear all your tax dues before dying. And the property you bequeath in your children will be taxed at market value.

A draft Tax Act being prepared says: "Where an individual disposes of an asset on death by way of transfer of ownership of the asset to another person the individual is treated as deriving in respect of the disposal an amount equal to the market value of the asset at the time of disposal; and the person who acquires ownership of the asset is treated as incurring in the acquisition costs of an equal amount. In plain English, this means any inheritance will be deemed a sale and taxed at the prevailing rates for real estate at the time an individual moves on to the after life. Such taxes exist in oilier countries, KM, but only where there is a proper tax culture and there are other safety nets and welfare schemes like housing support.

In death and in life, the tax - man is going after the Nepali\'s wallet. Just about every sphere of activity may now fall under the purview of internal revenue: you\'ll pay tax not only on wages, salaries, leave pay, overtime pay, fees, commissions, prizes and gifts but also the money you get to buy a khasi for Dasain.

There is more the tax official wants to take a chunk out of any personal allowance, including the cost of living, subsistence, rent, entertainment and transportation. The government will tax your money upon retirement. I he taxman is even targeting your redundancy payments, gratuity and other benefits you may get on being fired.

Less then one percent of Nepalis pays income tax, and the government says there is no other way to increase internal revenue without spreading the tax net. It also says the new act would repeal 17 existing laws, simplify procedures and make collection more comprehensive. Donor money has been spent to prepare [his draft, including work done by a Harvard professor and an IMF consultant. It therefore reflects the language and values of a Western country.

Critics of the draft say that inheritance tax will not work in countries like Nepal where people are not even paying normal income tax. Besides, because people\'s entire life savings go into building a house for posterity, and there is no government social welfare support, an inheritance tax is unimplementable.

The Nepali translation of the draft is unreadable, but is being prepared for submission to Parliament. The English original is a 109-page document with 132 Articles and annexes, it is twice as big as the Income Tax Act 1974, and is doubly difficult to understand.

The Fundamental problem here is that the draft is driven purely by revenue augmentation concerns, and not by savings, says T. R. Upadhya of the international consultants group KPMG Barnets in Kathmandu.

The Federation of Nepal Chambers of Commerce and Industries (FNCCI) has come up with a 21-page list of comments on the draft bill: and has stiffly criticised provisions such as the capital gains tax, accounting principles and the discretionary powers the law still gives tax officials. FNCCI also asks if Nepali businesses find the new tax regime so intimidating, what will foreign investors make of it? "At this rate, you can kiss foreign investment goodbye, said one Kathmandu-based joint venture specialist.

Most controversial art the clauses relating to capita gains which define disposal of assets as: " when the person parts with ownership including when the asset is distributed by the owner of the asset, merged with another asset or liability, leased to another person under a finance lease, cancelled, redeemed, destroyed, lost, expired, or surrendered. " Inheritance is something we have had for generations, but the new draft treats it as a capital gain, " says Sudarshan Raj Panday, general secretly- of the Association of Chartered acountants,"This tax draft is just take, take and take, says Prabhuram Bhandari, another CA,It is not just the taxpayer who is confused. Even tax officials privately admit that they would need special training for "at least six months" before they can actually understand and implement the tax.

The governments says the new tax will reduce the discretionary power of officials, But phrases such as "reasonable excuse" (Art. 120, 1 (C)) leave loopholes for subjective interpretation,Another clause under Compounding Offences (Art 129, 3 (C)) says the decision of the tax department "is final and not subject to appeal, which some say is against the Constitution itself.