Law in the making for permanent body to settle tax rows

Published On: August 4, 2017 07:43 AM NPT By: Rudra Pangeni | @rudrapang

KATHMANDU, Aug 3: Amid controversy over the Tax Settlement Commission (TSC), the government has initiated steps to establish a separate and permanent entity for settling tax disputes. A ‘Dispute Resolution Mechanism’ has been inserted in the Central Revenue Board Bill for forming an apex advisory body on matters of revenue, informed Revenue Secretary Shishir Kumar Dhungana. The bill is in the making at the Nepal Law Commission.

“The bill is under preparation,” Dhungana said adding that the board is meant for providing advisory services to the government on revenue matters including tax collection, policy and directions.

The proposed mechanism is an alternative way of responding to the private sector, which has long demanded a permanent entity for settling tax-related disputes that arise after taxpayers submit tax to the government through a self-declaration mode.

The move to set up the new entity comes at a time when three members of the TSC established in 2015 are facing corruption charges at the Special Court, for misuse of authority to the tune of Rs 10.02 billion while settling tax disputes.

Unlike the commissions formed under the Tax Settlement Act of 1976, the government expects the new entity to discharge its duty more responsibly so that tax settlement disputes won’t recur and the business community will also find rational settlements, officials said.

A source informed that only the latest tax settlement report has come out in public, raising a question about the mandate given to the commission. But several similar reports, which were not all free of controversy, never came into public knowledge.

As the TSC members misused their powers, the new mechanism envisaged will have more limited authority.

The mechanism will have a minimum of five members led by the revenue secretary and will settle tax disputes through rigorous discussions and in a transparent fashion, it is stated. The bill has proposed scraping the Tax Settlement Act of 1976.