He insisted that the government would not derail any action initiated against VAT receipt racketeers, who faked transactions to evade tax and even claimed VAT refund without having contributed a single rupee to revenue.[break]
“Use of fake VAT receipts is like printing fake banknotes. It´s a serious crime. We will not compromise over the case,” said Adhikari.
As ire flared among civil servants and lawmakers after Khanal´s sudden resignation, Adhikari held a press conference at the Ministry of Finance (MoF) to defend himself against the accusation that he was the main reason behind Khanal´s decision to quit.
“I had no differences of opinion with Khanal when it came to taking action against VAT evaders or placement of staff or any other matter,” he said.
He said as finance minister his challenge for now was to assure financial and economic stability, and he was relying heavily on Khanal´s experience and professionalism to that end.
Adhikari even asked the revenue secretary and the joint-secretaries heading different departments at MoF to explain different issues that media had cited as points of major difference between himself and Khanal to prove his innocence.
Khanal, who is well regarded for his competence, integrity and professionalism, had suddenly tendered his resignation to Chief Secretary Madhav Ghimire on Tuesday.
Khanal told Republica that the resignation was a personal decision and he had no grudges against anyone. However, sources close to him say he decided to quit because of Adhikari´s doublespeak and because political leaders considered him a major obstacle to their agendas. The government has not yet accepted the resignation.
While clarifying his position, Adhikari said he has instructed the Inland Revenue Department (IRD) to identify all possible loopholes in VAT law and its administration to plug leakages in future.
He also said the government will neither slow down the investigations IRD and Inland Revenue Offices were carrying out nor intervene in any way.
IRD and IROs are currently digging up new facts concerning entrepreneurs, including top business houses, creating fake VAT transactions worth Rs 10 billion (over US$ 138 million), thereby inflicting revenue losses of over Rs 4 billion on the state.
“We will not show any laxity in the investigations. We took statement from a tax evader on Wednesday,” said Rajan Khanal, director general of IRD.
MoF officials, however, evaded questions whether the government would consider amnesty (waiver of fines), something that tax evaders are lobbying for and Khanal strongly opposed.
IRD has slapped VAT, income tax and fines of some Rs 2.50 billion against 32 firms that have been involved in the fake VAT receipts racket. If the government grants them amnesty, it will save them Rs 1.25 billion.
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