It has already issued warnings to the VAT defaulters about the action, which could go to the extent of closure of the trading and manufacturing units if they did not settle dues by mid-January, 2010.
“We have warned them verbally as well as in writing,” said an official. He told Republica that the office has 145 clients who have not settled VAT dues ranging from Rs 10,000 to Rs 50 million.
Records of Ministry of Finance (MoF) show that those companies have cleared their recent VAT accounts, but have been refraining from clearing past dues, which dates as back as six years old and has been accounted as arrears of LTO.
The largest defaulter, according to the records, is Mount Everest Brewery belonging to Amatya Group, which is also the biggest defaulter of bank loans in Nepal. It has more than Rs 50 million worth of VAT dues to settle at the LTO.
The second largest VAT defaulter is Janakpur Cigarettes Factory (JCF) owned by the government. It has outstanding VAT due of more than Rs 46.60 million.
“The number of small defaulters is large. Unfortunately, state-owned enterprises (SOEs) are among the leading defaulters,” said the source.
LTO says it has started action against the defaulting companies because they have repeatedly turned down its request to settle the due. MoF has already given its nod for the action.
As a part of action against the defaulters, which officials say will commence from the third week of January, MoF has said it will stop issuing recommendations and other letters necessary for undertaking imports or doing businesses for those companies. They will also be deprived of all state facilities that they are enjoying now, such as tax deductions, VAT refund and bonded warehouse facility.
“For some adamant cases, LTO is even mulling over forcing the business units to shut and take over their property for recovering the taxes,” said the source, but did not disclose the names of those companies.
In case of SOEs, LTO has requested the government to deduct their tax dues while injecting capital in them.
LTO collects VAT and income tax from 397 largest business units of the country. In the last fiscal year, it had collected VAT worth Rs 8.93 billion income tax worth Rs 23 billion. As of the first five months of 2009/10, it has collected Rs 4.93 billion of VAT and Rs 7.67 billion of income tax.
Related story
Rs 800 million is new threshold for large taxpayers
