Local govts told to abide by law in tax collection – The Himalayan Times – Nepal’s No.1 English Daily Newspaper

Local govts told to abide by law in tax collection - The Himalayan Times - Nepal's No.1 English Daily Newspaper



The Ministry of Federal Affairs and General Administration has directed all the local levels to impose and collect any tax under its jurisdiction in line with the Local Government Operation Act, 2017.

A circular was recently issued to the local levels to this effect as per a secretary-level decision. “As sections 55-61 of the act have clearly mentioned the areas where and how the local levels can collect and impose tax, they are requested to act accordingly,” read the circular issued by the Resource Mobilisation Coordination Section at the MoFAGA.

The act has empowered local governments to collect and impose property tax, real estate tax, land revenue, house rent tax, business tax, parking fee, herbs/scrap/ wildlife tax and service fee, among others. However, the local levels are not allowed to impose any kind of tax, fee or tariff on goods imported from abroad by the Government of Nepal, provincial government, university, government hospitals, government-owned foundation or development committee for the projects run with foreign loan or grant.

Earlier too, the MoFAGA had told the local levels to implement the recommendations made by the report of a special committee submitted to the Ministry of Finance recently. The study report had recommended that the government take necessary measures to make the local levels aware about the taxes they are authorised to levy and collect as there was duplication and confusion in collection of taxes and fees in all three levels of government – federal, provincial and local – due to contradictions in constitutional and legal provisions, and lack of knowledge on the part of elected representatives and the general public.

The local levels were also urged to notify people and taxpayers in their concerned areas about the taxes and service fee being charged by them. The local levels are confused about their taxing powers. In some cases, the local levels were found to have granted exemption to various taxpayers on the past due tax, thereby raising fear of letting them off the tax net.

According to the report, many rural municipalities are implementing the tax system without adequate preparation and discussion with stakeholders. Some municipalities were found to be collecting pollution tax, which has not been stipulated in any laws and rules.

A version of this article appears in the print on December 16, 2021, of The Himalayan Times.

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