KATHMANDU, Nov 4: The government is preparing to take action against brick producers who have refused VAT registration claiming that brick production is a seasonal business and hence “vulnerable” to losses.
Though the Inland Revenue Department (IRD), which is the body authorized for VAT collection, had initiated process to bring brick kilns under VAT purview last year, the latter have been reluctant to comply with the law.
“We have been asking brick producers to register for VAT for the last one year,” Director General of IRD told Republica on Saturday.
An 11-member committee -- comprising representatives of brick producers -- formed by the Ministry of Finance (MoF) last year had also recommended to the government that the brick kilns be brought under the VAT net as they are making a handsome income but evading tax responsibility.
According to Sharma, out of a total of 700 small and big brick factories registered with the government across the country, only 200 have registered for VAT.
“We will initiate action against those who are not willing to register for the VAT from the coming brick producing season,” said Sharma.
Sharma said brick kilns are not willing to register for VAT, as this would make their transactions transparent.
As per the existing provision, any firm having annual transaction worth more than Rs 2 million must register for VAT.
Most of the brick producers have annual turnovers exceeding the VAT threshold. Revenue officials have estimated that the government has been losing at least Rs 400-Rs 500 million worth of revenue in VAT as brick producers have refused to come under VAT purview.