KATHMANDU, Jan 12: Inland Revenue Offices (IRO) in the Valley have started to approach house owners individually, asking them to pay due house rent tax -- one of the least complied components and cause of huge revenue leakage.

The offices have mobilized some three dozen volunteers and are issuing letters requesting tax compliance from each and every house owner in the city core.


“The volunteers are personally delivering letters to the house owners, and in case the owner is absent, they leave the notice affixed on the wall,” said Shishir Kumar Dhungana, chief of IRO Sector No. 1.

He told myrepublica.com that his office alone has mobilized 15 volunteers for the purpose and they are covering both potential household as well as commercial taxpayers. IROs believe that such pursuance at the individual level would put moral pressure to the taxpayers to comply with existing tax laws.

“It is difficult to say to what extent will it work, but our collection records suggest more people are paying house rent tax this time around,” said Dhungana.

Going by the existing law, landlords -- owners of both residential and commercial buildings -- need to pay 10 percent house rent tax to the government when they rent spaces of their buildings. However, only about 40,000 landlords in Kathmandu pay the tax. And even a substantial chunk of them pay less tax than what they are supposed to pay by producing under-valued contract paper. As a result, the government is mobilizing just about Rs 222 million in revenue from house rent tax in a year.

To do away with valuation problem, IRO, during this fiscal year, have decided to use what institutional tenants like banks and Nepal Telecom pay for the space in commercial buildings, mall and other commercial areas as the reference value for taxation purpose.

Under this practice, landlords in any area who have rented out their space to banks would have to pay tax in the same proportion for the space they have leased for other firms or outlet.

“We do not accept that the owner or mall operator leased the space out to other tenants at lower rate than what such institutional tenants are paying for,” said Dhungana, adding that such a practice will largely help to plug the leakage.

However, the offices have been facing problems in plugging leakage from the non-commercial segment, like house rents for residential purposes.

courtesy: republica