Kathmandu, September 29: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged the government to withdraw the value-added tax (VAT) imposed on electricity tariffs.
The FNCCI said that VAT has increased the production and operating costs of industries, hotels and tourism businesses, adversely affecting investment, employment and competitiveness. Currently, household consumers are charged 5 percent VAT, while other consumers are charged 13 percent.
As it is not easy for all businesses to immediately or fully adjust the VAT paid on electricity, the FNCCI has also called for making the process of tax adjustment and refund simple, transparent and time-bound.
Earlier, Finance Minister Swarnim Wagle had said that a study was underway to impose VAT only on electricity consumption above 100 or 150 units. However, the existing provision remains in place, under which consumption up to 50 units is exempt and VAT is charged on consumption above that threshold.
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