September 21: The government's decision to amend the Income Tax Act has received backlash.
In the proposal to amend the Income Tax Act, 2058 BS, the government has made a provision to include a clause that states ‘source of income shall not be reviewed for investment' while investing in various infrastructures. Although the government has defended such move stating that it wants to attract investment, stakeholders have pointed out the possibility of money laundering if the law gets amended.
Transparency International Nepal has protested stating that the government is amending the Income Tax Act to legalize illegal money.
According to Padmini Pradhangana, chairperson of the watchdog, if the proposal is endorsed to help legalize black money hidden by high-profile individuals such as politicians, civil servants, and businesspersons, it will promote corruption, increase tax fraud, and discourage regular taxpayers. This act goes against the spirit of Nepal's constitution, laws, and the international commitment against corruption, shared Pradhananga.
In a statement issued on September 20, Transparency International Nepal called on the coalition government to withdraw the proposal immediately.
However, the government has defended the move saying that it will not allow investment of illegal money.
According to the Ministry of Finance, by amending Section 11C of the Income Tax Act, 2058 BS, arrangements are being made to ensure that the source of income of the investment made in infrastructure development projects and industries of the national importance will not be sought till end of 2080 BS.
A statement issued by the Ministry of Finance on Monday said, "As per the law, action will be taken against money laundering, terrorist activities, corruption or any other criminal offense.”
According to Finance Minister Janardan Sharma, the government is fully committed to curbing money laundering and financial investment in terrorist activities and implementing national laws and international commitments on corruption control.