Pharma Companies Coming under VAT Net 

The government is preparing to bring pharmaceutical companies under the net of Value Added Tax (VAT), according to Finance Minister Shanker Prasad Koirala. Speaking at a programme organized to mark the 23rd anniversary of Deurali-Janata Pharmaceuticals Pvt Ltd (DJPL) in the Capital on the last week of January, Minister Koirala said, “Drug manufacturers are out of the VAT net so far. This has posed difficulties in monitoring and regulating them. Therefore, it is necessary to bring them under the VAT regime.”

 

Koirala, who is also the minister for Industry and Commerce and Supplies, said that a minimum VAT will be imposed on drug manufacturers instead of the current 13 per cent flat rate. “Imposing 13 per cent VAT on pharmaceutical companies will hit the consumers hard. So, the government is planning to levy a minimum VAT on them,” he said.

 

Speaking at the same programme, executive director of DJPL, Hari Bhakta Sharma said that pharmaceutical companies were ready to pay minimum VAT determined by the government. “However, the government should provide incentives and facilities to the pharmaceutical companies once they are under the VAT regime,” remarked Sharma. The Association of Pharmaceutical Producers of Nepal (APPON) is yet to come up with a stance on this issue. Talking to New Business Age, APPON President Umesh Lal Shrestha said, “APPON is yet to make public its views on the proposition to impose VAT on drug manufacturers. But, personally I think that it is not necessary,” he said, “This is a policy level issue. We didn’t expect such remarks from the minister of a government whose days are numbered.”

 

Revenue Mobilisation Falls Short of Target

The government has fallen short of meeting the revenue mobilization target by nearly Rs 4.74 billion in the first six months of the current fiscal year. According to the Ministry of Finance (MoF), the total revenue mobilization in the first six months of the current fiscal year stood at about Rs 163.44 billion against the target of Rs 168.18 billion.

 

“However, the revenue mobilization in the first six months of the current fiscal is about 21.5 per cent than that of the same period of the last fiscal year,” Bhumi Ram Sharma, joint spokesperson for the MoF told The Corporate. The government had collected total revenue of about Rs 134.56 billion in the first six months of the last fiscal year.