ACAN suggests paying corona insurance claims through bonds

By A Staff Reporter Kathmandu, May 9: The Association of Chartered Accountants of Nepal (ACAN), an organisation of accountants, has suggested issuing corona bonds to settle the remaining Rs. 11 billion claims of corona insurance that have to be paid by the insurance companies.

The Association, in its suggestion for the budget of the coming fiscal year, said it would be appropriate for the government itself or the insurance companies to issue 4-year 4 per cent corona bonds equal to Rs. 1 billion for immediate payment of coronavirus insurance liabilities.

The ACAN said that the insurance payment obligation of Rs. 400 million would be fulfilled immediately if the policy was introduced to buy the bonds by the commercial banks and include that investment in the statutory liquidity ratio (SLR) required by the banks.

In this way, the current Rs. 11 billion liability of coronavirus insurance payment can be fulfilled by issuing bonds of Rs. 25 billion, according to a press statement of the ACAN.

The Association has submitted suggestions, including on how to meet liabilities of coronavirus insurance to the Ministry of Finance, the Ministry of Industry, Commerce and Supplies and the Revenue Advisory Committee.

A delegation of the Association led by its president CA Ananda Raj Sharma Wagle submitted its suggestions to the office of concerned bodies.

The Association has said that it has prepared final policy suggestions based on the opinions and advice of various government bodies, associations and chartered accountants involved in the audit profession, read the press statement.

The ACAN has included suggestions in the areas of increasing revenue by improving revenue administration, policy reforms in revenue management, coronavirus insurance payment measures, reforms in revenue law, simplification of tax collection process of different government levels and development of a one door system.

The Association has suggested that the payment of sales and service fees should be made mandatory through the banking system, to charge digital service fee of up to 2 per cent on digital services, tax deduction on e-commerce transactions and value added tax for those earning through online services.

Similarly, in order to attract business establishments to agriculture, policy reform has been proposed to give income tax exemption for the first 10 years from the date of commencement of business and 50 per cent exemption in the tax levied thereafter.

Stating that the losses in the tourism sector have been huge due to the COVID-19 pandemic, the Association has suggested extending such losses' transfer period from seven years to 12 years.

The Association stressed on the need to provide exemption from customs duty, excise duty and value added tax on machinery and goods imported by the tourism industry.

In order to encourage the use of electric vehicles, the Association has asked for tax exemption while constructing charging stations and arrangements to capitalise 125 per cent of the amount invested in this sector by the fiscal year 2022/23.

The Association suggested that the domestic company that produces appliances such as electric cooking ovens and stoves for industrial use should be allowed to capitalise 125 per cent if it invests in the sector by 2022/23.

The Association has also demanded increasing the personal income tax limit from Rs. 400,000 to Rs. 500,000.