Exporters draw finance minister’s attention to reduced facilities

By A Staff Reporter,Kathmandu, June 13: Exporters have drawn the government's attention to the fact that the new budget cut the facilities enjoyed by the export industries. 

During a meeting with Finance Minister Dr. Prakash Sharan Mahat on Monday, a business delegation of the Federation of Export Entrepreneurs Nepal drew the minister’s attention over the imposition of Value Added Tax on raw materials such as wool and cotton in the new budget citing that the new provision would affect the overall export of these goods.

 “The new provision imposed on the import of raw materials will increase the production cost of carpet, felt, and cotton products and will reduce the competitiveness of these products in the international market," said Shanker Prasad Pandey, president of the Federation of Export Entrepreneurs Nepal.

He asked Minister Dr. Mahat to remove the provision if he really wanted to promote the export of goods produced from the micro, cottage and small industries.

Stating that the government has arranged a budget of Rs. 900 million for providing incentives for export, he said that the budget allocated for incentives would not be enough for all exporters. 

“Large exporters will enjoy the incentives as per their access, so it is necessary to provide incentives to the small ones with priority. We want to request the Finance Minister to make arrangements for providing incentives on export equally to small exporters as well,” he said.

The sub-section of the Income Tax Act of 2023/24 has been repealed and the discount on income tax has been withdrawn in the current budget. According to this arrangement,  the tax will increase to 20 per cent from 12.5 per cent for the exporter companies and from 18 per cent to 39 per cent for natural persons.

Stating that there will be a decrease in export as the export industries would lose their incentive and their competitiveness would also decrease, the Federation urged the government to maintain the existing provision on income tax.

The Federation has demanded that loans for small and domestic industries based on domestic raw materials should be provided at subsidised rates like in agriculture as a policy.

Receiving the suggestion of the exporters, Finance Minister Dr. Mahat said that he would hold extensive discussions with the private sector regarding the demands of exporters. He added that the government was in favour of promoting export.