KATHMANDU: The Nepali Congress and CPN-UML coalition, currently working on forming a new government, has reached an agreement to amend the Economic Bill, 2081.
The alliance supports the amendment proposal by National Assembly member Bhagwati Neupane, which suggests deleting sub-section 6 of Section 36 and adjusting the subsequent sub-sections.
This agreement paves the way for potential amendments to the bill.
Section 36 (6) of the Economic Bill, 2081, which has been passed by the House of Representatives, includes a restrictive phrase in Section 57 (1) of the Income Tax Act, 2058.
The phrase states: “However, the provisions of this sub-section shall not apply when the number of shares and capital of former shareholders remain unchanged, while new shareholders are added and capital increases.”
Neupane argued that this amendment is necessary because the bill enables companies to increase their capital without tax implications, allowing them to convert black money into white.
“That restrictive phrase poses a danger to the country, particularly by facilitating the transformation of black money into white,” Neupane stated.
“It permits capital increases without paying taxes, enables membership shares, and allows the buying and selling of shares without tax. This provision creates loopholes, which is why we proposed the amendment.”
With the new political alignment, the Nepali Congress is united in amending the bill that has already been passed by the House of Representatives.
Nepali Congress whip Anand Mohan Bhattarai expressed support for Neupane’s proposal.
However, he noted that the bill, expected to be tabled by the government on Thursday, was stalled due to a minority vote.
“We support the amendment registered by him, submitted to the House on the 23rd after extensive discussion. We backed it as well,” he said.
On behalf of UML, National Assembly Whip Devendra Dahal expressed concerns that, despite its introduction to support small businesses, the Economic Bill primarily benefits large investors.
“To encourage small entrepreneurs, the bill allows new investors to inject billions into a company without any tax implications,” Dahal stated.
“This primarily benefits large investors, not small businesses. We believe a decision on this matter should be made only after thorough discussion. Our position remains unchanged.”
Dahal emphasized that according to Article 111 of the Constitution, the National Assembly has the authority to make amendments, and once the minister accepts these changes, the House of Representatives will reconsider the Bill.
Article 111, Clause 2, states that a bill passed by the House of Representatives must be sent to the National Assembly, which must respond within 15 days if it recommends any changes. Additionally, Clause 3 allows the House of Representatives to incorporate any appropriate suggestions from the National Assembly before submitting it to the President for verification.
Clause 4 indicates that if the National Assembly does not return the bill within 15 days, the House of Representatives can send it directly to the President for verification.
With the new political dynamics, it appears feasible to amend the economic bill, especially as the Nepali Congress-UML coalition holds a majority in both the House of Representatives and the National Assembly.
Subsection 1 of Section 57 of the Income Tax Act states, “If ownership of an entity changes by fifty percent or more compared to the ownership over the previous three years, that entity shall be deemed to have disposed of its assets or liabilities.”
Nepali Congress leader and former Finance Minister Prakash Sharan Mahat accused Finance Minister Barshaman Pun of attempting to exempt Ncell from billions in taxes through amendments to the Finance Bill, which he protested in the House of Representatives.
In response to parliamentary questions about the bill, Finance Minister Pun claimed that the provision was intended to support startup companies.
However, the Nepali Congress-UML members in the National Assembly united against the amendment, arguing that it was designed to evade income tax for large investors.
Comment