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PROPOSAL FOR TAX DISCOUNT TO FOREIGN CEMENT FACTORIES FOR EIGHT YEARS

PROPOSAL FOR TAX DISCOUNT TO FOREIGN CEMENT FACTORIES FOR EIGHT YEARS

April 27, 2016 Categories CorporateTop News

BABURAM KHADKA

KATHMANDU, April 26

The Investment Board Nepal (IBN) has taken initiative to give tax discount to four big cement factories for eight years at a time when big cement industries are being established in the country.

The IBN has started the initiative for Reliance Cement of India, Dangote of Nigeria, Hongxi Group of China and Shivam Cement of Nepal, and Huaxin also of China. The IBN will recommend to the Finance Ministry to provide facilities, that are not currently provided to Nepali industries, to these four industries with foreign investment. The proposal will be presented at the next IBN meeting to be chaired by Prime Minister (PM) KP Sharma Oli. The IBN will formally recommend to the ministry for tax discount from the upcoming fiscal year once the meeting approves it.

The Economic Act mentions that industries with investment of Rs 1 billion in the current fiscal year and employing more than 500 persons will get complete tax waiver for five years and 50 percent discount for the next three years. The IBN has started the initiative to provide the benefits as per the act even to the industries with foreign investment.

IBN sources said it is proposing additional facilities as the projects to be given permission will have investment of at least Rs 10 billion and will obviously employ more persons. The IBN deems that tax discount must be provided to address a few technical and practical difficulties the factories will face. Similarly, the Ministry for Population and Environment will also be recommended to fast track environmental impact assessment (EIA) of cement factories and approval of forest land.

The Ministry of Land Reforms and Management will also be recommended to do away with the land ceiling for cement industries as there will not be sufficient land to establish a cement factory as per the current ceiling of 500 ropanis in hills and 50 bighas in tarai put in 2011. The Finance Ministry similarly will also be proposed to allocate budget to construct necessary access roads to the factories and high voltage transmission line.

Reliance Cement of India will manufacture 7,000 tons a day, Dangote of Nigeria 6,000, Hongxi Group of China and Shivam Cement of Nepal 6,000 and Huaxin also of China 3,000. These four industries are bringing foreign investment of Rs 145 billion. Dangote is preparing to establish the factory at Bhimphedi in Makwanpur, Hongxi mine in Palpa and factory in Nawalparasi, Huaxin in Narayani zone and Reliance in central Nepal.

‘Game to destroy domestic industries’

The private sector has said that domestic factories will be shut down if foreign ones were given tax discount for eight years.

“The IBN has started the game of destroying the domestic industries. Giving facilities to foreign industries when domestic industries are capable to meet domestic needs is unacceptable,” President of the Federation of Nepalese Chambers of Commerce and Industries (FNCCI) Pashupati Murarka said. He added that the decision to give the facilities to foreign industries and not to the domestic ones will not be accepted. While accepting that foreign investment is necessary for Nepal, he stated that facilities should not, however, be indiscriminately given in the name of bringing foreign investment.

President of Nepal Cement Manufacturers Association Dhruba Thapa said the industries will be ravaged due to fall in competitive capacity if facilities were given to foreign industries but not to domestic ones. “Nepali industries have not received any facility. Proposing tax discount saying it will bring foreign investment is a game to close domestic industries,” he stated.

http://www.karobardaily.com/2016/04/12642/