health tax

7/30/2019 Health Tax

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TAX ON SERVICESSpecial Reference to Health Service

Inland Revenue Department


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Outline

Our Experiences

Contribution to revenue and registration

Features : health service taxHST as a Indirect Taxes

Legal Provisions: HST

ComplianceTax provisions : ITx, TDS, VAT

Tax issues


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Health Service & Tax


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Operations


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Our Experiences

Good and Bad - mixed experiences .

Tight Revenue target fulfilled with growth 23%

This Yr. First month encouraging 29% growth.

Market Monitoring & rental tax campaign

Punitive Action orientation due to VAT fraud .

Big Issue of Secrecy and Public Disclosure / RTI.

Banda & Strikes in the name of Business . Mismatch data issues in large number .

Health Sector not fully comply with the Tax .


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Types of Taxes

Direct taxes- Income tax

Key indirect taxes (In Nepalese context):

Value Added tax/ Customs duty/ Excise Duty

Health service tax

Education service fee


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Macro economic indicators

Indicators 2006/07 2007/08 2008/09 2009/10 2010/011 2011/12

Real GDP( Annual change %)

2.8 5.8 3.8 4.0 3.5 4.6

Per Capita GDP($)

390 464 465 556 662 735

Revenue annualgrowth %

21.3 22.7 33.3 25.4 11 22.5

Revenue/ GDP % 12.1 13.7 14.5 15.4 14.8 15.5

Budgetdeficit/GDP %

4.1 4.1 5.0 3.5 3.8 3.6

Tax RevenueNon-Tax Rev

InternalImport Based

83%17%

70%30%


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Contribution to Revenue

Income Tax26%

Value AddedTax

36%

Excise15%

Customs Duty

21%

Other Tax2%

Composition of Tax Revenue(2010/11)


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Registration Scenario

Types PAN VAT

Hospitals 549 50Others 5836 276

Total 6385 326


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Collection fromHealth Sector

Types/ Tax 2066.67Rs. '000

2067.68Rs. '000

2068.69Rs.'000

HST 136631 176322 243033

VAT

11738 37296 80809

ITx 262685 415505 559037


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VAT, HST and Education Fee

VAT: 13% levied on sales amount

Tax credit on direct & indirect purchase(including fixed asset, machinery)

HST charged @5% in every service.

(no tax credit facility)

1% ESF charged on educational fee ofmedical college


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Features : HST

As indirect tax paid by the service receiver.

Collection on behalf of government .

levied on goods or services

Optional (HST: not for VAT registered) Compulsory levied on Health Service

(except government or community hospital)

Levied on all health service- Institutional fees,Procedural charges, consultation fees , Diagnosticsand Pathological services .


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Income Tax

Individual firm/ corporate

Individual_ personal :

remuneration + other income Income tax return filing

Installment tax payment

Poush, Chaitra, Ashadh40% 70% 100%


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Tax Deduction at Source

TDS on remuneration of employees

TDS on service charges

TDS on rental expenseTDS on tender or contract

Tax deduct on every payment

(on remuneration 12 month installment)

Tax deposit up to 25 days of next month


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Compliance and Reporting

Registration:

(Voluntary/ Forced)

Billing andRecording ofTransaction:

(by Taxpayers)

Return Filing:

(Self Assessment )

Tax Payment:

(Self-payment)

Audit andManagement

Assessment

Adm.Review/Appeal

Management


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Compliance: Legal Provisions

HST Constitute by Financial Act

5% HST on sales value (service Charge)

13% VAT for VAT registered entity(op to 5yrs must levied VAT not back HST)

Voluntary registration (upgrade to VAT)

Exemption for community and govt. hospitalReturn file & payment: trimester/ upto25days


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Compliance: Legal Provisions

Rs. 1000 per Non filer of return

15% interest on delay payment

To be closed business for due payment for< 3 Month Huge Investment Question.

Heavy Penalty on non compliance due amount.


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Tax Compliance MethodsPromotion for voluntary Simplified structure Simplified formsTaxpayer education Friendly visit Interaction

Publications/ Advertisement Help desk/ Call centre

Outcomes of paid Tax

Punitive method Information collection Sudden visit Investigation Audit/ Verification Notice/ Follow up Penalties Legal action Tobeclosed business Duecollectionetc


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Taxation Issues in Nepalese Health Sector

Income Tax Issues;

Lack of awareness, and education about tax.

To bring Informal transactions ? in to tax net.

Lack of forecasting, gap analysis and full CollectionTax Non-compliance , non-registration , non filler.

Tax Assessment and Tax Dispute Settlement issues

Rationale the all tax incentives . Used or Misused?


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Tax issues : Health service sectorcontd.

VAT Issues;

Under valuation,

No billing ,under billing and Fake VAT billing.

Carousal frauds ,Mismatch transactions .Tax avoidance and tax evasion .

(protest and resistant persist)

Rate Issues: 5< >13

5% HST or 13% VAT which rate to be applied?


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Tax Avoidance and Tax Evasion Issues

Tax noncompliance Ranges of activities that areunfavorable to a state's tax system.

Tax avoidance ;Reducing taxes by legal means .

Tax protesters ;Some tax evaders interprets thatthey are not subject to being taxed .

Tax evasion ; Criminal non-payment of tax

liabilities. Breaking the Laws. Tax resistance; is the refusal to pay a tax (Theresister does not want to support the government)

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Causes of Tax Avoidance and Tax Evasion


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Tax System/ Reform

Tax system Reform

The process of changing the way how taxes arecollected or managed by the government

Main Agenda of Reform is;IRD seek to simplify the tax systemand make the systemmore understandable and more accountable.

5 Yrs Strategic Plan and 3 yrs ReformAction Plan

To meet GDP-Revenue ratio up to 20 % by 5 yearsTo meet GDP- Tax ratio 13.2 to 17% within 3 years .

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Taxation : Anomalies Reform24

Taxation Reform

Taxation- Anomalies


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Tax Payers ; Manual Online25


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Methods of Health Care Financing

Out of Pocket Spending

Social Health Insurance

Private Health InsuranceCommunity Health Insurance

General taxation Financing

(Health care Expenditure)


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Global taxation issues in Health Sector

Major concern of the people in USA as per survey Priority one -Health care 35%

Priority two- Education 22%

Priority three-Social Security 17%

Priority four- Energy 15%

Priority - Others 11%

Are you willing to pay higher cost so that all American

have Health Insurance? Answer; Yes =57% No= 38%

Majority would pay higher taxes for UHC( UniversalHealth Care.)


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Taxable Health Services


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Diagnosis & Procedure


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Thank You !

health tax

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