The Inland Revenue Department (IRD) plans to make a final call to brick factories to register themselves under value added tax (VAT). The IRD's move follows the recommendation of a government committee consisting of government officials, experts and the factory owners that they be brought under the tax net.

IRD officials said that they would ask the owners of brick kilns to register within a few days. "This will be the final call for voluntary registration and payment of VAT," said Tanka Mani Sharma, director general of the IRD. "We will shut them down if they continue to ignore instructions to pay VAT." Brick factory owners have blamed the committee's report as being "unfair", and said that they would oppose any inconvenient measures imposed by the government.

Mahendra Bahadur Chitrakar, president of the Bricks Producers Association, said that they would only agree to the system they have proposed under which they will pay VAT at a flat rate and 85 percent of which will be refunded to them. "We will only accept this modality of taxation," he added. However, officials said that this system would have no meaning as it does not require the factories to issue bills. Other options recommended in the report are registering the firms under VAT and exempting them from paying outstanding VAT or imposing a green tax at a rate lower than the VAT rate.  

The IRD intends to assume a tough stance as most brick factories have been continuously disregarding directions to register as VAT payers. IRD officials said that the factories have been refusing to pay VAT despite conducting transactions worth millions of rupees."We have waited for them for a long period to come under the VAT net, and the government had also formed a dialogue committee," said Sharma. "The dialogue committee has recommended that VAT should be imposed on the brick factories."