Despite repeated requests, hundreds of party palaces, star hotels, shopping malls and petrol pumps as well as some public offices in the Capital have refused to identify and register their taxable components, KMC’s Revenue Department chief Dhurba Kafle said.

The KMC is entitled to collect tax on property, business, house rent, vehicles, entertainment and land of businesses operating in the city which should amount to Rs 3.5 billion each year according to a municipal projection. However, the city authority hardly collects half of that amount.

Hotels, including Hyatt Regency, Shanker, Radisson, Shangri-la, Everest, Soaltee, Malla and Yak and Yeti have not yet complied with the KMC’s directive to register their taxable components arguing that the House and Land Tax Act 1962 exempts them from the municipal tax.

The Act has a non-applicability clause for “land where customers of a hotel dine and stay, motor vehicle parking place and garden.” But Kafle says a hotel has other facilities apart from these such as restaurant, night club, casino, shop and conference hall for which taxes can be levied. “They are misreading the law or are feigning ignorance to cover up the structures they have built on their premises without acquiring permission.”

Last year, the KMC had stopped providing its basic services like garbage collection to these hotels but the services were resumed after an agreement was reached. A year on, they are yet to register the taxable components.

Other private organisations such as KL Tower, Kathmandu Plaza and Kathmandu Business Park and government institutions, including Sajha Bhandar Limited, Sanskriti Sansthan, Khadya Sansthan, Dairy Development Corporation, National Trading Limited, Nepal Electricity Authority, Nepal Oil Corporation, Krishi Samagri Company and Employees Provident Fund have flouted the KMC’s directive. Among them, the Nepal Electricity Authority alone owes about Rs 200 million in taxes.

The KMC estimates more than 300,000 businesses to be operating in the metropolis but only about 60,000 of them are under its tax net. To this end, the KMC has made an agreement with Nepal Chamber of Commerce (NCC) to make its member organisations comply with the tax regulations. Under the scheme to be effective from the coming fiscal year, the NCC will receive 10 percent commission for bringing new businesses into the KMC tax net.