KATHMANDU, Aug 6: Waste management companies, plastic collection centers and recycling factories in Kathmandu have halted their work since two weeks to protest against the government's decision to mandatorily register them under the Value Added Tax (VAT) system. Arguing that they are already registered under the Permanent Account Number (PAN) system, they say they will not resume their business unless the government revokes its policy to register them under VAT. 

Tanka Prasad Adhikari, the owner of a plastic collection center at Jadibuti, said enforcing the policy on the waste management centers and factories will eventually take toll on the workers who have a limited source of income.  “Registration under VAT requires auditing and other obligations which is economically not viable for these petty firms that run with limited source of income,” said Adhikari. 

According to Adhikari, the collection center collects about a ton of plastics each day to send it for recycling. 

"We pay Rs 15 per kilogram as transportation cost. The policy is likely to drain all our profit and it will ultimately force us to shut down as no such center would prefer operating on loss,” added Adhikari. Recycling factories have been registered under the PAN system but the budget announcement for the current fiscal year has made it mandatory for them to get registered under the VAT system. 

According to an official at the Inland Revenue Department, the government introduced this new provision with a view to collect tax from each and every business organisation and factory operating in the country. 

“Many trucks carry tons of plastic waste for recycling in India. Therefore, we are trying to bring them under a fair tax system by implementing this policy,” he said.

However, Rajesh Acharya, an entrepreneur associated with a plastic recycling factory, stressed that the new policy has discouraged waste collection centers and recycling factories to work efficiently.  “Around 1,100 tons of plastics are collected from the Kathmandu Valley in a month. Due to a lack of relevant recycling machines, only about 20 percent of the waste plastics get recycled in the country while the rest goes to India for recycling,” said Acharya.

“The government could have introduced policies to create conducive environment for recycling plastics inside the country rather than adding the burden of VAT to the factories. We will not be able to properly function if the policy is enforced upon us,” added Acharya.