The Department of Revenue Investigation (DRI) has today filed a case against Varun Beverages Nepal charging the multinational company of evading tax of Rs 649.60 million through the use of fake value added tax (VAT) invoices.
Filing a case at Kathmandu District Court today against seven former and present directors of the multinational company, the department has sought around Rs 1.95 billion in principal and penalties. “The department is seeking to recover Rs 649.60 million in principal, along with a fine that is double the principal amount or nearly Rs 1.30 billion, from the company,” the department informed, adding that it has also urged the court to consider up to three year jail term, according to the a provision in the Revenue Leakage Investigation and Control Act-1995. “The department filed a case against Amit Gupta, Ravikanta Jaipuriya, Rohit Kohli, Prabin Kumar Agrawal, Vinod Kumar Singh and Ashok Kumar and the company itself.”
The multinational company Varun Beverages has been in the business of carbonated and non-carbonated beverage products including Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon and Mountain Dew in Nepal. The company operates plants in Kathmandu and Nawalparasi districts. Last year, Varun Beverages invested Rs 2.39 billion in a second production plant at Ramgram-10 of Nawalparasi district. In the fiscal year 2017-18, the multinational company earned a net profit of Rs 4.83 billion. It has been operating in six countries including Nepal, India and China.
The department has investigated the multinational company for four months on a tip-off that the company was engaged in VAT bill scam amounting to millions. According to the section 4 (A) and (B) of Revenue Leakage Investigation and Control Act-1995, the department has already seized the bank guarantee of Rs 1.60 billion of Varun Beverages before the case was filed at the Kathmandu District Court.
During the investigation, the department discovered that the company had been issuing fake VAT bills while conducting business with its business partners between fiscal years 2013-14 and 2018-19, the department claimed, suspecting that the multinational company has evaded VAT amount worth Rs 253.40 million and Rs 396.15 million in income tax and dividend during the five years. “The Rs 1.95 billion that the department is trying to recover is by far the largest amount in terms of VAT bill scam.”
Lately, the government has been failing to meet the VAT target since the beginning of the current fiscal year putting the Finance Minister under tremendous pressure. The department – under the Finance Ministry – has been active in investigation of fake VAT bills as one of the key resources of the government earnings, VAT has been witnessing regular fall. The VAT and income tax shortfall in the first four months of the current fiscal year 2019-20 stood at around Rs 21 billion, according to the Financial Comptroller General’s Office (FCGO). “The government – during the first four months between mid-July and mid-November – has collected Rs 104 billion revenue, which is 83.2 per cent of the target.”
Of the annual revenue mobilisation target of Rs 506 billion for the current fiscal year, the target for the first four months was Rs 125 billion but the government witnessed a shortfall of around Rs 21 billion.
With the government getting tough with tax evaders, the department has intensified its drive against defrauding firms. Thus, the department has registered 28 cases against 76 individuals related to VAT and income tax scams and sought recovery of Rs 10.29 billion in principal and fines in the first four months of the current fiscal year. Likewise, the department has filed cases against 515 individuals on VAT and income tax scams – till date – and sought nearly Rs 37 billion in principal and penalties, along with three-year imprisonment of the accused.
Meanwhile, the government is also in the process of amending the Revenue Leakage Investigation and Control Act-1995 to curb tax evasion and money laundering. The amended act has already been passed by the lower house of parliament.
Filing a case at Kathmandu District Court today against seven former and present directors of the multinational company, the department has sought around Rs 1.95 billion in principal and penalties. “The department is seeking to recover Rs 649.60 million in principal, along with a fine that is double the principal amount or nearly Rs 1.30 billion, from the company,” the department informed, adding that it has also urged the court to consider up to three year jail term, according to the a provision in the Revenue Leakage Investigation and Control Act-1995. “The department filed a case against Amit Gupta, Ravikanta Jaipuriya, Rohit Kohli, Prabin Kumar Agrawal, Vinod Kumar Singh and Ashok Kumar and the company itself.”
The multinational company Varun Beverages has been in the business of carbonated and non-carbonated beverage products including Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon and Mountain Dew in Nepal. The company operates plants in Kathmandu and Nawalparasi districts. Last year, Varun Beverages invested Rs 2.39 billion in a second production plant at Ramgram-10 of Nawalparasi district. In the fiscal year 2017-18, the multinational company earned a net profit of Rs 4.83 billion. It has been operating in six countries including Nepal, India and China.
The department has investigated the multinational company for four months on a tip-off that the company was engaged in VAT bill scam amounting to millions. According to the section 4 (A) and (B) of Revenue Leakage Investigation and Control Act-1995, the department has already seized the bank guarantee of Rs 1.60 billion of Varun Beverages before the case was filed at the Kathmandu District Court.
During the investigation, the department discovered that the company had been issuing fake VAT bills while conducting business with its business partners between fiscal years 2013-14 and 2018-19, the department claimed, suspecting that the multinational company has evaded VAT amount worth Rs 253.40 million and Rs 396.15 million in income tax and dividend during the five years. “The Rs 1.95 billion that the department is trying to recover is by far the largest amount in terms of VAT bill scam.”
Lately, the government has been failing to meet the VAT target since the beginning of the current fiscal year putting the Finance Minister under tremendous pressure. The department – under the Finance Ministry – has been active in investigation of fake VAT bills as one of the key resources of the government earnings, VAT has been witnessing regular fall. The VAT and income tax shortfall in the first four months of the current fiscal year 2019-20 stood at around Rs 21 billion, according to the Financial Comptroller General’s Office (FCGO). “The government – during the first four months between mid-July and mid-November – has collected Rs 104 billion revenue, which is 83.2 per cent of the target.”
Of the annual revenue mobilisation target of Rs 506 billion for the current fiscal year, the target for the first four months was Rs 125 billion but the government witnessed a shortfall of around Rs 21 billion.
With the government getting tough with tax evaders, the department has intensified its drive against defrauding firms. Thus, the department has registered 28 cases against 76 individuals related to VAT and income tax scams and sought recovery of Rs 10.29 billion in principal and fines in the first four months of the current fiscal year. Likewise, the department has filed cases against 515 individuals on VAT and income tax scams – till date – and sought nearly Rs 37 billion in principal and penalties, along with three-year imprisonment of the accused.
Meanwhile, the government is also in the process of amending the Revenue Leakage Investigation and Control Act-1995 to curb tax evasion and money laundering. The amended act has already been passed by the lower house of parliament.
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