DRI files cases against 17 firms accused of revenue leakage

 The Department of Revenue Investigation (DRI) today filed cases at the Patan High Court against the proprietors of 17 firms accused of being involved in revenue leakage seeking to recover Rs 2.36 billion from them.

According to a press note issued by the department, it has filed cases against traders associated with Shangrila Trade and Suppliers, Mahalaxmi Trade Concern, Chandan Suppliers, Hanuman Suppliers, Delight Enterprises and GM Import and Export. "Ansar Manjeel Traders, PR Nirman Sewa, New Dip International, DN International, Himalayan Nepal Suppliers, RP Traders and Infratech are also under scrutiny of the department," it reads, adding that the department also filed cases against Nitesh Impex, Morgan Trade Link, Rise Auto Trade and trader Shakir Ali. "Of the accused, the department has sought to recover the largest amount of Rs 1.07 billion from trader Flot Raut Ahir of Shangrila Trade and Suppliers.

DRI files cases against five firms for using fake VAT bills

 The Department of Revenue Investigation (DRI) today filed cases against proprietors of five firms on a alleged charge of making revenue leakage by using fake value added tax (VAT) bills.

According to the DRI, these firms are found to have evaded rs 410 million revenue. Of them, the DRI has sought to recover Rs 41.64 million from proprietors – including Kamal Bahadur Raut of Raut Trade Concerns in Triyuga Municipality-12 in Udayapur. Likewise. proprietor of PRK Trade International Lahuman Majhi of Tamakoshi Rural Municipality in Dolakha has been accused of evading revenue worth Rs 55.68 million. “Three individuals including proprietor of Creta Enterprises Nabikarik Ansari of Belawa Rural Municipality-3 in Parsa have also been accused of making revenue leakage worth Rs 82.46 million,” a press note of department reads.

The DRI also filed a case at the High Court in Patan against proprietor of Minaja International Ram Babu Sahani in Parwanipur of Bara district to recover Rs 21.91 million. “Raman Construction in Raghunathpur of Dhanusha has also been accused of evading revenue of Rs 208.76 million,” the press note reads, adding that the department has sought to slap these firms and their proprietors with fines equivalent to the embezzled amount and the jail terms according to the law.

DRI files cases against six firms for evading Rs 4.18 billion in taxes

In the past three days, the Department of Revenue Investigation (DRI) has filed cases – in Patan High Court – against six firms on the charge of fake Value Added Tax (VAT) bills. They have been alleged to be involved in using fake VAT bills and smuggling of the goods to evade the taxes worth Rs 4.18 billion, according to a press note issued by the department.

Unique Wide International Pvt Ltd operating in Kathmandu Metropolis-1 has been charged for using fake VAT bills to evade the taxes amounting Rs 378 million. The company purchased the fake VAT bills from proprietor of New Unique International Bhuvan Pandey, according to the department, which sought to recover the amount from the duo and the jail penalty as per the rule. The department on Monday filed the case against the owner of Unique Wide International Pvt Ltd and New Unique International and a chartered accountant for dodging revenue and using fake VAT bill, the press note reads, adding that Jeevan Basnet – the owner of these firms that dodged the revenue and Bhuwan Pandey is the chartered accountant, who supplied fake bills to these firms.

“These firms dodged VAT worth Rs 124.22 million, income tax worth Rs 228 million and capital gains tax worth Rs 25.74 million,” according to director general at the department Dirgha Raj Mainali.

The department has sought to confiscate Rs 378 million from them and a fine equivalent to that amount as per the Revenue Leakage (Investigation and Control) Act, he said, adding that the department has so far filed cases worth around Rs 8 billion against people in fake VAT bill scandals for irregularities. “We are investigating fake VAT bills worth around Rs 14 billion.”

Likewise, the department today filed a case against High Tech International – that operates in Sorhakhutte of Kathmandu as it was found to have evaded taxes of Rs 2.42 billion through smuggling of goods. The department has accused the firm of not making the customs declaration of most of the imported goods and evaded taxes through under invoicing.

The department also sought to recover Rs 1.39 billion from three firms – JSS Mobile and Services Pvt Ltd, Shree Shyam Impex and Shree Shyam Baba Enterprises – which are operating their businesses in Sanepa of Lalitpur district. They have also been charged for smuggling of goods hurting the state treasury.

The department said that its team confiscated hard cash of Rs 9.90 million earned from smuggled gold in Bhairahawa, in a separate incident. The department has charged proprietor of Sony Jewelers Sunil Sunar and his helper Amit Pariyar and started further investigations.

Varun Beverages pays Rs 1.6 billion to prevent arrest of its officials

The bottlers for Pepsi in Nepal Varun Beverages today deposited Rs 1.6 billion as bail amount in order to prevent the arrest of its officials charged in a fake value-added tax (VAT) bill case.
The Department of Revenue Investigation (DRI) had on Tuesday filed a case against seven current and former officials including Amit Gupta, Rabikanta Jayapuriya, Rohit Kohali, Prabin Kumar Agrawal, Binod Kumar Singh and Ashok Kumar of the multinational company for evading tax worth Rs 649.6 million by producing fake VAT invoices.
The department has sought Rs 1.6 billion bail for seven incumbent and former officials of Varun Beverages, confirmed the department that has claimed that a consortium of banks led by Standard Chartered Bank has provided the bank guarantee on behalf of the company. “The department had interrogated four officials including Binod Kumar Singh and Ashok Kumar Singh before filing the case,” it said, adding that the department’s probe revealed that the company used to issue cheques in line with the fake VAT bills, only for the other parties to return the amount after charging eight per cent commission on the value of fake VAT bills.
Since a year, the department has prepared tax evasion cases worth Rs 12 billion against 130 of the 981 companies under investigation.

Department of Revenue Investigation moves to court against Varun Beverages

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.

DRI files cases against 50 tax evaders

Over the first four months of the current fiscal year, the Department of Revenue Investigation (DRI) filed cases against 50 – firms and individuals – on charge of revenue evasion.
Most of the cases are related to the use of fake value added tax (VAT) bills and evading excise duty and customs duty, according to the director general of department Dirgha Raj Mainali. “The department took action against 15 firms that were found using fake VAT bills to evade taxes,” he said, adding that the department is investigating many defrauding firms over the past year. “The department has been investigating against 25 cases related to the use of fake VAT bills by the big players that are suspected to have evaded large amount of taxes.”
The department last month investigated four cases related to evasion of taxes worth Rs 360.27 million, whereas the department last week had filed cases against 26 tax evaders. “Of them, some 25 traders are facing action for submitting fake VAT bills to evade taxes, while one is involved in smuggling of gold,” he added. “Proprietor of Lumbini Pan Masala and Tobacco Products Abdullah Musalman and proprietor of NS Traders and Suppliers Dujman Thapa were found to have evaded taxes worth Rs 13.25 million by using fake VAT bills.”
Likewise, the department filed case against proprietor of Prabha Enterprises Ram Prasad Chaulagain and proprietor of PC Traders Ram Krishna Dhakal for evading taxes amounting to a combined Rs 8.67 million under the same charge.
In a separate case, some 21 traders, including Binod Kumar Agrawal from Dhobighat, Lalitpur, and Bikas Agrawal from Hattiban, were also found to have evaded taxes amounting to Rs 1.29 billion. “The accused allegedly issued fake VAT bills through 13 different firms,” claimed the department that is responsible for investigating revenue theft.

Some 900 firms under DRI scanner for ‘tax evasion’

According to Department of Revenue Investigation, more than 900 firms are under investigation for purchasing and using fake value-added tax (VAT) bills. “These firms were delivering goods and services to government agencies, contractors, multinational companies, hydropower companies and hospitals, depriving the government of its revenue,” according to director-general of the department Dirgharaj Mainali.
More than 100 companies that sold fake bills are currently under the scanner, he said, adding that it had earlier filed cases against 39 individuals for printing and selling fake VAT bills. In March, the department had registered a case for the first time against 24 individuals. An additional 15 individuals were dragged to the court in June.
“The combined value of the fake VAT bills under investigation is around Rs 11 billion,” Mainali said, adding that the alleged VAT scam may be the biggest one yet in terms of both value and the number of firms involved. “The department today also filed a case at the Kathmandu District Court against proprietor of Lucky AS Enterprises Sunil Kumar Gautam for evading taxes worth Rs 99.56 million through alleged submission of fake VAT bills.
According to the body responsible for investigating revenue theft, it is the third case filed by the department in the last 10 days against people submitting fake VAT bills. “The alleged tax evasion in the three cases is cumulatively worth Rs 342.85 million,” a press note issued by the department reads.
The department – on November 12 – registered a case at the Kathmandu District Court against proprietors of Huspy Care International and Shree Shyam Traders for dodging taxes worth Rs 111.98 million. Likewise, the department – on November 5 – had filed a case at the same court against the proprietors of Nepal Donghua Construction Engineering Company, charging them of evading both VAT and income tax worth Rs 131.31 million.
After targeting the sellers of fake bills, the department is focusing now on investigating and filing cases against the firms that purchased and used them to evade tax, Mainali said, adding, “By showing higher expenditure on fake purchases, they also paid less income tax.”
Earlier, in the fiscal year 2010-11, the Inland Revenue Department (IRD) had built up cases to recover Rs 6.69 billion in back taxes from 518 firms. Many of these cases remain undecided but the Supreme Court is going to be decided very soon.

ITEC Day 2019 celebrated

The Embassy of India celebrated 55th anniversary of Indian Technical and Economic Cooperation (ITEC) Day in Kathmandu today.
Minister for Federal Affairs and General Administration of Nepal Lalbabu Pandit was the chief guest of the celebrations. Ambassador of India to Nepal Manjeev Singh Puri, on the occasion, noted that the ITEC programme has been pivotal in training senior officers and other officials from various ministries and departments of Nepal at India’s most premier institutions. “The programme has tremendously contributed towards skill up-gradation and human resources development in Nepal,” he said.
About 150 ITEC alumni attended the celebrations. ITEC Programme is fully funded by the Government of India to share India’s developmental experience with 161 friendly developing countries, including Nepal.
The training courses are in the fields of computers, engineering, information technology, journalism, banking, legislation, power, remote sensing, manpower research, education, empowerment of women, hydrology, law enforcement, business planning and promotion, accounts and finance.
A number of Nepali institutions have benefitted from special tailor-made ITEC course designed based on their specific needs. For example this year, 62 officials of Finance Ministry participated in a Public Finance Management course at the Institute of Government Accounts and Finance (INGAF) in New Delhi. Similarly, another special tailor-made ITEC course on Investigation and Control of Revenue Leakage was held in 2 batches for 50 Department of Revenue Investigation (DRI) officials at National Academy of Customs Excise, Indirect Taxes and Narcotics (NACIN) in Faridabad in March 2019. Similarly, 60 Nepali officials are currently being trained on Anti Money Laundering and Countering Financing of Terrorism at NACIN. In addition, a total of 34 Nepali water resources experts are pursuing their MTech in the fields of irrigation water management, Hydrology, Alternative Energy and water resources development at the prestigious IIT in Roorkee.

Tax evaders to face up to five years of jail

If any government official and private sector individual is found to be colluding to evade taxes, then they are liable to face jail terms, according to a new law endorsed by the Federal Parliament today.
According to the Revenue Leakage (Investigation and Control) Act – endorsed by the Federal Parliament – if civil servants and businesspeople are found to be collaborating to evade taxes, then the civil servant will be suspended till the case is settled and could also face a minimum jail term of six months to a maximum of five years, depending on the volume of the revenue leakage. “If any government official is booked by the Department of Revenue Investigation (DRI) for investigation of revenue leakage, the official will be automatically suspended until the issue is resolved,” it reads, adding that the defrauder will also have to pay a fine of 100 per cent to 200 per cent of the misappropriated amount. “If the revenue leakage is below Rs 5 million, the guilty will be imprisoned for six months, whereas for revenue leakage of above Rs 5 million to Rs 10 million, the jail term has been fixed at six months to one year.”
Likewise, the offender will face a jail term of one to three years for revenue leakage from Rs 10 million to Rs 30 million. “If the guilty is found to be involved in revenue leakage of over Rs 30 million, then they will be imprisoned for three years to five years.”
But the act has given the respite for revenue leakage due to genuine mistake. “If the revenue leakage occurred due to a genuine mistake, and the amount is up to Rs 5 million, the guilty could receive half the jail term and will have to pay only half the fine,” the new act reads, adding that the guilty will have to face a jail term and pay the maximum fine, for amounts beyond Rs 5 million.
However, the earlier act has that any offender involved in revenue leakage had to face a jail term of only up to three years and pay a fine that was 200 per cent of the misappropriated amount.
According to chairman of Finance Committee under the Federal Parliament Krishna Prasad Dahal, the law has been amended as the previous laws to control revenue leakages were not effective enough.

Finance Minister inaugurates online tracking of vehicles

Despite the opposition from the transporters, finance minister Dr Yuba Raj Khatiwada today inaugurated Internet-based Vehicle and Consignment Tracking System (VCTS) – a system of tracking commodities sold in the market – in the capital.
With the enforcement of the tracking system, all transportation companies, importers or entrepreneurs must have to make entry of their goods and consignments in a centralised website before transportation of goods from one destination to another inside the country, the Finance Ministry claimed. The Internet-based entry will be required only for wholesale entrepreneurs.
“The details of all the goods that are taken from one place to another for a commercial purpose must be registered under a centralised information system before they are transported,” according to the VCTS that is aimed at combating revenue leakage.
The government claims that VCTS is beneficial for truckers and entrepreneurs as it will end the hassles emanating from manual checking of documents during transportation, the private sector has asked the government some more time for adaptation to the new system as the country has no reliable Internet system yet. Though the government has made the system mandatory, the private sector has urged to roll out the system phase-wise. “The immediate and full-fledged implementation of the system is doubtful,” said vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Umesh Lal Shrestha.
The Department of Revenue Investigation (DRI) has warned that it will fine up to Rs 50,000 for the violators of the mandatory provision of entry of consignments in the website after three months –mid-October – of the new system that came into operation from today. “However, the second time offender will have to pay a fine of up to Rs 100,000,” it adds.
According to the department, the tracking system will ensure greater transparency in import business, check smuggling of goods and discourage the use of fake Value Added Tax (VAT) bill that has seen a steep drop lately.
The system – which will also be linked with the customs – will track all parties involved in business activities, ranging from importers to consumers, according to the department. “With the implementation of the tracking system, importers and entrepreneurs will be able to get real-time update of the movement of their consignments.”
The department will also remove its all 10 check-posts across the country after the implementation of the new system.
The Office of the Prime Minister and Council of Ministers has issued a circular on the VCTS – on July 8 –saying that it will be effective from July 17. 

RID identifies new group involved in fake VAT scam

Department of Revenue Investigation (DRI) today said that it has identified the third group involved in a producing and selling fake Value Added Tax (VAT) bills, after filing separate cases against two groups, though it has not arrested anybody associated with the case till today.
On June 21, the department had filed a case against 15 individuals at the Kathmandu District Court on the charge of evading Rs 2.98 billion in taxes by producing and selling fake VAT bills in one of the largest cases related to revenue fraud. “Again on March 3, the department had filed a similar case against 24 individuals for evading Rs1.75 billion in taxes through fake VAT bills,” the director general of the department Dirgha Raj Mainali said, adding that the department identified a third group involved in producing and selling fake VAT bills, while exploring the links with the two cases. “The modus operandi of the new group is the same as the previous two groups, registering the firms in the names of ignorant and illiterate people from rural areas, and producing and selling under the guise of such firms.”
Though, the department still has no clue on how many people are involved in the third group and the amounts involved in the bills that they had sold, the amount might run into billions.
When the department filed the first case on March 3, it had arrested Parameshwor Sah and Jaya Kishor Sah – with the later being the mastermind – and when the second case was filed, the department had arrested Gopal Prasad Bhattarai who – in partnership with Rimbar Dhwoj Karki – had registered various firms under the names of many villagers to run a fake VAT bill racket.
The department is investigating around 100 firms for producing and selling fake VAT bills. They claimed that they have sold such bills worth around Rs 8 billion.
Over 600 firms have been found to have purchased fake bills from the racketeers. The fake VAT bill scandal has already become larger than the one that was seen in the fiscal year 2010-11. In 2010-11, the tax authorities had decided to collect Rs 6.69 billion from 518 firms. The incident made national headlines due to the involvement of noted industrialists and businessmen.

DRI files case against five for smuggling 32 kg gold

Department of Revenue Investigation (DRI) filed a case today against five including Laxman Tiruwa, Suraj Tiruwa, Sarita Tiruwa, Indira BK and Shankar Bahadur BK for smuggling 32 kg of gold to Nepal from India. "The group had smuggled the gold to Nepal via Kanchanpur in far-western Nepal, according to the department that has filed the case at Kanchanpur district court.
The department has charged the defendants of revenue evasion. It has also sought to recover Rs 169.2 million from them.

Policy harmonisation needed to curb flow of dirty money

Greater policy harmonisation among government agencies has been urged to curb the flow of dirty money.
As some world leaders have resigned and others are under pressure to resign over the Panama Papers leak concerning international illicit money flows, government agencies in Nepal have also started debating policy harmonisation. "Nepal Investment Board approves mega foreign investments but it now has to be extra careful to investigate backgrounds before approving foreign investments," according to a high source at the Department of Money Laundering Investigation (DMLI).
Likewise, apart from cross checking foreign investments, banks and financial institutions also have to check the backgrounds before handling any transactions or opening accounts for foreign or domestic investors, the source said, adding that Article 6 of the Anti-Money Laundering Act has restricted the opening of accounts for shell companies – offshore bogus companies – and carrying out any transactions with them. "If found out, the banks and financial institutions will be punished under the Act."
Though banks and financial institutions already have to report transactions of over Rs 1 million or suspicious transactions to the Financial Information Unit (FIU) under the central bank, the Panama Papers leak has again raised a serious question over the possibility of such institutions becoming involved 'unknowingly'.
Banks and financial institutions have to be extra careful now, the source said.
Likewise, the government has also to seriously take stock of registered companies to curb the flow of dirty money, the official suggested. "Though Nepal has committed itself to curb the flow of dirty money – earnings through corruption, tax evasion and black marketing – the government itself is promoting black marketing and institutional corruption, and this could damage the economy in the long run."
Meanwhile, the DMLI today called on stakeholders including the revenue administration, the central bank's Financial Information Unit (FIU) and the police, to discuss the possibility of dirty money flowing into the country from offshore shell firms, and also the possible Nepali names in the Panama Papers leak.
Along with the DMLI, the FIU and the Department of Revenue Investigation (DRI) are the key government agencies that deal with issues of money laundering, terrorism financing and foreign exchange misappropriation.
According to DMLI chief Damodar Regmi, the meeting discussed the seven Nepalis fingered by the Panama Papers leak. "We are seriously discussing financial connections, transactions and the possibility of tax evasions," he said, adding that the department has also restarted the profiling of suspicious names that could be in the Panama Papers although the leak has not identified any of the names. "It has, however, claimed that the names will be published in May," Regmi added.
Last year also, the central bank, the DRI and DMLI had tried to investigate names that had figured in rumours following revelations of illegal outflow of money to a Swiss Bank.
Such investigations are very tricky, Regmi said, adding that without any authentic information it's impossible to track the flow of dirty money and the activities of bogus companies. "However, we have restarted the process of profiling names and restarting investigations," he added.
As Nepal has been seeing a steady rise in FDI commitments from the countries identified by the ICIJ as tax havens, the DMLI has said that it will now step up surveillance for FDI coming from these tax havens. There is a need of in-depth investigation, given the huge foreign direct investment (FDI) entering Nepal from tax havens in recent years, Regmi said, adding that statistics from the Department of Industry (DoI) reveals that of the total FDI commitments till last fiscal, about 20 per cent were from tax havens.
The rise in money entering Nepal from tax havens has raised question that it could be illegal money stashed abroad by Nepalis, though the government departments have no proper records of such money.
Apart from enhancing the supervisory capacity to monitor FDI commitments, the government agencies like the DoI and the Office of Company Registrar (OCR) should work together to fight the flow of dirty money.
Regmi said that now onwards the DMLI will adopt 'risk-based supervision system', instead of launching investigating after the incident of money laundering surfaces. But, the DMLI has any success success so far in investigating money laundering cases. The department has not filed any any case against money launderers at the Special Court in the current fiscal year, neither had it filed any case in the last fiscal year too.
Since its establishment some five years ago, the department had filed only 30 money laundering cases at the Special Court. The DMLI was established in 2011 after a huge international pressure on the government. The government had committed the Financial Action Task Force (FATF) – a global anti-money laundering body – that it would approve the anti money laundering act in line with global fight against the fight to dirty money flow.
The department has to be strengthened to get result against the cases of money laundering.
Currently, the department has been probing 700 cases and 200 of them are in 'advanced stage', according to Regmi.

Economists urge tough laws against money laundering

Economists have suggested to the government to strengthen the law to curb the illegal outflow of money from the country.
Their suggestion came a day after the Panama Papers leak that has also fingered seven Nepalis having partnership firms in several tax havens. "Though the issue will not have any impact on Nepal at present, it will definately have adverse impact on revenue mobilisation in the future," said former chief secretary Bimal Koirala, speaking at an interaction in the capital today.
Citing the recent example of how the government is unwilling to charge capital gains tax (CGT) on the sale of TeliaSonera's ownership in Ncell to Axiata, Koirala asked the government to start tracking the money. "The Panama Papers should be a lesson for the government to make its law strong enough to prevent such illegal flow of money."
The names of the seven Nepalis mentioned in the Panama Papers have yet to be disclosed.
Koirala suggested to the government to bring all manner of earning under the tax net so as to prevent money laundering. "If the government fails to bring strong legal provision to curb illicit flow of money, drug peddlers and armed smugglers could misuse the country for stashing their illegal earnings," he said, "Such earnings from corruption and tax evasion is sent to offshore firms and back channeled to the country under the pretexts of loans and investments."
The government also needs to find ways to plug the loopholes if there are any to curb the flow of dirty money.
He also cited the example of the central bank's freezing of Rs 3.5 billion that entered Nepal in the name of Mukti Shree Group, suspecting back channeling of black money, and also asked the government to prioritise the foreign investment. "The government should not accept all kinds foreign investments," Koirala said, suggesting the government to accept only those foreign investments that pay taxes and generate employment in the country.
Likewise, senior economist Prof Dr Bishwhambher Pyakuryal, on the occasion, said Nepal's mention in the Panama Papers has raised a question mark over the country's credibility. The deficiency in trust will result in low foreign borrowings and grants, which will in the longer term hit the development and social sectors, he said, adding that it will hit the social sector hard in the long run. "Tax evasion will hit revenue mobilisation resulting in low government spending in the social sectors."
Previous international reports have also mentioned about Nepalis stashing their illegal earnings in various tax havens. The report 'Illicit Financial Flows from Developing Countries' published by Global Financial Integrity (GFI) had last year revealed that $754 million on an average every year was siphoned away from Nepal between 2003-2012.
According to the report, trade misinvoicing – misreporting the value of a commercial transaction on an invoice submitted to customs – accounted for most of the capital flight.
Likewise, the prolonged political transition in Nepal has made it easier for domestic and foreign firms operating in Nepal to launder money out of the country, the economists said.
"If the current situation persists, Nepal could face blacklisting by the international community," Pyakuryal added. Blacklisting of a country means it will not be able to do international trade and will have restricted movement of its citizens across the globe.
"Nepal should thus enter into an agreement with the tax haven countries for information sharing relating to tax and banking transactions," he suggested.
Meanwhile, a day after the Panama Papers exposé, Department of Money Laundering Investigation (DMLI) today said that it would start probe to find whether Nepalis too are holding offshore accounts.
It is calling a meeting of key stakeholders –Financial Intelligence Unit (FIU) under Nepal Rastra Bank, Department of Revenue Investigation (DRI) and Nepal Police – tomorrow to discuss on whether Nepalis have offshore accounts and whether the government agencies are aware of such accounts.
In one of the biggest leaks in the history, International Consortium of Investigative Journalists (ICIJ) on Monday made public a huge cache of documents showing how the world’s rich, powerful and famous exploit the secretive offshore tax regimes and hide their money. The documents also named the top 10 destinations, known as tax havens, where the world’s rich and powerful stash their money. 

LPG traders demand VAT exemption

Liquefied Petroleum Gas (LPG) — popularly known as cooking gas — distributors today demanded Value Added Tax (VAT) exemption for the cooking gas in the domestic use.
"The government must abolish VAT in cooking gas following the same rule applied in kerosene," LP Gas Distributors' Association-Nepal Chandra Krishna Shrestha at an interaction with revenue authorities here today.
"It will reduce cost for the domestic users," he said, explaining that neighbouring India has also adopted 'No VAT' in cooking gas for domestic users. "The distributors should also be exempted from VAT net."
LPG distributors get just two per cent commission from LPG, so we should not be included in the tax net," he said.
LPG dealers also supported the distributors on the occasion.
"The government will not get benefit from VAT in LPG," said president of Federation of Gas Dealers Associations Gyaneshwor Acharya. "Only the bottlers are getting benefit from VAT refund."
However, Department of Inland Revenue (DRI) director general Tanka Mani Sharma, on the occasion, urged the LPG distributors, dealers, and sellers to cooperate in implementing VAT in the sector. "The government would simplify the entry into the VAT net," he said, adding that small technical problems will be sorted out through discussion with concerned Inland Revenue Offices.
During the interaction, acting general manager of Nepal Oil Corporation (NOC) Suresh Agrawal said that the government is implementing dual colour cooking gas cylinder to reduce the loss of the state entity.
"LPG bottlers, distributors, dealers and depots must support the move that benefits consumers," he said, adding that NOC is looking for their encouraging support.
The government has planned dual colour cylinders — red for domestic and blue for commercial purpose — from June 15 but it has further delayed due to recent agitation of LPG bottlers for a month. The government and bottlers have agreed to enforce dual colour cooking gas cylinders from July 16.
The state oil monopoly has been incurring huge losses from LPG because it has to sell cooking gas cylinders in subsidised rate.
According to NOC, it has around Rs 358.6 loss in one cylinder at current price.
However, the cooking gas traders suggested the government to start automatic pricing mechanism to recover the losses. The automatic pricing system will ensure the hike and drop of price according to the buying price transparently, they claimed.
Likewise, LPG import has also increased four times in a decade. The country used to import around 4,800 metric tonnes in a month in 2002-03 but the import has increased to 18,000 metric tonnes in the current fiscal year due to rising demand and urbanisation.
Currently, about one million households have been using nearly four million cooking gas cylinders in a month.

Government officials find tax offices lucrative

The government officials’ priority for transfer has changed, as unlike earlier, majority of them want to get transferred to the tax offices like Inland Revenue Department and Department of Revenue Investigation (DRI), according to a survey.
Some 70 per cent of the government officials surveyed said that they want to get transferred to tax offices.
Earlier, customs used to be their first priority. "But the survey revealed that customs has become the second priority at present," said senior training officer at the Revenue Administration Training Centre Basu Sharma.
Earlier, customs used to be lucrative but the current trend showed the officials started preferring tax offices as they found it even more lucrative in recent years, may be due to some ‘unseen’ benefits,” according to a Finance Ministry official.
“Finance Ministry comes to the third priority and nobody wants to get transferred to research and academic departments," Sharma said, adding that the results could be an eye-opener for the Finance Ministry.
The officials also said that there is massive political interference and unpredictable environment in the government job. “Government employees’ image has taken a plunge," they said, adding that the frequent transfer on the basis of ideology has forced the officials to believe that system does not work.
The unions in the government machinery are so powerful that they have no more them on their ability. The bureaucracy needs a complete revamp as it’s not professional, they said.
They are not satisfied with the current organisational structures too. “The current government organisational structure offers nothing for growth and development, neither personal nor organizational, they said.
The Revenue Administration Training Centre had conducted a 45-day long training for over 60 government officials from senior to junior level including that from Revenue Department and Finance Ministry.
The frequent changes in the government coupled with the bureaucracy have been making it harder for the government employees to maintain their professionalism and discouraging them from believing on the system.