Suspected Tax Evasion: Documents of BYD and other brands is being reviewed, MG also Involved

Kathmandu: The Department of Revenue Investigation is prioritizing an investigation into suspected tax evasion by Chinese electric vehicle brands. The department initiated this investigation after receiving confidential information about the misuse of government incentives provided through the budget.

An official involved in the investigation stated, "We are investigating almost all electric vehicle brands imported and sold in Nepal from China, with BYD being the primary focus." The investigation team from the Department of Revenue Investigation even conducted a raid at the office of Cimex Inc., the official distributor of BYD in Nepal.

Based on specific information, the revenue team seized almost all documents related to vehicle import and sales from the raid. However, due to insufficient documents from the raid, the team requested additional documents from Cimex Inc. Employees of Cimex presented the requested documents directly to the Director General.

"After obtaining the documents for BYD electric vehicles, we have requested further details from the Customs Department for verification," said another official involved in the investigation.

The letter sent by the Revenue Department to Customs requests comprehensive details provided during the customs clearance process. Importers are required to submit information such as the country of origin, manufacturing company, and cost price during customs clearance. "We have requested those details," the official added, "Once we receive the information from the Customs Department, we can confirm whether the importers have committed tax evasion."

There is a suspicion within the department that electric vehicles might have passed customs clearance by underreporting their motor power and capacity. Nepal lacks the machinery to verify the motor power and capacity of electric vehicles. Additionally, the government’s policy of clearing customs based on kilowatts has led companies to import vehicles accordingly. The revenue department received information suggesting that vehicles produced with a certain capacity in the manufacturing country were imported to Nepal with reduced kilowatts. This prompted the Revenue Investigation Department to open a file on the matter.

Based on the findings from the BYD investigation, the department is prepared to investigate other companies as well. After requesting information from the Customs Office, the investigation will proceed based on the provided details. The department also plans to involve experts for further assistance.

Following the control of BYD's documents from Cimex, the Department of Revenue Investigation also received information regarding MG’s electric vehicles. "There is information suggesting that MG may also have committed tax evasion. This will be investigated as well," a source stated.

The revenue department has received specific information that companies importing and selling electric vehicles are exploiting loopholes in government policy by reducing the power and capacity of vehicles with a peak motor power of 150 kilowatts. Previously, the Customs Department also suspected tax evasion by electric vehicles and had written letters to customs clearance testing offices, including those in Rasuwagadhi and Tatopani. Additionally, the higher leadership of the Ministry of Finance concluded that tax evasion might be occurring through electric vehicles.

"This investigation was initiated because the Prime Minister's Office and the Ministry of Finance reached this conclusion," the source clarified, "Otherwise, why would the Department of Revenue Investigation under the Prime Minister's Office proceed with the investigation?"

The Customs Office is an entity under the Ministry of Finance, while the Department of Revenue Investigation operates under the Prime Minister's Office.