Five Brands Evade Millions in Customs Duty by Misclassifying Luxury Vehicles as Minibuses

Kathmandu. It has been found that expensive, luxury, and private use vehicles have been listed as minibuses to evade customs duties and taxes that should be paid to the state. Five famous brands in Nepal have been found to be engaged in such activities with the intention of evading revenue worth millions. Among those evading tax in this manner are vehicles of world-famous brands and even Kellogg's Chocos, which children eat.

The 63rd annual report of the Auditor General mentions that importers of Isuzu, Highlander, Maxus, Joylong, and Starline brands have used incorrect classification at the customs point and got the vehicles cleared.

• How did Jeeps and Pickups become Minibuses?

According to customs law, high customs duties, excise duties, and value-added tax (VAT) are levied on private use cars, jeeps, vans, and double-cab pickup vehicles. The total tax on such luxury vehicles exceeds 200 percent of the vehicle's price.

However, with the objective of promoting public transport, the government has provided tax concessions by imposing very low customs duties and VAT on minibuses or buses with a capacity of 11 seats or more.

Taking extreme advantage of this policy, importers have declared low-seat capacity, luxury, and expensive SUV and double-cab pickup vehicles as minibuses in customs declarations.

According to the report, upon technical examination of the vehicle's actual seat capacity as manufactured by the company, its length, engine capacity, and wheelbase, these vehicles do not meet the standards of a minibus under any circumstances. However, the importers showed a seating capacity of 11 to 14 seats by installing folding seats inside the vehicle or only on paper.

Due to extreme negligence or possible collusion of officials at major customs offices such as Biratnagar, Rasuwa, Tatopani, and Birgunj, these vehicles were easily passed as minibuses. The report states that customs employees released the vehicles after collecting lower duties based solely on the incorrect information and brochures submitted by the importers, without conducting any physical or technical inspection of the vehicles.

The Office of the Auditor General has stated that millions of rupees that should have been deposited in the state treasury have been misappropriated through such incorrect classification. It has been recommended that vehicles of the Isuzu, Highlander, Maxus, Joylong, and Starline brands be reclassified as jeeps/vans/pickups according to the law and taxes be determined accordingly.

The Auditor General has directed the Ministry of Finance and the Department of Customs to immediately recover all amounts including the actual customs duty, excise duty, value-added tax, and the fines and late fees applicable to them from the importers.