EV importers evade NPR 4 billion in taxes, says Auditor General

KATHMANDU, MAY 15: Importers of electric vehicles (EVs) have evaded billions in taxes, according to the Office of the Auditor General. In its audit report for the previous fiscal year 2023/24, submitted to President Ramchandra Paudel yesterday, the office concluded that nearly NPR 4 billion in taxes were dodged during EV imports.

As per the existing regulations, customs duties and excise taxes are levied based on the motor capacity of EVs.  The vehicles with motors between 50 kW and 100 kW are subject to a 15% customs duty and a 10% excise tax. For vehicles with motor capacity between 100 kW and 200 kW, both customs duty and excise tax are set at 20%.

However, the report reveals that some companies falsely declared EVs with motor capacities between 100 kW and 200 kW as having only 99 kW, thereby reducing their tax burden significantly. Through such misrepresentation on invoices, tax evasion amounting to NPR 3.77 billion was committed. The Auditor General has recommended recovering the evaded amount.

Further evidence from export records in the manufacturing countries showed that the same EV models, when shipped to other countries, were listed with motor capacities between 100 kW and 200 kW. But when those same models entered Nepal, they were invoiced as 99 kW — solely to benefit from lower tax rates.

According to the report, these EVs were cleared through the Rasuwagadhi and Tatopani customs offices, both located along the Nepal-China border. The Auditor General concludes that a portion of EVs imported from China were involved in this tax evasion.