VAT scam probe nearing end

KATHMANDU, MAR 15: 

Inland Revenue Department (IRD) has almost completed investigations of all the 518 firms who were involved in using fake Value Added Tax (VAT) invoices.

The department has completed investigations of 512 firms out of the total of 518 who were involved in the scam, said director general at the department Tanka Mani Sharma.

“The investigation of 512 firms has been completed with an assessment of Rs 6.2 billion as taxes and fines,” added Sharma, saying the department slapped a fine of Rs 2.98 billion for VAT, Rs 2.87 billion for income tax and Rs 170 million for excise frauds on firms involved in producing fake VAT bills.

Of the remaining six firms, one has already been shut down and a public enterprise has yet to submit its income detail, according to him. 

“The government has issued an arrest warrant for the owner of a company.” Similarly, the department is searching for the proprietors of a company which was being operated as a joint venture company. 

“Of the six cases still remaining, the Department of Revenue Investigation is still carrying out investigations of one firm involved in producing fake VAT bills.” The department slapped the actual defrauded amount of VAT and income tax along with fines of up to 100 per cent, according to IRD.

Of the 512 firms already investigated, 130 firms have approached the Administrative Review Committee led by the director general of the department for a review of their tax assessment, according to Sharma. “The committee has already finalised the review plea of 76 firms and the hearing for the rest will finish soon.”

The firms can move the Revenue Tribunal and even the courts if they are not satisfied with the tax assessment, he informed. “The government has collected Rs 1 billion out of Rs 6.2 billion so far,” he added.

Inland Revenue Department started investigations into the fake VAT bill scam from November 2010, after it discovered widespread use of fake VAT receipts. From the beginning of January it started investigations of an additional 1,700 firms suspected of revenue evasion through fake VAT bills. 

A majority of traders and firms in the country are taking consumers for a ride to evade VAT by not issuing invoices to customers, according to the department.

Source: THT