Bottlers Nepal’s mockery of the government with tax evasion
The god-forsaken economy of Nepal stands amidst a detrimental liquidity crisis. The post lockdown scenario in the country saw increased credit disbursement with low deposits and declining foreign reserves, collectively contributing to a liquidity crunch. While the government is looking to relieve the economic pressure through increased expenditure accompanied by a loan amounting to USD 150 million from the World Bank, Bottlers Nepal (Coca Cola franchise holder) has made a mockery of Nepal’s financial and judicial systems by deliberately evading tax obligations.
Bottlers Nepal is a celebrated name in the beverage industry of Nepal. With internationally acclaimed soft drinks like Coca Cola, Sprite and Fanta under its portfolio, the company is also known for its state-of-the-art branding and marketing campaigns. Completely disregarding the prolific brand status of its beverages, UAE-based Coca Cola SABCO Asia Limited sought to cheekily get away with tax evasions while transferring ownership of Bottlers Nepal to Ireland-based European Refreshment.
The Department of Revenue Investigation filed a case condemning Bottlers Nepal for evading capital gain tax worth Rs 3.71 billion while transferring its ownership. Additionally, the department held that the company must pay an additional Rs 3.71 billion in fine for the felonious act. The company’s total tax obligations, including penalty, stands at Rs 7.43 billion as per the filed case.
What’s more outrageous is Bottlers Nepal’s failure to present income details for the year 2014-15, before and after the transfer of ownership. Furthermore, The Department of Revenue Investigation contended that ownership transfer of the company remained unnotified to relevant government agencies including the Large Taxpayers’ Office. How on earth does a massive company like Bottlers Nepal that manufactures blue chip products like Coca Cola, Fanta and Sprite manage to evade taxes under the radar?
Taxes are a major source of government revenue and largely contribute in regulating the economic sector of a country. Sadly, tax evasion is an issue that has periodically surfaced in the media sphere and plagues the business industry of Nepal. The revenue department reported tax evasions amounting to Rs 24.74 billion in the fiscal year during 2020/21. Moreover, unlawful engagements from big names like Ncell and Bottlers Nepal is only setting a wrong example for smaller companies. Aggravating the matters, Nepal has had to deal with liquidity crunch numerous times in the past as well. Perhaps, tax evading tendencies and liquidity crises have a potential link between them!
