Kathmandu. After the tax dispute over electric vehicles escalated, a proposal has been made to set the tax rate on the purchase price according to the luxury of the vehicle.
The Department of Revenue has been proposing to set the tax rate on EV vehicles based on the price since last year. But the Ministry of Finance has not accepted it. In the Economic Act 2082, preparations are being made to set the tax rate on the price. An employee of the Customs Department said, “We could not measure the kilowatt (motor capacity) of a water-pulling motor, now how do traders allow us to measure the motor capacity of an electric vehicle? The system of determining the customs rate in kilowatts is wrong. Now there is no option but to determine the tax rate based on the purchase price.”
According to the employee, preparations are underway to determine the tax rate based on the features and amenities loaded in the vehicle instead of the peak power. The department has already started preparations to determine the tax rate based on luxury. However, the department should be cautious if this arrangement poses a risk of low electrification.
The department has now started the homework to determine the tax rate based on the purchase price. The Office of the Auditor General has already written a complaint to the Customs Department alleging tax evasion of Rs 5 billion in a single year, alleging tax evasion of Rs 5 billion in a single year. The office has concluded that tax evasion of Rs 5 billion was committed from EV vehicles imported from the Tatopani Customs Office and Rasuwa Customs Office in the fiscal year 2080/081 alone.
The Office of the Auditor General has also raised the issue of tax evasion in a report to be made public in a few days. According to office sources, the report states that ‘if the government does not have a machine to measure the kilowatt of electric vehicles, then the tax rate should not be determined in kilowatts.’
The government has determined the tax rate on electric vehicles based on motor power, including tax exemptions. But vehicle importers are evading taxes by understating the peak power capacity of the motor. Electric vehicles are operated entirely by software. How many kilometers per hour can these vehicles run? Experts argue that it is easy to set the issue of how much peak power they will give. Vehicle importers who declared 150 kW and brought vehicles with them are correcting the documents and passing the inspection as less than 100 kW after the tax became expensive.
The report of the High-Level Advisory Committee on Tax System Reforms has also proposed to make the tax rate equal for electric vehicles and petroleum vehicles. The government’s policy to encourage electric vehicles has kept the tax rate for electric vehicles very low compared to the tax rate for non-electric vehicles. For example, while a total duty of 42.95 percent is levied on the price of electric jeeps, cars, and vans with a capacity of more than 50 kW and up to 100 kW, a duty of 235.61 percent has been imposed on the price of jeeps, cars, and vans with a capacity of 1000 to 1500 cc that run on the same type of fuel. Electric vehicle importers have been accused of only benefiting from the tax breaks provided by the government, with businessmen taking advantage.
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