BYD’s Nepali distributor Cimex Inc faces allegations of Tax Evasion in electric car imports

Cimex Inc Accused of Evading Over NPR 11.5 Million on BYD e6 Electric Cars
BYD Distributors' legal battle escalates: Personal disputes and business strategies unfold in Nepal

KATHMANDU: In a startling turn of events, Cimex Inc. Pvt. Ltd., the official Nepali distributor of Chinese automaker BYD Auto, is now under investigation for alleged tax evasion in Nepal. The Department of Customs (DoC) has notified Cimex Inc. that it has reportedly evaded over 11.5 million rupees in taxes on the import of 20 units of the e6 model car from BYD Auto, China.

According to DoC officials, Cimex Inc. is suspected of engaging in malpractice during the import of its e-6 electric cars and manipulating the import of the ATTO 3. The company is accused of consistently lowering the prices of each imported e6 car, raising concerns about potential tax evasion through the continuous devaluation of the vehicles during import.

The Revenue Administration has initiated preliminary investigation into the matter, suggesting that such practices could benefit electric car manufacturers like BYD Auto in Nepal and beyond. To address these concerns, the Inland Revenue Department (IRD) has launched a detailed investigation, closely scrutinizing the documents related to BYD Auto Industry’s ATTO 3 imported by Cimex Inc. Pvt. Ltd.

The investigation focuses on a six-month period of import where the value exceeded NPR 600,000. If a significant difference in value is observed during this period, the Revenue Department will conduct a thorough investigation. Despite consistently importing at lower prices, there is no apparent reduction in consumer prices, leading authorities to explore whether the cost savings have been passed on to consumers.

The Department of Commerce, Supplies & Consumer Protection has also joined the investigation, aiming to determine if the alleged cost reduction has indeed reached consumers or if it has been retained by Cimex Inc.

Cimex Inc., initially making payments for car imports in US dollars, has recently shifted to using Chinese Yuan for letters of credit (LCs). BYD Auto, a prominent player in the Nepali market, has imported various models, maintaining a significant presence with representatives in different regions.

BYD Auto accuses Cimex Inc. of deviating from the company’s plan, prompting BYD Auto to intervene in daily management through a hostile takeover. The IRD is now scrutinizing the price cycle of BYD e6 imported by Cimex Inc., which has exhibited a reduction in value during previous imports. The department suspects that if e6 sales increase, Cimex Inc. might continue to strategically lower prices with each import to gain a competitive edge.

Automotive traders, grappling with the challenge of fluctuating prices in cars imported every 15 to 20 days, emphasize the difficulty in predicting these changes. For many, the primary goal is to maximize revenue, focusing on reducing taxes and customizing cars for additional profits.

Cimex Inc., as a distributor of BYD Auto in Nepal, has disclosed initial findings of revenue evasion on the 20 units of e6 it imported. The IRD, under the Ministry of Finance, previously sent a letter to Cimex Inc, requesting documents for verification under the Revenue Investigation Section. After an extended period, the examination office has initiated a study on tax evasion in the import of e6, checking taxes, and conducting examinations.

Previous revelations by Cimex Inc. about price fluctuations in the electric car BYD e6, manufactured in May 2015, have added complexity to the investigation.

A public notice sent to BYD Auto on March 19, 2019, claimed compensation of $40,000 for each car imported. In April 2022, Cimex Inc. sent another public notice for 20 units of a similar capacity e6, stating that each car was sent to BYD for only $10,000.

The examination office had previously studied the depreciation of a single electric car by $30,000 in less than three years. Additionally, the office had researched Cimex Inc.’s claim of selling each car for NPR 4.5 million to consumers, despite purchasing them for only $10,000.

The Department of Commerce, Supplies & Consumer Protection is also actively investigating these claims, adding another layer of complexity to this intricate web of allegations and counterclaims.

Fiscal Nepal |
Sunday December 24, 2023, 04:04:33 PM |

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