KATHMANDU: The Department of Customs (DoC) has directed all customs offices to prevent tax evasion while importing electric microbuses.
In a recent circular, the DoC instructed all customs offices to measure the seat size of vehicles according to the standards outlined in the Vehicle and Transport Management Regulations, 1997 (Eighth Amendment), before clearing customs.
The DoC took a stricter stance after reports surfaced that some importers were evading taxes by reducing seat sizes to increase the number of seats in electric microbuses. Officials of the DoC say some importers have been found declaring a higher seat count, similar to minibuses, to reduce tax liabilities, particularly for electric microbuses imported from China.
Customs offices, so far, had been relying solely on the documents provided by importers to determine customs duties. However, after discovering discrepancies between the seat sizes declared in documents and the actual sizes in vehicles, the department has directed customs offices to measure seat sizes before customs clearance instead of relying solely on paperwork.
Electric microbuses with up to 14 seats are levied a 10% customs duty, while those with 15 seats are subject to only a 1% duty. To exploit this loophole, importers were reducing seat dimensions and declaring a higher seat count.
However, this is not a new instruction. The DoC is only instructing officials to strictly implement the regulations. “This is not a new instruction. The existing regulations already specify the seat size for microbuses. We found that some importers were reducing seat sizes to increase seat numbers,” Kamal Kumar Bhattarai, the information officer for the Tatopani Customs Office, told MeroAuto. “We have been instructed to measure seat sizes to ensure compliance before clearing customs.”
According to the regulations, a microbus seat must have a minimum length of 15 inches, width of 16 inches, height of 15 inches, backrest height of 22 inches and legroom of 11 inches. However, some traders have been found reducing seat lengths below 15 inches so that they can increase the seat count beyond 14.
A lower customs duty is applied if the number of seats is more than 15. For instance, electric microbuses with up to 14 seats are levied a 10% customs duty, while those with 15 seats are subject to only a 1% duty. To exploit this loophole, importers were reducing seat dimensions and declaring a higher seat count.
Earlier, importers were also found evading taxes by underreporting motor power.
When counting seats, only regular seats and the driver’s seat are considered. The conductor’s seat and additional folding seats are excluded from the count.
Following the DoC’s directive, customs officials have started taking physical measurements of seat sizes. Vehicles failing to meet the specified seat size standards are being held at customs yards. This stricter enforcement has put pressure on traders accustomed to evading taxes.
Both microbuses and minibuses are subject to the same additional taxes: 2.5% excise duty, 5% road construction fee and 13% VAT.
