That a handful of rich Nepalis have been parking their ill-gotten wealth in tax heavens such as the British Virgin Islands and Switzerland is an open secret. This is why the Department of Money Laundering Investigation (DMLI) has been on their trail for a number of years. The investigations were intensified last year when the International Consortium of Investigative Journalists (ICIJ) revealed that eight Nepalis had stashed as much as US $54 million in the Swiss accounts of HSBC bank. But curiously not a single suspect has been implicated in either money-laundering or tax evasion charges. In the opinion of the bankers and others involved in the financial sector that Republica spoke to, such blatant cover-up could have been possible only with the connivance of senior government officials and powerful political leaders. But it's getting harder and harder for the rich and powerful in Nepal to cover their dirty tracks. On Sunday, the ICIJ made another disclosure, its biggest, releasing a treasure trove of documents now called Panama Papers. Seven Nepalis, according to the papers, are shareholders in offshore firms in tax havens.The ICIJ has not revealed the names of the Nepalis who have registered firms in tax havens, although the documents do name one Nepal Ventures Limited. No further detail of this company is provided. The ICIJ hopes to make more names public sometime in May. But we suspect that our DMLI already has a list of tax dodgers. It does not act on it because these criminals have political protection. Thus unless there is more political will to punish tax evasion and money-laundering, the investigations of the DMLI, the Revenue Investigation Department or any other investigating agency won't amount to much. The prolonged political transition has made it easy for domestic and foreign firms operating in Nepal to secretly funnel money out of the country, for whatever reason. These firms are seldom punished because power politicians protect them. Either that or the political parties will have extracted big donations from tax dodgers to finance their expensive electoral campaigns and to keep their cadres happy. This is how the financial criminals enjoy impunity. But with a little more political will, a lot can be done.
Our central bank, for instance, can have agreements with other central banks around the world to share banking-related information. Nepal Rastra Bank now has such agreements with its counterparts in India and China. We need many more such agreements so that it is easier to track the outflow of money. Another thing that can be done is for our government to sign Double Taxation Avoidance Agreements (DTAA) with as many countries as it is feasible to do so. This will help our tax authorities find who is paying taxes where. We hope that the publication of the Panama Papers and the global awareness it has generated results in meaningful changes in how Nepal deals wish suspected financial crimes. The politicians who protect criminals, we hope, now realize that it's only a matter of time before their complicity is also exposed. Otherwise powerful figures like Xi Jinping, David Cameron and Vladimir Putin would not find themselves in trouble today.
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