‘PM contemplating withdrawing case against Cotiviti Nepal’

Published On: April 4, 2024 07:40 PM NPT By: Republica | @RepublicaNepal

KATHMANDU, April 4: Prime Minister Pushpa Kamal Dahal has shown keen interest in the case filed by the Department of Revenue Investigation (DRI) against the 100 percent foreign investment information technology (IT) company Cotiviti Nepal Pvt Ltd.

Sources within the office of the Prime Minister and the Council of Ministers said that Prime Minister Dahal has discussed the matter with Finance Minister Barshman Pun.

Finance Minister Pun reportedly informed the Prime Minister about the revenue administration's assessment of the case, highlighting certain weaknesses in the investigation.

Senior officials of the Ministry of Finance, including the Secretary and Joint Secretaries, raised concerns with Finance Minister Pun regarding the DRI's inadequate coordination with the Revenue Administration in handling the Cotiviti case.

"The senior leadership of the ministry pointed out to Finance Minister Pun that there was insufficient coordination between the DRI and the Revenue Administration," stated a senior official from the Ministry of Finance. The Finance Minister also expressed concern that their perspectives were not adequately considered.

It has been revealed that both the Prime Minister and the Finance Minister are dissatisfied with the negative signal sent to investors by filing a lawsuit just before the investment conference.

Sources further disclosed that Prime Minister Dahal is contemplating the possibility of withdrawing the case. The case filed by the DRI is of a criminal nature and falls under the Revenue Leakage (Investigation and Control) Act, typically handled by the high court.

However, if the Office of the Attorney General recommends and the Council of Ministers approves the withdrawal of the case, it can be withdrawn.

The DRI filed a case against Cotiviti Nepal Pvt Ltd at the High Court on charges of VAT and capital gains tax evasion last Sunday.

Cotiviti Nepal Pvt Ltd exports 100 percent of its IT services to America. However, Nepal's law and international practice exempt exports from VAT.

Nevertheless, the DRI argued that Cotiviti Nepal is a subsidiary of the American company Cotiviti Inc. Despite this, Nepal's tax experts and chartered accountants emphasize that there is no provision to levy VAT when a subsidiary company exports services to its parent company.