Kathmandu- CG Motors, a subsidiary of the Chaudhary Group owned by Nepal’s billionaire Binod Chaudhary, has once again been accused of tax evasion.

The company, which has previously been found guilty of dodging taxes on electric vans imported from China under the KYC brand, is now facing allegations of similar misconduct involving King Long microbuses.

Documents obtained by Biznessnews reveal that CG Motors, the official distributor of King Long vehicles in Nepal, imported 14-seater microbuses but falsely declared them as 15-seater minibuses to benefit from a reduced customs duty rate.

Manipulating Seat Counts for Lower Duties

Under Nepal's Financial  Act, 2024, 14-seater electric microbuses attract a 10 percent customs duty, while minibuses with 15 seats or more are taxed at only 1 percent.

CG Motors is accused of exploiting this rule by adding an extra seat to the 14-seater King-Long microbus and declaring it as a 15-seater minibus, thereby evading the 9 percent duty difference.

The company reportedly imported identical models of King Long’s electric microbuses from Xiamen King Long United Automotive Industry Co. Ltd. and classified them differently at customs.

For instance, On September 15, 2023, CG Motors imported 30 units of the “King Long XMQ 6520” (14-seater) at $22,000 each under HS code 8702.40.30, which carries a 10 percent customs duty.

On April 4, 2024, 50 units of  the same model with identical specifications was imported as a 15-seater minibus under HS code 8702.40.20, benefiting from a reduced 1 percent duty rate.

According to Nepal’s Vehicle and Transport Management Act,1993  minibuses must meet specific technical standards, including seat dimensions, spacing, internal height, and emergency exits.

The King Long XMQ 6520 model fails to comply with these criteria:

Weight Misclassification: Minibuses must weigh between 4 and 10 tons, but the imported vehicles weigh only 2.4 tons.

Seat Count Manipulation: The addition of one seat to a 14-seater model does not legally qualify it as a minibus, as folding and auxiliary seats cannot be counted under Nepali's law.

The Rasuwa Customs Office approved the misclassification without verifying these technical requirements.

Impact and Revenue Loss

By misclassifying the microbuses, CG Motors avoided customs duty, excise tax, VAT, and road maintenance charges. Investigations estimate the total tax evasion to exceed Rs 14.5 million.

This is not CG Motors’ first instance of tax evasion. The company has previously been found guilty of similar misconduct with the KYC electric van brand and was compelled to pay the evaded taxes following court rulings.

Meanwhile, concerns have also been raised about other CG Motors imports, including Neta V and vehicles from brands such as GAC Aion,Smart Automobile, Avatr, XPENG and Dayun Auto. Regulatory authorities are expected to conduct deeper investigations into CG Motors’ operations to ensure compliance with tax and import laws.

The Chaudhary Group has yet to comment on these latest allegations