OAG reviews tax evasion case worth Nu 85M

Anti-Corruption Commission (ACC) has found that the proprietor of Lhaimetog Export and Import Damcho Choden also known as Anim Damcho, and its chief executive officer and her nephew Younten Jamtsho allegedly evaded Nu 21.296 million in tax between 2009 and 2017.

Between 2009 and 2017, as per ACC investigation, the firm reported taxable income of Nu 88.819 million to the tax authority and paid Nu 1.133 million as business income tax. ACC found that the firm’s actual earning was much more and that it had concealed export income of at least Nu 70.987 million.

Lhaimetog export and import registered in 2009 exported cordyceps to certain foreign customers in Southeast Asia. The company belongs to Anim Damcho, but was operated by her nephew Younten Jamtsho.

Younten Jamtsho and his staff allegedly falsified and significantly undervalued its export invoices and in many instances even directed its foreign customers to wire transfer the money to the personal accounts of Lam Tshering Wangdi, Anim Damcho Choden and his own account.

The ACC’s report submitted to OAG for probable prosecution stated that the firm should be liable to restitute Nu 85.214 million including evasion penalties and overdue interest calculated as of June 30, 2018.

The ACC through public notice on October 12 suspended the operations of the firm based in Chubachu, Thimphu with immediate effect after finding a prima facie case of corruption.

The ACC submitted evidence for nine counts of offense against Damcho Choden and Younten Jamtsho on tax evasion. Younten Jamtsho also could face another nine counts of forgery.

In 2009, ACC reported that the two individuals reported an income of Nu 2.981M when it actually earned more than Nu 5.16M, and similarly the investigation found that it had concealed income of Nu 5.206M in 2010, Nu 16.969M in 2011, Nu 5.469M in 2012, Nu 7.422M in 2013, Nu 24.783M in 2014, Nu 4.963M in 2015, Nu 865,449 in 2016, and Nu 7.003M in 2017.

The ACC forwarded the draft charges on the investigations of tax fraud between 2009 and 2017 to the OAG on December 31, 2018.  The case is being reviewed.

This investigation was part of the overall investigation into suspected misuse of public fund in connection to the Buddha Dordenma construction project at Kuenselphodrang, Thimphu. Evidence of tax fraud surfaced when investigators started conducting in-depth review of numerous bank accounts of Damcho Choden.

During the investigation, she failed to explain numerous bank deposits including many foreign remittances credited to her personal accounts. Further, detailed examination of email accounts seized from her nephew Younten Jamtsho on June 11, 2018 revealed serious and compelling indications of fraud and manipulations of invoices with the purpose to conceal income from taxation.

As per section 35 of the Income Tax Act 2001, any business entity, if found to have concealed income, would be liable for a fine amounting to twice the tax sought to have been evaded. In addition, the offender can also be prosecuted and be liable for imprisonment.

Section 61.1 (d) of the Anti-Corruption Act 2011 also makes a person guilty of an offence if he or she fraudulently abates payment of taxes, fees, levies, and charges to a public agency.

Tshering Palden

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