Earlier, the Cabinet meeting on 12 Kartik had rejected the agreement, but due to protests, the government did not issue a 'minute' of the decision.
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The government has terminated the Double Taxation Avoidance Agreement (DTAA) between Nepal and Mauritius. The decision to terminate the agreement was taken at a cabinet meeting on Monday.
Earlier, the Cabinet meeting on 12 Kartik had also decided to cancel the agreement . However, after criticism over the decision to exempt the capital gains tax on the Dolma Impact Fund, Prime Minister Sushila Karki, taking interest, instructed the then Chief Secretary Ek Narayan Aryal to 'minute' the decision only after understanding the facts.
On the instructions of Prime Minister Karki, the then Chief Secretary Aryal had not even started the 'minute' process of the decision. 'Dolma Impact Fund is subject to tax as per the provisions of the Income Tax Act and is a controversial issue like Ncell, so the minute was not taken at that time because it was said that we should understand it further and make a decision in the interest of the nation,' said the then Chief Secretary Aryal. 'It is not known on what basis the Cabinet decided to cancel it now.' He said that the issue of treaties and agreements should be interpreted by the court rather than the Council of Ministers.
Finance Ministry spokesperson Tanka Prasad Pandey said that the cancellation of the double taxation exemption agreement with Mauritius was approved by the ministry on Monday and the cabinet meeting on the same day.
‘I am not aware of the decision made earlier. The proposal was submitted by the ministry on Monday and has been approved,’ he said, ‘The proposal must have been made in the past as well. Since it has been approved now, this is the final decision.’
The government had sought the opinion of the Ministry of Law and Foreign Affairs in the last week of Kartik after the then decision of the cabinet was opposed. The government had sought the opinion after making the decision first. Only two weeks after the decision to exempt Dolma from the 25 percent tax on capital gains and cancel the agreement with Mauritius, the government had sought the opinion of the Ministry of Law and Foreign Affairs on whether it was possible to do so.
Since Dolma would make a profit of 1.17 billion rupees by selling 2.6 million shares in Makar Jitumaya Suri Hydropower Company, a potential capital gains tax of 294.4 million rupees is incurred. However, on the instructions of the Ministry of Finance and the Department of Internal Revenue, the Inland Revenue Office decided on 12 Kartik that Dolma would not have to pay capital gains tax based on the agreement with Mauritius.
