Kathmandu: The use of personal bank accounts for business transactions to evade taxes is on the rise in Nepal, according to the Financial Intelligence Unit (FIU-Nepal) annual report released by the Nepal Rastra Bank (NRB).

The report revealed that 37% of suspicious transaction reports from January 2020 to December 2022 were related to tax evasion through personal bank accounts. On average, 65 such suspicious transactions were reported monthly during this period.

The report highlighted that 48% of these transactions were linked to proprietorship businesses, 33% to private limited companies, and the registration status of 19% remained unknown. Various business sectors such as trading, manufacturing, hotels, restaurants, travel, and medical services were found to be involved. In most cases, multiple personal accounts were used for transactions related to a single business.

Out of the 204 cases analyzed by FIU-Nepal, 113 were disseminated to the Department of Revenue Investigation and Inland Revenue Department for further investigation. The report recommended stakeholders to harmonize the nature of business and the type of account used for related transactions.

It also urged regulators to impose fines and penalties on the use of personal savings accounts for business transactions and recommended discouraging such practices through directives. Additionally, investigating agencies were advised to include personal accounts of shareholders, promoters, proprietors, key staff, and their close associates during tax assessments or other investigations.