KATHMANDU, Nov 26: Silver Heritage Group Ltd, the Australia-listed company that owns Tiger Palace Resort in Bhairahawa, is preparing to sell its Nepal operation, raising concerns over possibility of tax avoidance from the transaction carried out abroad.
Not only the possible deal that Silver Heritage is negotiating with possible buyers raises concerns over possible tax avoidance in Nepal, it is also likely to put over a billion rupees in loans of four commercial banks at risk.
Though Silver Heritage has published on its website the conditional offer to purchase the company’s Nepal operation, tax authorities in Nepal along with the Nepal Rastra Bank (NRB) seem to be unaware of the development.
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“We have not officially heard anything about the sale. But, some people are lobbying to provide foreign exchange permit to the resort. If any transaction is happening, the NRB should be aware about it,” a senior official at the NRB told Republica.
Earlier in September, Silver Heritage Group Ltd had even said that it has received an offer from Indra Bahadur Thapa, a little known non-resident Nepali, to purchase its Nepal operation. However, the deal failed to materialize as Thapa did not pay the deposit of US$ 3 million within the deadline set by the company. Thapa had even consulted with government officials who are believed to have given thumbs down to the deal.
The resort built with foreign direct investment along with huge loan financing by Nepali commercial banks has drawn criticisms at the local level for encroaching public lands while building its structures.
Worried about the possibility of loans turning bad, the NRB has sought details of loan exposure of Prime Commercial Bank Ltd-led consortium to Tiger Palace Resort.
Writing a letter to Prime Commercial Bank last week, the NRB asked the commercial bank not only to provide ‘factual details’ regarding loans floated to the resort as consortium lead, but also sought clarification over risks of such loans.
The consortium has provided Rs 1.1 billion in loans to Tiger Palace Resort.
Citing a complaint it received from stakeholders last week and Rupandehi District Court’s interim injunction over the encroachment of government and community-owned land to build resort and casino, the central bank instructed the commercial bank to immediately provide the details.
On July 14, a case was filed against the resort management on charge of building infrastructures by encroaching upon 10 kattha of land belonging to Lumbini Underground Water Project in Bhairahawa. Responding to the case, the court had ordered the hotel not to build infrastructures, sell properties and use land as collateral.
