British Council owes millions in taxes, a complaint filed in Parliament says

A consumer rights forum lodged a complaint alleging that the British Council has not paid taxes on its income from IELTS.

At least two government agencies and a parliamentary committee are investigating the British Council’s alleged tax evasion on the money it has been raising from the International English Language Testing System (IELTS), a mandatory test for Nepali students who want to pursue higher education in many English-speaking countries.

Following a complaint from the Forum for Protection of Consumers’ Rights Nepal, the Parliamentary Committee on Industry, Commerce and Consumers Rights on Friday asked the Ministry of Finance and Ministry of Education to investigate whether the British Council is liable to pay taxes.

The Kathmandu District Administration Office and the Department of Revenue Investigation are also looking into separate complaints they have received.

The investigations come a week after the Forum for Protection of Consumers’ Rights Nepal filed a complaint at the parliamentary committee, alleging that the British Council, the UK’s international organisation for cultural relations and educational opportunities, was “doing business” in Nepal but wasn’t paying taxes as per the law of the land.

“Going by the complaint, it looks like the council needs to pay a huge amount of money in taxes,” said Shivadatta Baral, an under-secretary at the House committee. “We have asked the finance and education ministries to look into the matter and are waiting for a response. The committee will decide how to proceed after studying the reports.”

The British Council was founded in 1934 as a charity organisation and has been operating in Nepal since 1959. It was the only organisation authorised to conduct IELTS exams for years before the entry of the International Development Programme, an international organisation offering placement to students in different countries which also conducts IELTS tests, two years ago.

English language proficiency tests like the IELTS are mandatory for students who wish to study in Australia, the United Kingdom, Ireland and New Zealand. A large number of universities and colleges in the United States also accept IELTS scores, along with the Test of English as a Foreign Language (TOEFL).

In recent years, there has been a significant rise in the number of Nepali students going abroad for higher studies. Of around 65,000 students who received a No Objection Certificate, required to study abroad, from the Education Ministry in the fiscal year 2018-2019, three-fourths were for English-speaking nations.

The British Council had been charging Rs16,950 for the test but has raised the fee to Rs21,500 starting this year.

Education consultancy operators estimate that around 40,000 students sat IELTS exams last fiscal year and paid at least Rs650 million in fees.

Jyoti Baniya, chairperson of the consumer rights forum that lodged the complaint in Parliament, said the council has been operating for years without registering with the government and without paying any taxes.

“The council owes billions of rupees in taxes if we calculate the money it has raised all these years,” Baniya told the Post. “It is bewildering how the organisation has been conducting banking transactions worth millions of rupees every year without registering.”

Officials at the Inland Revenue Office confirmed to the Post that they had received complaints about the council not paying tax over the years.

“We are investigating the matter,” Lok Prasad Neupane, chief of the Maharajgunj branch of the tax office, told the Post. “We need to do a thorough study before I can share details.”

The Kathmandu District Administration Office is also studying a separate complaint it has received about tax evasion by the council.

A tax strategy prepared by the head office of The British Council in the UK says that it is “committed under its code of conduct to comply with the law in all the countries and territories where it works”.

The British Council was not immediately available for comment.

“Our country director and head of exams are on leave, so we will be able to respond to your query by next week,” said Suchita Shrestha, communications manager at the council, in an email response.

However, a source at the council, who spoke on condition of anonymity, said that the British Council had already registered with the Company Registrar’s Office and was committed to paying taxes, although there were administrative obstacles.

According to advocate Semanta Dahal, taxes can only be exempted if bilateral or multilateral treaties to that effect are signed between the Nepal government and any foreign country or international organisation. However, it is not clear whether any such agreement exists between the British Council and the Nepal government. Officials at the Education Ministry too were unaware of the basis for the council’s functioning.

“It has been years since the council was established,” Ram Sharan Sapkota, joint-secretary at the Education Ministry, told the Post. “The ministry will come out with a statement after an investigation and a report to the parliamentary committee.”