Kathmandu, Nov. 5 -- The interim government formed to hold elections following the Gen Z movement has courted controversy by granting a tax exemption to Dolma Impact Fund, which has channelled its investment into Nepal through a "shell company" registered in Mauritius-a tax haven.

The government based its decision on the Double Taxation Avoidance Agreement (DTAA) signed with Mauritius. But this treaty has already been annulled by the government, rendering it inapplicable for future transactions.

The move comes amid persistent ambiguity over whether such foreign investments are taxable under Nepal's Income Tax Act, 2002. With the law unclear, the election-time government's decision has stirred debate.

The ruling allows the company to pa...