Introduction

Nepal levies a variety of taxes, including income tax (corporate income tax and personal income tax), value added tax, excise duty, customs duty, property related tax (land registration tax, property transfer tax) and others.

Direct Taxes
Income Year: Mid-July of one year to Mid-July of another year (Shrawan to Ashadh as per NepaliCalendar)

 

Corporate Income Tax

The taxability of the income of a person in Nepal is based on two broad principles.

  • For residents: on the basis of “Residence Principle”
  • For Non-residents: on the basis of “Source Principle”

An entity is resident in Nepal if it is registered /incorporated in Nepal. An individual is resident in Nepal if stays in Nepal for 183 days or more during an income year.

 

Tax Rate

Corporate tax rate                                                                                                                                                                 25%

However, entities operating banking and general insurance business,

telecommunication, security or commodity future market related services,                                     30%

petroleum extractions, producing cigarettes, cigars, liquors and other related

products

Dividend tax rate                                                                                                                                                                     5%

Repatriation by Foreign Permanent Establishment (FPE) of a Non-resident                                     5%

Non- residents carrying international flights (on gross proceeds basis)                                               5%

 

COVID-19relaxation on corporate tax

Rebate on rate of taxes for FY 2076.77 (2019.20 AD) to tax payer affected by COVID-19:

Any entity having turnover up to NPR 10 million – rebate of 25% on tax rate

Hotel, Trekking, Travels, Transportation and Air Transport Service business having turnover more than NPR 10 million – rebate of 25% on tax rate

 

Deduction on contribution to fund created by Government for controlling, care and cure for COVID-19

Any person (individual or entity) contributing to fund created by Nepal government, province government or local government for controlling, prevention and cure for COVID-19, such expenses is allowed as deduction for the Income Year 2076.77 (2019.20 AD)

 

Tax Exemptions and Concessions
Industry/Entity/Person Condition Applicable Tax Rate /Concession /Exemption

Special Industry

(agricultural production or manufacturing industry not producing alcoholic or tobacco related product)

(general concession)

Special Industry fully operated throughout the year

In case of Natural person: progressive tax rate up to 20% of taxable income.

In case of Entity: 20% of taxable income

 

 

 

Further concessions on special industry are as follows:

Industry/Entity/Person Condition Applicable Tax Rate /Concession /Exemption

Special Industry and Information Technology Industry

(employment concession)

Direct Employment to 100 or more Nepali Citizens throughout the year

 

Direct Employment to 300 or more Nepali Citizens throughout the year

 

Direct Employment to 500 or more Nepali Citizens throughout the year

 

Direct Employment to 1,000 or more Nepali Citizens throughout the year

 

Direct Employment to 100 or more Nepali Citizens covering at least 33% from Women, marginalized(Dalits) or Disable throughout the year

10% concession on the rate otherwise applicable

 

20% concession on the rate otherwise applicable

 

25% concession on the rate otherwise applicable

 

30% concession on the rate otherwise applicable

 

Additional 10% concession is allowed

     

Special Industry

(geographical concessions)

Concession for the period of 10 Years commencing from the year of commercial production.

Established in a very-undeveloped area

 

Established in undeveloped area

 

Established in under-developed area

 90 % concession on the rate otherwise applicable

 

80 % concession on the rate otherwise applicable

70 % concession on the rate otherwise applicable

Special Industry/Tourism Sector

Concession based on size of investment and number of employees)

Newly set up special industry & tourism industry (except casino business) having capital investment of more than NPR 1 billion, with direct employment for more than 500 individuals throughout the year

Existing industry increasing their installed capacity by at least 25%, increasing their investment to NPR 2 billion and direct employment to more than 300 people throughout the year

 

 

 

 

No-tax for a period of 5 years from the date of operation and 50% concession on the rate otherwise applicable for next 3 years

No-tax for a period of 5 years from the date of operation and thereafter 50% concession on the rate otherwise applicable for next 3 years, on the income generated from its increased capacity

 

 

Industry established in Special 

Economic Zone (SEZ)

 

 

 

Industry established in mountain districts or in SEZ specified by Nepal Government in hilly districts

 

 

 

 

Industry established in SEZ located in areas other than above

 

 

 

Dividend distributed by an industry established in SEZ

 

 

Royalty or technical or management service fee paid to foreign investor of the industries established in SEZ

 

No tax for a period of 10 years from the date of commencement of transactions and 50% concession on the applicable rate thereafter

 

 

No tax for a period of 5 years from the date of commencement of transactions and 50% concession on the applicable rate thereafter

 

 

No tax for a period of 5 years from the date of commencement of transactions and 50% concession on the applicable rate for next 3 years

 

 

50% concession on applicable tax rate

Person engaged in research and extraction of minerals, petroleum and natural gases and fuel Started commercial operation by Chaitra, 2080 (mid-April, 2024) No tax for a period of 7 years from the date of commencement of transactions and 50% concession on the applicable rate thereafter for 3 years
Industry operating a Zoological/Geological or Biotech park or industry established in Technology Park / Information Technology Park, Prescribed by GON in Nepal Gazette. Industry established in technology/information technology park are related to software development, data processing, cyber cafe, digital mapping. 50% concession on applicable tax rate
Industry engaged in Energy Sector

Licensed Person or entity has to produce, transmit or distribute electricity by Chaitra 2080 (mid-April, 2024).

This is also applicable to electricity produced from solar, wind and compost

No tax for a period of 10 years from the date of commercial production and 50% concession on the applicable rate thereafter for 5 years in the income from sale of energy.
Export Oriented Industry Exportation of goods or Services

(a) In case of natural person, 25% concession if applicable tax rate is 20% and 50% concession if applicable tax rate is 30%.

 

(b) In case of entity, 20% concession on applicable tax rate.

 

(c) In case of manufacturing industry, additional 25% concession on the tax remaining after considering concession as per (a) or (b) above.

Entity

·        Operation of Tram or Trolley Bus.

 

·        Construction and operation of ropeway, cable car, overhead bridge.

·        Construction and operation of Airport, Road, Bridge, tunnel, subway.

 

 

40% concession on the applicable tax rate

 

 

40% Concession on the applicable tax rate

 

50%Concession on the applicable tax rate

 

 

 

Cottage Industries Cottage Industries owned by individuals No tax for a period of 7 years from the date of commencement of business or transactions. If such industry is owned by woman, there shall be tax exemption for another 3 years.
Entities Listed in security market Manufacturing entities, tourism service entities, entities engaged in production, distribution and transmission of electricity and entities related to software development, data processing, cyber cafe, digital mapping established in Technology Park / Information Technology Park, and industry operating a Zoological /Geological or Biotech park prescribed by GON in Nepal Gazette. 15%concession on the applicable tax rate from such income
Production Industry Industry established in remote and undeveloped area producing brandy, cider and wine based on fruit 40% concession on the applicable tax rate for a period of 10 years from the date of commencement of transactions
Individual or entity Royalty income received from export of intangible asset 25% concession on applicable tax rate from such income
Individual or entity Income from transfer of intangible asset 50% concession on the applicable tax rate from such income
Special Industry and Tourism related Industry Capitalization of its profit with the view of extension of its capacity 100% concession on the tax on dividend on capitalization.
Public company Conversion of Private Company having paid up capital of NPR 500 million or more to Public Company (not applicable to companies covered by Section12 of Companies Act 2063 (2006 AD)) 10% Concession on the tax rate otherwise applicable for 3 years
Domestic Tea/Dairy Industry Domestic Tea Production and Processing/Dairy/Cloths Manufacturing Industry 50% Concession on the tax rate otherwise applicable
Community based health service Health Entities operated by communities. 20% Concession on the tax rate otherwise applicable
Special Industry Established and Operated in industrial areas or industrial village

25% exemption shall be provided on applicable tax for5years from the date of commercia loperation.

 

 

Note: 

Where a person qualifies for more than one concession with respect to same income, the person shall be entitled to one concession with respect to that income at his discretion.

Gifts made by a person to a tax exempt organization is allowed as reduction to the minimum of NPR 100,000 or 5% of Adjustable Taxable Income, whichever is lower. However, if any company has contributed to Prime Minister Relief Fund or Re-construction fund, the amount is deductible from Taxable Income.

 

Deductions

All the expenses incurred to derive the income is allowed for taxation if they are incurred during the year on the name of taxpayer itself. Expense for personal purpose and paid on cash (over NPR 50,000) or payment in respect of expenditure not mentioning PAN in invoice exceeding NPR 2,000 are not allowed as deduction. However, such limitation is not applicable when goods are directly purchased from natural person related to agriculture, forest, animal and other household items.

Salary and wages expenses paid to employee or labor who does not have PAN are not allowed as deduction except for casual wages payment up to NPR 3,000.

Apart from general deductions following deduction are capped with as follows:

 

Interest to shareholders with controlling interest

Limit: interest income + 50% of adjustable taxable income determined without any interest income or interest expense.

The amount or part thereof, which is in excess of limit, can be carried forward to the next income year.

This provision will be applicable if the interest has been paid to shareholder (either a non-resident, concessional person or exempt-entity) and their control is at least 25%in Nepali company.

 

Repair and Maintenance Expense

Limit: Up to 7% of the depreciation base of each pool of asset (exception, this ceiling is not applicable to Air-line Company if the repair expense is relating to overhauling of aircraft).

The amount or part thereof, which is in excess of limit, can be capitalized in the asset in the beginning of subsequent Income Year and depreciation is allowed subsequently.

 

Pollution Control Cost

Limit: Up to 50% of adjustable taxable income from business.

The amount or part thereof, which is in excess of limit, can be capitalized in the asset in the beginning of subsequent Income Year and depreciation is allowed subsequently. Practically, no one claims their deduction under this provision.

 

Research and Development Cost

Limit: Up to 50% of adjustable taxable income from business

The amount or part thereof, which is in excess of limit, can be capitalized in the asset in the beginning of subsequent Income Year and depreciation is allowed subsequently. Practically, no one claims their deduction under this provision.

Note: Adjustable taxable income means taxable income without deducting the expense under consideration and donations, if any.

 

Deprecation

Depreciation is allowed as per written down value (WDV) basis and depreciable assets are categorized into various pools, the rate of depreciation is prescribed by Tax Authority as follows

Pool Assets Depreciation Rate
A Building, Structure and Assets of similar structures including leasehold asset 5%
B Computer, Data Processing Equipment, Furniture, Fixtures and Office Equipment 25%
C Automobiles, Bus and Minibuses 20%
D Construction and Earth Moving equipment, unabsorbed portion of Repair & Maintenance, Pollution Control Cost and Research and Development Cost, and assets not covered in any other pools. 15%
E

Intangible assets other than depreciable assets mentioned in

Pool D

As per Life Span of Asset

 

Accelerated depreciation of 1/3 of applicable rate is also available in case of following entities:

  • Special Industries
  • Hydro Power and Power Generation
  • Tram and Trolley operators
  • Building and operation of ropeway, cable car, overhead bridge.
  • Building and operation of roads, bridge, subway, tunnel, railway, airport way.
  • Entities engaged in infrastructure development under BOOT scheme
  • Co-operative registered under Co-operative Act
  • For the current year, acceleration clause has, possibly, withdrawn mistakenly. We are expecting the amendment.

 

Losses Carried Forward 

Losses can be carried forward up to 7 years from the year of occurrence.

However, in case of business extracting petroleum products, BOOT projects, Projects involved in Electricity Power House, Generation and Transmission are allowed to carry forward up to 12 years.

In case of long term contract obtained from international bidding losses can be carried back.

 

Foreign Tax Credit

In case that a resident person has paid overseas income tax on its taxable income derived from sources outside Nepal, the income tax paid overseas can be adjusted against its tax payable in Nepal. However, the adjustable amount of overseas income tax cannot exceed the amount of income tax otherwise payable in Nepal in respect of non-Nepal sourced income.

If the taxpayer wishes for deduction of foreign tax from its foreign income, the deduction is permitted.

 

Tax Avoidance Scheme

If a person makes any arrangement with the purpose of avoiding or reducing tax liability, Taxation Authority may, for the purpose of determination of tax liability, re-characterize the arrangement or part of it. Similarly, if a person does any transaction with a purpose to reduce tax liability entering into ‘Transfer Pricing’ or ‘Income Splitting’ arrangement, Tax Authority has the power to re-characterize and assess the tax.

 

Transfer Pricing

Nepal tax laws has provisions on Transfer Pricing which covers transaction between “associated person”. In any arrangement between persons who are associates (related parties), the IRD may, by notice in writing, distribute, apportion, or allocate amounts to be included or deducted in calculating the income between the persons as is necessary to reflect the taxable income (or tax payable) that would have arisen for them if the arrangement had been conducted at arm’s length.

The IRD may:

  • Re-characterize the source and type of any income, loss, amount, or payment; or,
  • Allocate costs, including head office expenses, incurred by one party in conducting business with their associate or associates (related party or related parties) based on the comparative turnovers of the businesses.
  • Formalities for appropriate-adjustment will be applicable for the taxpayer from the countries having tax treaty with Nepal.

The tax law, in brief, states that transaction should be at arm’s length price. Presently, there is no filing requirement or requirement to prepare a detail Transfer Pricing Study Report in Nepal. Accordingly, no local standard requirement or compliances to be done. However, IRD is working on the Transfer Pricing Issue and very soon there will be some specific provisions regarding Transfer Pricing in Nepal.

 

Double Taxation Avoidance Agreement (DTAA)

Nepal has entered into tax treaties with 11 countries (Austria, Bangladesh, China, India, Republic of Korea, Mauritius, Norway, Pakistan, Qatar, Sri Lanka and Thailand). The purposes of tax treaties are to avoid international double taxation on the same income and to prevent tax avoidance.

 

Cooperative societies

Cooperative societies registered under Cooperative Act, 2074 and not involved in transactions exempted under section 11(2) shall be levied tax as follows:

  • Cooperatives operating in urban municipal areas:5%
  • Cooperatives operating in sub- metropolitan areas:7%
  • Cooperatives operating in metropolitan areas:10%

 

Personal Income Tax

An individual is resident in Nepal if he resides for a period of 183 days or more in income year (mid-July to mid-July basis). A person who is not resident of Nepal is non-resident individual.

For Resident Person -FY 2077.78(2020.21AD)

Assessed as Individual Assessed as Couple
Income Level (NPR) Tax Rate Income Level (NPR) Tax Rate
Up to 400,000 1% Up to 450,000 1%
Next 100,000 10% Next 100,000 10%
Next 200,000 20% Next 200,000 20%
Next 1,300,000 30% Next 1,250,000 30%
More than 2,000,000 36% More than 2,000,000 36%

 

For Non-Resident Person

Serial number Nature FY 2077.78 (2020.21 AD)
1. Income earned from normal transactions (employment or business) 25% flat rate
2. Income earned from the transactions subject to withholding tax withholding tax will be final

 

Note:

The following amounts are deductibles.

  • Contribution to Retirement Payment up to one-third of assessable income to maximum of NPR 300,000
  • Donation to tax exempted entities up to maximum of NPR 100,000
  • Insurance premium up to NPR 25,000
  • Health Insurance premium up to NPR 20,000
  • Remote area allowances up to maximum of NPR 50,000

Further, medical tax credit up to maximum of NPR 750 is allowed and remaining can be carried forward. Additionally, 10% tax rebate is allowed to female individual.

 

Withholding Taxes
Payment Subject to Withholding Withholding Tax Rate (%) Final Withholding(Yes or No)
If the payee is non-resident As below Always final
Interest, Natural Resource, Royalty, Commission, Service Fee, Sales Bonus payment by a resident person having source in Nepal 15 No
Resident employment company making payment of commission to non-resident 5 Yes
Lease payment of aircraft 10 No

·        Service payment to a resident person registered under VAT

·        Payment of more than NPR 50,000 under a contract or agreement

1.5 No
Rent payment having source in Nepal No federal tax, but there is local tax, rate may vary to local authorities (indicative rate is 10%) Yes
Dividend, Gain from Investment Insurance 5 Yes
Win fall Gain 25 Yes
Payment for service to a non-resident company 15 Yes
Payment of repair & maintenance of contract or agreement to a non-resident company 5% Yes
Payment of re-insurance premium to a non-resident 1.5% Yes
Payment for the transportation of goods(VAT not registered) 2.5% No
Payment for the transportation of goods(VAT registered) 1.5% No

Resident BFIs making payment of Interest on loan taken from foreign

bank in foreign currency and investing in specified areas prescribed by NRB.

10% Yes
Resident BFIs on providing foreign exchange facility for language test or standardized test fee to students going abroad 15% Yes
Reward/rebate awarded to consumer making payment through electronic payment medium including payment card, digital wallet, mobile banking on purchase of goods or services. NO TDS  
Other payment to non-resident As per written information by IRD Yes

 

Note:

If any contributor transfers his contribution from approved retirement fund to social security fund established under Contribution Based Social Security Fund Act, 2074 (2017 AD) within Chaitra End, 2077 (Mid-April 2021) then no TDS shall be applicable under Section 88 on such amount.

 

Capital Gain Tax

Gain on Sale of Shares 
Seller Tax collected at source Annual tax rate
Listed company Unlisted company
Resident – individual 5% 10% Same as TCS rate
Resident -entity 10% 15% Corporate tax rate
Non-resident 25% 25%  

 

Gain on Transfer of Land & Building
Seller Tax collected at source Annual tax rate
Owned less than 5 years Owned 5 Years or more
Resident – individual 5% 2.5% Same as TCS rate
Resident -entity 1.5% 1.5% Corporate tax rate

 

Change of Control

Where there is change of 50% or more in the underlying ownership of an entity as compared with its ownership 3 years previously, the entity shall be treated as disposing off any assets and any liabilities owned by it. Where there is change in ownership during the Income Year of an entity, the parts of the Income Year before and after the change in ownership are treated as separate Income Years.

 

Compliance Requirement

Income Tax Return

Within three months from the end of Income Year. If application is made to Tax Office for extension, IRD may extend such notice for maximum of three months.

Any error on Income Tax Return submitted can be rectified by submitting revised Income Tax Return within 30 days from the date of submission of erroneous tax return.

 

Estimated Tax Return

Based on estimated tax liability

  • Within Mid-January (Poush end) of Income Year (First Installment) – 40% of Tax Liability
  • Within Mid-April (Chaitra end) of Income Year (Second Installment) – 70% of Tax Liability
  • Within Mid-July (Ashadh end) of Income Year (third Installment) – 100% of Tax Liability

 

Tax Assessment

Assessment system is based on Self-Assessment. However, an assessment under Self-Assessment scheme may be subject to review and amendment by Tax Authority which can be performed within four years from the date of submission of Income Tax Return.

 

Advance Ruling

If there is ambiguity in application of any issue as per Income Tax Act, there is provision of making application for advance ruling to IRD and the instruction issued by IRD is binding to the applicant.

 

Appeal 

If the taxpayer is not satisfied with the decision of amended assessment by Tax Authority, the taxpayer has a right to apply for administrative review by depositing one fourth of disputed amount and further to Revenue Tribunal by depositing half of principal portion of disputed amount and full portion of fines and penalties.

 

Tax amnesty for 2077.78 (2020/21AD)
  1. If the case (other than the case of fake invoices) for which the tax or excise duty was determined during tax assessment by Ashadh End, 2075 (mid-July 2018) in accordance with the Income Tax Act, 2058 (2002 AD) or VAT Act, 2052 (1996 AD) or Excise Act, 2058 (2002 AD) is pending at Inland Revenue Department for administrative review or at revenue tribunal or at any competent court due to dissatisfaction of tax payer in the verdict of the department and the tax payer withdraws cases and pay assessed taxes and duty so determined along with interest by Falgun End, 2077(mid-March 2021 AD), then such person shall be waived off from fee, additional fee and penalties under the related acts.
  2. Any Person having taxable income in previous years but had not paid Income Tax on such Income, if takes PAN and files income tax return and pays Income tax pertaining to income of Financial year 2074.75(2017.18 AD) and 2075.76 (2018.19AD) by Falgun End 2077 (mid-March 2021 AD), then interest and fees of such financial years and tax and interest prior to such financial years shall be waived.
  3. Natural Person having annual turnover up to NPR 5 million who had obtained PAN in previous years but had not paid tax, if files income tax return of FY 2073.74 (2016.17 AD), 2074.75 (2017.18AD) and 2075.76(2018.19AD) and Pay Income tax along with 25% of applicable interest by Falgun End 2077(mid-March 2021), then the person shall be waived off from filling of return and payment of tax and interest of the financial years prior to 2073.74(2016.17 AD) and remaining interest (i.e, 75% of applicable interest) of the financial years 2073.74(2016.17 AD), 2074.75(2017.18 AD) and 2075.76(2018.19 AD).
  4. Natural Person or Entity having annual turnover more than NPR 5 million and who have obtained PAN but had not submitted Income Tax Return prior to and including FY 2073.74(2016.17AD), if file return, pay tax and 25% of applicable interest within Falgun end, 2077(mid-March 2021 AD) then such natural person or entity shall be waived off from applicable fee and remaining 75% interest.
Indirect Taxes

Value Added Tax (VAT)

Applicability

VAT is applicable on supply of goods or services;

  • supplied into Nepal,
  • imported into Nepal, and
  • exported from Nepal

Some goods or services which are of basic necessities and agro-products are exempted and some are zero rated (export of services)

Tax Rate – Single rate 13%

 

Registration

Person supplying the goods crossing threshold of NPR 5 million and supplying services or goods & services both crossing the limit of NPR 2 million are required to be registered under VAT.

Small vendors to the extent of threshold may voluntarily register.

 

VAT Records

Purchase book, Sales Book and VAT records, either manual or computerized, are the basic records to be maintained by a registered person. The retention period is six years.

 

VAT Credit and Refund

VAT paid on purchases relating to the business, excluding food, beverage, entertainment, petrol. Diesel and cooking gas for consumption, are allowed of input tax credit within one year from the date of transaction. In case of VAT paid on purchase of automobiles only 40% of VAT payment is allowed for credit.

Input tax credit of a tax period which could not be adjusted against next four consecutive months, the taxpayer can claim the refund. Similarly, in case of more than 40 percent of export out of total sales in a tax period is eligible for refund.

Such refund shall be made within 3 years from the end of tax period.

 

VAT Return

Every registered taxpayer is required to submit VAT return within 25 days from the end of Nepalese Calendar month. However, hotel and tourism sector business obtain two-months and publishing houses and brick industry obtains four-months tax period for submission of VAT returns.

 

Facilities

Bank guarantee facility is available for VAT payable on import of raw materials solely usable for production of exportable goods. For this benefit, industry shall have export record of more than 40% of its production during previous 12 months and domestic value addition of at least 10%.

 

Tax Assessment

Assessment system is based on Self-Assessment. However, an assessment under Self-Assessment scheme may be subject to review and amendment by Tax Authority which can be performed within four years from the date of submission of VAT Return.

 

Advance Ruling

If there is ambiguity in application of any issue as per VAT Act, there is provision of making application for advance ruling to IRD and the instruction issued by IRD is binding to the applicant.

 

Appeal 

If the taxpayer is not satisfied with the decision of amended assessment by Tax Authority, the taxpayer has a right to apply for administrative review by depositing one fourth of disputed amount and further to Revenue Tribunal by depositing half of principal portion of disputed amount and full portion of fines and penalties.

 

Excise Duty

Applicable Act

Excise Act 2058 (2002 AD) & Excise Rules 2059 (2003 AD) and amendment made by Finance Act from time to time.

 

Applicability

Excise Duty is applicable to goods/services produced/imported into Nepal. Relaxation and exemption are mentioned to certain goods produced in Nepal.

 

Tax Rate

Specific to individual item based on specific rate or ad-valorem basis.

 

Valuation

On production – Factory Price

On Import –Value for custom purpose plus custom duty

 

Licensing

For the items where excise duty is levied, no one can manufacture, import, sale or store a product without taking license. License taken is valid for one year and has to be renewed by paying renewal fee.

 

Excise Duty Credit

Excise duty paid on purchase of raw materials and auxiliary materials allowed. No excise duty credit is allowed to packaging materials.

 

Management System

Physical Control System – in case of liquor.

Self-Removal System – in case of other goods.

 

Facilities

Bank Guarantee Facility is provided to goods imported through bonded warehouse.

Full exemption of excise duty is provided in case of export. Similarly, full exemption is provided to industries producing goods using scrap more than 90%.

 

Records

Records of excisable goods purchased, produced, sold, released and balance of stock as certified by excise duty officer.

 

Time of Payment
Physical Removal System At the time of issuance of invoice
Self-Removal System Within 25th of the month following the issue of invoice
Goods imported At the time of entering of such goods

 

Excise Return

Within 25 days from the end of Nepalese Calendar month.

 

Advance Ruling

If there is ambiguity in application of any issue as per Excise Act, there is provision of making application for advance ruling to IRD and the instruction issued by IRD is binding to the applicant.

 

Appeal

If the taxpayer is not satisfied with the decision of amended assessment by Tax Authority, the taxpayer has a right to apply for administrative review by depositing one fourthof disputed amount and further to Revenue Tribunal.

 

Custom Duty

Applicable Act

Customs Act 2064 (2007 AD) & Customs Rules 2064 (2007 AD) and amendment made by Finance Act from time to time.

 

Applicability

Custom Duty is applicable to import and export of goods and services.

 

Tax Rate

Specific to individual item (as prescribed in tariff on the basis of HS code)

 

Taxable Value

Based on transaction value determined as per General Agreement on Tariff and Trade 1994 and valuation principles mentioned in Customs Act.

 

Facilities

Bank Guarantee Facility is provided to export industries and Duty Free Shops. Further, certain custom exemption is provided to those industries established in Special Economic Zone (SEZ).

Special exemption/concession is provided to those goods if imported from neighboring countries like China, India. Also, concessional tariff rate applicable for the import of those goods which are imported under bilateral/multilateral agreement.

Post Clearance Audit (PCA) Custom Authority can make PCA after clearance of goods as required.

 

Appeal and Review

If an importer is not satisfied with the valuation made by Custom Authority, he can apply to Valuation Review Committee.

 

Other Taxes

Telecommunication Service Charge

To be charged from customer 13% of the collected amount.

 

Telephone Ownership Fee

NPR500 per connection in case of postpaid and 2% of value of SIM and Recharge Card

 

Infrastructure Tax

NPR10 per liter for import of petrol, diesel and aviation fuel.

 

Road Repair and Improvement Fee

NPR 4 per liter in petrol and NPR 2 per liter in Diesel

 

Pollution Control Fee 

NPR1.50 per liter in petrol and diesel

 

Casino Royalty

Annual License Fee for Casino – NPR40 million.

Annual License Fee for Casino using only modern equipment and machines – NPR10 million

Note:

50% of the Additional fee and annual additional fee of the FY 2075.76 (2018.19 AD) shall be waived to a person or organization licensed to operate a casino, if it pays the remaining 100% royalty and 50% additional fee as well as annual additional fee for the FY 2075.76 (2018.19 AD) and 100% royalty, additional fee and annual additional fee for the year 2076.77(2019.20 AD) within the end of Chatira, 2077(mid-March 2021).

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