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Duties and Tax Exemption

The Nepalese Customs Administration collects customs duty, Value Added Tax, excise and other taxes at the border points. It accounts for 44% of the total revenue and 50% of the total tax revenue of Nepal. Customs duties alone contribute 20% of the total tax revenue in Nepal. The Customs Administration is at the forefront in terms of internal revenue mobilization as it recognizes the equally important to enhance trade facilitation by adopting international convention, recommendation and best practices without compromising the national security. 

A tax exemption could be agreed with the Minister of Finance for the importation of humanitarian goods under strict rules. The assessment is made by the Government authority on a case-by-case basis. 
 

For more information on Nepal's custom authorities and contact information, please see the links below: 

4.1 Nepal Government Contact List

Nepal Department of Customs Website

Emergency Response

[Note: This section contains information which is related and applicable to crisis times. These instruments can be applied when an emergency is officially declared by the Government.  When this occurs, there is usually a streamlined process to import goods duty and tax free.]

Agreements / Conventions Description

Ratified by Country?

Date of Ratification

WCO (World Customs Organization) member

Yes

22 July 1985

Annex J-5 Revised Kyoto Convention

N/A

 

OCHA Model Agreement

Yes

31 May 2007

Tampere Convention (on the Provision of Telecommunication Resources for Disaster Mitigation and Relief Operations)

Yes

23 April 1999

Regular Regime (Non-Emergency Response)

[Note: This section should contain information on the usual duties & taxes exemption regime during non-emergency times, when there is no declared state of emergency and no streamlines process (e.g. regular importations/development/etc.).]

The Customs Act 2064 was ratified in 2007 with First and Second Amendments ratified in 2009. The full details of the current Nepal Customs Act can be found at the Nepal Department of Customs Website

Organizational Requirements to obtain Duty Free Status

United Nations Agencies

 The UN has a long-standing agreement with the Government of Nepal for duty-free importation. 

Non Governmental Organizations

The government has a provision to provide duty-free exemption to NGOs on an event basis.  It doesn’t have a provision to provide exemption by long-term agreements.  NGOs need to apply for duty-free exemption through the Social Welfare Council (SWC) by following specific procedures.

Exemption Certificate Application Procedure

Duties and Taxes Exemption Application Procedure

Generalities

Request for exemption is first sent to the Foreign Aid Division of the Ministry of Finance. Once the Finance Secretary approves the request, the approval is sent to the Customs Department at the intended entry point where an Import Permit will be issued. Generally importers or exporters within the territory of Nepal have to furnish the following shipping documents regarding their importation or exportation of commodities:

  • Compulsory Documents:
    • Import/Export declaration form (BPP)
    • Invoice
    • Packing list
    • Letter of credit
    • Certificate of origin
    • Certificate of insurance
    • Bill of Lading / Airway Bill
    • Industry Registration Certificates
    • Permanent Account Number (with VAT Registration and Income Tax Registration if not exempt)
  • Optional Documents:
    • Duty- exemption letter ( in case of diplomatic or exemption status)
    • Airlines Delivery Order (DO) / Customs Transit Declaration (CTD) for import only
    • Visa / GSP for ready-made garments exportation
    • Concurrence certificate from Department of Archaeology, Wildlife, Forestry or any other agency when required for exported goods
    • Phytosanitary certificate

Process to be followed

  • Submit request for exemption to the Ministry of Finance's Foreign Aid Division
  • Finance Secretary approves request
  • Finance Secretary issues letter to Customs Department at intended entry point
  • Customs Department entry point issues Import Permit
  • Goods cleared through Customs at entry point

Exemption Certificate Document Requirements

Duties and Taxes Exemption Certificate Document Requirements (by commodity)

 

Food

NFI (Shelter, WASH, Education)

Medicines

Vehicle & Spare Parts

Staff & Office Supplies

Telecoms Equipment

Invoice

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

AWB/BL/Other Transport Documents

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Donation/Non-Commercial Certificates

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Packing Lists

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Other Documents

3 original Phyto- sanitary certificates, 3 copies, 1 original Certificate of Origin, 3 copies, applies to both UN and NGOs

N/A

N/A

3 original Phyto- sanitary certificates, 3 copies, 1 original Certificate of Origin, 3 copies, applies to both UN and NGOs

N/A

1 original permit from the Department of Telecommunications, 3 copies, applies to both UN and NGOs

Additional Notes

NGOs have different procedures from the UN. NGOs must be registered with Social Welfare Council, Ministry of Finance with notification from the Ministry of Foreign Affairs. After the registration procedure is done with the above mentioned entities, application for registration is made to the Department of Customs. All exemption requests are submitted to the Ministry of Foreign Affairs who certifies the documents. If the items requested for exemption are on the Ministry’s approved list then the request is approved and processed. If the items are not on the Ministry’s approved list, the request has to be submitted and approved by the Ministry of Finance. Documents required for the this request are:

  • Bill of Lading
  • Insurance policy (only for commercial goods for risk of loss)
  • Certificate of Origin
  • Invoice
  • Packing List
  • Mode of Payment (grant, donation, non-commercial certificate)

Customs Clearance

General Information 

The delays at Border Posts can be extensive – up to 4 days. It is critical to get all the paperwork accurate and correct.

Customs Information

Document Requirements

See the table below.

Embargoes

None

Prohibited Items

Importation of narcotic drugs, beef and beef products, valuable metals and jewelry are prohibited except under bag and baggage regulations. Prohibited exports include archaeological and religious artifacts, controlled wildlife, narcotics, arms, ammunition, explosives, industrial raw materials, imported raw materials, parts, capital goods, timber and logs.

General Restrictions

Products that may be imported only under special licenses include arms, ammunition, explosives, communication equipment, computers, TVs, VCRs and walkie-talkies.

Customs Clearance Document Requirements

Customs Clearance Document Requirements (by commodity)

 

Food

NFI (Shelter, WASH, Education)

Medicines

Vehicles & Spare Parts

Staff & Office Supplies

Telecoms Equipment

D&T Exemption Certificate

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Invoice

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

AWB/BL/Other Transport Documents

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Yes, 1 original, 3 copies, applies to both UN and NGOs

Donation/Non-Commercial Certificates

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Packing Lists

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Yes, 3 originals, 3 copies, applies to both UN and NGOs

Phytosanitary Certificate

Yes, 3 originals, 3 copies, applies to both UN and NGOs

N/A

N/A

N/A

N/A

N/A

Other Documents

N/A

Approval from Ministry of Women, Children and Social Welfare must be obtained.

Approval from Ministry of Women, Children and Social Welfare must be obtained.

N/A

Approval from Ministry of Women, Children and Social Welfare must be obtained.

Approval from the Ministry of Communica tions must be obtained for the bandwidth.

Additional Notes

In order to clear goods through Customs, the final duty-free exemption letter will be obtained from the Head of Customs and will be addressed to the Customs officer at the border crossing point. It will authorize an approved clearing agent to clear the goods per the specifications contained in the approval letter.
There is no cold chain storage available for vaccines at TIA airport and it normally takes one day for customs clearance.

Transit Regime

The majority of Nepal’s imported goods are shipped through the ports of India, namely Kolkata, and the information contained in this section applies to this transit regime. All the documents for clearing should be filed with the shipping line, port, and customs authorities for clearing and possession of cargo. Cargo is unloaded from the ship by the port authorities. If the cargo is in containers and these are not to be forwarded to the Indo-Nepal border then de-stuffing is done at the cost of the importer. The shipping line gives possession of the cargo to the importer's clearing agent after examining all the documents and the original Bill of Lading. The importer's clearing agent gets the cargo appraised by Indian customs authorities who open cases and make inspections in accordance with the invoice, packing list, etc. After a satisfactory inspection, customs authorities make an endorsement on the import license and other papers and seal the cases. The importer's clearing agent should obtain a transit insurance policy for the Indian import duty leviable in favour of the Collector of Customs. After completion of these formalities, the Customs authorities issue a Customs Transit Declaration (CTD) form that allows movement of Nepal-bound cargo from the Kolkata Port to the land customs post at the Indo-Nepal border. An “Undertaking Letter,” one per shipment, is issued by the Nepal Consulate in Kolkata. The cargo goes to the Continental Freight Temporary Storage facility. The rate is $250 / day / container.