| TRADE
- The role of public sector to
be limited. It is to work as a catalyst to expand
the role of private sector in trade.
- Taxation system to be simplified.
- No Licenses required for exports
of any products other than banned or quantitatively
restricted items which are listed in Annexure 1.
- The duty drawback scheme available
for the refund of import duty paid on imported
raw materials and intermediate goods required
for the production of exportable products.
- On the export of goods other
than rates specified a service charge at the
rate of 0.5% of the export value shall be levied.
- Export Promotion Zone (EPZ) to
be established.
- No Duty levied on raw materials
and auxiliaries imported by industries in EPZ.
- Industries exporting more than
80 percent of the production to be granted similar
facilities as given to industries in EPZ.
- No license required and no quantitative
restriction on the import of raw materials (except
stipulated) otherwise required for the export
oriented and import substituting industries.
Foreign currency required for such import will
be made available by the commercial banks at
the market rate .
- Exporters allowed to retain their
export earnings in their own foreign currency
account. They can spend certain percentage of
this amount for trade promotion activities.
- No quantitative restrictions
on the exportable products carried by tourists
while returning from Nepal.
- Imports of all items other than
banned or quantitatively restricted as listed
in Annexure 2
is allowed.
Annexure 1
A. PRODUCTS BANNED FOR EXPORTS
1. Articles of Archaeological
and Religious Importance
1.1 National and
foreign coins of archaeological value.
1.2 Idols of gods and goddesses, palm leaf inscription
(Tad Patra), plant leaf inscription (Bhoj Patra).
1.3 Scroll (Thanka paintings) of historical importance.
2. Conserved wildlife
and Related Articles
2.1 Wild animals.
2.2 Bile and any part of wild animals.
2.3 Musk.
2.4 Snake skin, Lizard skin.
3. Narcatic Drugs
Norcotic Marijuana, Opium, Hashish (as defined in
the Single Convention on Narcotics, 1961).
4. Articles of Industrial
Importance
4.1 Explosives material
and fuse or materials needed therefor.
4.2 Materials used in the production of arms and
ammunition.
5. Industrial Raw
Materials
5.1 Raw hides and
skin (including dry salted).
5.2 Raw wool.
5.3 All imported raw materials, parts and capital
goods.
6. Other products
6.1 Mamira.
6.2 Log and timber.
B.
PRODUCTS UNDER QUANTITATIVE RESTRICTION
Products as notified
by His Majesty's Government in the Nepal Gazette
from time to time.
C.
PRODUCTS ALLOWED FOR FREE EXPORTS
All products other
than banned ones and under quantitative restrictions.
Notes:-
1. The Ministry of
Commerce will decide from time to time the goods
to be included under the category of quantitative
restriction.
2. The Ministry of Commerce will interpret as to
which of the products listed above will be permitted
to export.
Annexure 2
PRODUCTS BANNED FOR IMPORTS
1. Products injurious
to health
(a) Narcotic drugs
like, opium and morphine
(b) Liquor containing more than 60 percent alcohol
2. Arms and ammunitions
and explosives (except under import license of His
Majesty's Government)
(a) Materials used
in production of arms and ammunition
(b) Guns and cartridges
(c) Capes without paper
(d) Arms and ammunitions, and other explosives
3. Communication equipment:
wireless, walkie-talkie, and similar other audio
communication equipment's (except under import licence
of His Majesty's Government)
4. Valuable Metals and
Jewelleries (except permitted under baggage rules)
5. Beef and beef products
6. Any other product
notified by His Majesty's Government in the Nepal
Gazette.
INDUSTRY
Classification of
Industries:
Manufacturing
Industries
Industries which produce goods by utilizing or processing
raw materials, semi-processed materials by products
or waste products or any other goods.
Energy Industries
Industries generating energy from water resources
& wind, solar, coal, natural oil and gas, bio-gas
or any other sources.
Agro and Forest-Based
Industries
Business mainly based on agriculture or forest products
such as integrated sericulture and silk production,
horticulture and fruit processing, animal husbandry,
dairy industry, poultry farming, fishery, tea gardening
and processing, coffee farming and processing, herticulture
and herb processing, vegetable seed farming, mushroom,
vegetable farming or vegetable processing, tissueculture,
green house, bee-keeping, honey production, rubber
farming, floriculture and production, and forestry
related businesses such as lease-hold forests, agro-forestry,
etc.
Mineral Industries
Mineral excavation or processing thereof.
Tourism Industries
Tourist lodging, motel, hotel, restaurant, resort,
travel agency, skiing, gliding, water rafting, cable
car complex, pony-trekking, trekking, hot air ballooning,
para sailing, golf-course, polo, horse-riding, etc.
Service Industries
Workshop, printing press, consultancy service, ginning
and baling business, cinematography, construction
business, public transportation business, photography,
hospital, nursing home, educational and training
institution, laboratory, air services, cold storage,
etc.
Construction Industries
Road, bridge, ropeway, railway, trolley bus, tunnel,
flying bridge and industrial, commercial and residential
complex construction and operation.
Cottage
Industries
The traditional industries utilizing specific skill
or local raw materials and resources and labour
intensive and related with national tradition, art
and culture as mentioned in Annexure 3.
Small Industries
Industries with a fixed asset of up to an amount
of thirty million rupees shall be named as small
industries.
Medium Industries
Industries with a fixed asset between thrity million
rupees and one hundred million rupees shall be named
as medium industries.
Large Industries
Industries with a fixed asset of more than one hundred
million rupees shall be named as large industries.
Facilities and Concessions
to be Accorded to Industries :
- No income tax in excess of twenty
percent shall be levied on the income derived
from any industries other than the ones producing
cigarettes, bidi, cigar, chewing tobacco, khaini
and industries producing other goods of a similar
nature utilizing tobacco as their basic raw
materials, and alcohol or beer producing industries.
- Except for cigarettes, bidi,
cigar, chewing tobacco, khaini, industries and
industries producing other goods of a similar
nature utilizing tobacco as their basic raw
material. Industries producing alcohol or beer,
and saw mill and catechu industries, any other
industry using eighty or more than eighty percent
of indigenous raw materials in its products
and supplying all its manpower from among Nepali
citizens shall be granted a rebate at the rate
of 10 percent of the income tax.
- Any national priority industry,
which constructs and operates road, bridge,
tunnel, ropeway, flying bridge, and manufactures
and operates trolley bus and tram as enlisted
in Annex-4,
shall be granted a rebate of fifty percent of
the income tax on their income for a period
of ten years from the date of operation and
other industries as enlisted therin shall be
granted a rebate of fifty percent of the income
tax on their income for a period of seven years
from the date of operation.
- Any industry, established in
any Remote, Undeveloped, and Underdeveloped
Areas as enlisted in Annex-3,
othe than cigarettes, bidi, cigar, chewing tobacco,
khaini industries and industries producing other
goods of a similar nature utilizing tobacco
as their basic raw materials, and industries
producing alcohol or beer, shall be granted
a rebate of thirty, twenty-five and twenty percent
of the income tax respectively and thirty-five,
twenty-five and fifteen percent of the excise
duty respectively for a period of ten years
from the date of operation.
- Fruit based fruit processing
and cider and wine industries with a fixed asset
of up to two million five hundred thousand rupees
established in Mugu, Humla, Jumla, Dolpa, Kalikot,
Bajura, Darchula, Bajhang, Achham, Mustang,
Manang, Solukhumbu, Sankhuwasabha and Taplejung
districts shall be entitled to an excise duty
exemption for a period of ten years, and fruit
based alcohol industries shall be entitled to
excise duty exemption for a period of five years.
On completion of such exemption period, His
Majesty's Government may grant excise duty exemption
to the fruit based alcohol industries for up
to an additional period of three years.
- While calculating depreciation
on the fixed assets, industries shall be entitled
to add one third to the rate of depreciation
allowed under the existing income tax laws.
- If an industry diversifies itself
through reinvestment in the same or any other
industry, or expand its installed capacity by
25 percent or more, modernizes its technology
or develops ancillary industries, it shall be
entitled to a deduction of 40 percent of new
additional fixed assets from its taxable income.
Such remission may be deducted on a lumpsum
or on an instalment basis within a period of
three years.
- Permission shall be granted for
a reduction of up to 50 percent from the taxable
income for the investment of any industry on
process or equipment, which has the objective
of controlling pollution or which may have a
minimum effect on the environment. Such remission
may be deducted on a lumpsum or on a instalment
basis within a period of three years.
- Pre-operation costs incurred
by any industry in connection with skill development
training shall be allowed to be capitalized.
- After an industry comes into
operation, 10 percent of the gross profit shall
be allowed as a deduction against taxable income
on account of expenses related with technology,
product development and efficiency improvement.
- An industry donating an amount
of up to 5 percent of its gross income to any
school, college, university, hospital, religious
place and in social activities shall be entitled
to a deduction of such donated amount in course
of assessing the taxable income.
- Up to5 percent of gross income
spent for the advertisement of the products
or promotion services, hospitality and any other
similar expenses shall be allowed to be deducted
while assessing the taxable income.
- If any industry provides direct
employment to six hundred or more than six hundred
Nepali citizens round the year, it will be,
in addition to other facilities, granted an
additional income tax rebate at the rate of
ten percent for that year.
- If any other industry utilises
locally available raw materials, chemicals and
packing materials, etc. on which excise duty
is already imposed, the excise duty shall be
reimbursed to the industry utilizing such raw
materials chemicals and packing materials. The
amount to be so reimbursed shall be refunded
within sixty days after an application to that
effect has been duly submitted.
- The customs duty is excise duty
on raw materials and auxiliary raw materials,
etc. utilized by any industry in connection
with its product during its production shall
be reimbursed on the basis of the quantity of
the export.
- In cases where any industry sells
its products in the Export Promotion House,
the customs duties levied on the raw materials
imported for producing the products so sold
as well as the excise duty levied on the products
so produced shall be reimbursed to the concerned
industry on the basis of the quantity of sale
and export.
- If an industry sells its product
within the Kingdom in any foreign currency,
the excise duty and custom duty on such product
and customs duty, excise duty levied on the
raw materials and auxiliary raw materials, etc.
utilized in such product shall be reimbursed.
- The customs duties and excise
duty on the production materials of intermeiate
goods to be utilized for the production of exportable
industrial goods and excise duty levied on the
product shall be reimbursed to the concerned
industry producing the intermediate goods, on
the basis of the quantity of export.
- No tax, fee or charge of any
kind shall be levied on the machine, tool, equipment,
machinery and raw material to be employed by
an Export Promotion Industry as well as on the
products of such industry. Provided that if,
for any reason, any product of such industry
is required to be sold wihtin the country, tax,
fee or charge thereof shall be required to be
paid on the basis of the quantity of sale.
- An industry will be entitled,
for the purpose of the income tax to deduct
the amount of expenses incurred by it for the
long-term benefit provided to its workers and
employees including housing, life insurance,
health facilities, education and training.
- The rate of customs to be levied
on the basic raw materials which are not produced
in Nepal and are required for the production
of industrial machinery or of any other goods
may not be more than the rate of import duty
that may be levied on the import of industrial
machinery or ready made goods as is produced
with the use of such raw materials.
- If an industry producing intermediate
goods sells its products to any other industry
producing finished goods, the custom duty and
excise duty to be levied on such products will
be allowed to be adjusted on the basis of the
quantity utilized by the industry producing
the finished goods. Provided that such a finished
goods producing industry shall be required to
have been registered for the purpose of excise
duty.
- Forest-based industry may be
made available any forest on a leasehold basis.
- No royalty shall be imposed if
any industry generates electricity for its use.
- His Majesty's Government may,
be notification published in the Nepal Gazette,
grant additional facilities to the Export Promotion
Industry, and prescribed industries established
in the Export Processing Zone and in the government
or non-government industrial estate.
- On the recommendation of and
with the decision of the Council of Ministers,
and by notification published in the Nepal Gazette,
additional facilities may be granted to any
National Priority Industry or any industry established
in Nepal by the way of invention therein.
- Cottage industries provided with
additional facilities.
Annexure 3
COTTAGE INDUSTRIES
With the exception of
cigarettes, bidi, cigar, chewing tobacco, khaini
industries and industries producing other goods
of a similar nature utilizing tobacco as the basic
raw material, alcohol and beer producing industries,
Handloom, Pedalloom, Semi-automatic loom. Warping,
Dyeing and Printing, Tailoring (Other than Readymade
Garments), Knitting, Handknitted Woollen Mat and
Blanket (Radi, Pakhi), Woollen Carpet, Pashmina,
Woollen Garments, Carpentry, Wooden Artistic Product,
Cane and Bamboo Works, Natural Fibre Products, Handmade
paper and Goods made up thereof. Gold, Philigiree
Procucts including Silver, Brass, Copper Precious
and Semi-Precious Stones, Ornaments, Sculptures
and Pottery, Honey, Chyuri, Cardamom Processing,
Clay or Ceramic Pottery, Leather Cutting and Tanning,
Rural Tanning and Leather Goods producing Works,
Jute, Sabai Grass, Babio, Choya, Cotton Thread Products,
Artistic Products made up of Bones and Horns, Stone
Carving, Ceramic Fine Arts, Pauwa, Boutique, Incense
Stick (Dhup), Dolls and Toys Industries and cottage
industries with the fixed asset of up to two hundred
thousand rupees.
Note :
i. Unless otherwise
mentioned speciafically, machines of the above mentioned
industries should not employ through electric motors
of diesel or petrol or crude oil engine more than
a total of five kilowatt. Power looms shall not
be included under Cottage Industries.
ii. Permission shall
be required for the establishment of mechanised
woollen spinning and mechanised woollen carpet manufacturing.
INDUSTRIES REQUIRING
PERMISSION
Industries producing
explosives including arms, ammunition and gunpowder,
security printing, bank notes and coin industries.
Cigarettes, bidi, cigar,
chewing tobacco, khaini industries and industries
producing goods of a similar nature utilizing tobacco
as the basic raw material and alcohol or beer producing
industries.
Annexure 4
NATIONAL PRIORITY INDUSTRIES
1. Agro and forestry-based
industries.
2. Engineering industry
(producing agricultural and industrial machine).
3. Industry manufacturing
fuel saving or pollution control devices.
4. Solid waste processing
industry.
5. Road, bridge, tunnel,
ropeway and flying bridge constructing and operating
industry, and trolley bus and tram manufacturing
and operating industry.
6. Hospital and nurshing
home (only outside the Kathmandu valley).
7. Industries producing
ayurvedic, homoeopathic and other traditional medicine,
and industries producing crutch, seat belt, wheel
chair, stretcher and stick and so on to be used
in aid of the disabled and orthopaedic.
8. Cold storage installed
for the storage of fruits and vegetables.
Annexure 5
CLASSIFICATION OF DISTRICTS ON THE BASIS OF INDUSTRIALIZATION
| Remote Area |
|
|
|
| 1. Darchula |
2. Bajhang |
3. Bajura |
4. Humla |
| 5. Mugu |
6. Jumla |
7. Kalikot |
8. Dolpa |
| 9. Mustang |
10. Manang |
11. Solukhumbu |
12. Sankhuwa Sabha |
| 13. Khotang |
14. Bhojpur |
15. Achham |
16. Dailekh |
| 17. Jajarkot |
18. Rukum |
19. Okhaldhunga |
20. Myagdi |
| 21. Terhathum |
22. Ramechhap |
|
|
| Undeveloped Area |
|
|
|
| 1. Taplejung |
2. Rolpa |
3. Baitadi |
4. Rasuwa |
| 5. Gulmi |
6. Parwat |
7. Dadeldhura |
8. Pyuthan |
| 9. Doti |
10. Sallyan |
11. Panchthar |
12. Baglung |
| 13. Sindhupalchowk |
|
|
|
| Under developed Area |
|
|
|
| 1. Kailali |
2. Surkhet |
3. Arghakhanchi |
4. Palpa |
| 5. Syangja |
6. Dhading |
7. Lamjung |
8. Tanahu |
| 9. Gorkha |
10. Sindhuli |
11. Udayapur |
12. Dhankuta |
| 13. Illam |
14. Kanchanpur |
15. Bardia |
16. Dang |
| 17. Nuwakot |
18. Kavrepalanchowk |
19. Dolkha |
|
FOREIGN INVESTMENT
Permission will not
be granted for foreign investment in the industries
specified in Annexure 6.
Rest of the industries a permission is required.
Foreign investments
will be permitted up to 100 percent except the negative
list.
Permission can be granted
to use foreign technology in the industries specified
in Annexure 6.
Repatriation of capital
& profits is allowed. - Priority will be given
in supplying electricity to the industries.
No intervention will
be made in fixing prices of the products of any
industry.
Business visas shall
be granted to foreign investors or their dependent
family members or authorised representatives and
their dependent family members to stay in the kingdom
of Nepal so long as they maintain their foreign
investment. Provided that a Foreign Investor, who
makes a lump sum investment of at lest US$ 100,000,
or an equivalent amount in any convertible foreign
currency, and his dependent family members shall
be granted residential visas so long as he maintains
his investment.
Annexure 6
LIST OF INDUSTRIES NOT TO BE GRANTED PERMISSION FOR
MAKING FOREIGN INVESTMENT
Clause (a)
1. Cottage industries.
2. Personal service (such as hair-cutting, beauty
parlour, tailoring and driving training etc.).
3. Arms and Ammunition industries.
4. Explosive, gunpowder.
5. Industries related to Radio active materials.
6. Real Estate business (except construction industries).
7. Motion picture business (produced in national
languages and the language of the nation).
8. Security printing.
9. Currencies and coinage business.
Clause (b)
1. Retail business.
2. Travel agency.
3. Trekking agency.
4. Water rafting.
5. Pony trekking.
6. Horse-riding.
7. Cigarette, bidi (tobacco), Alcohol (excluding
those exporting more than 90 percent).
8. Internal courier service.
9. Atomic energy.
10. Tourist lodging.
11. Poultry farming.
12. Fisheries.
13. Bee-keeping.
14. Consultancy services, such as management, accounting
engineering and legal services.
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