Nepal overhauls customs to boost revenue
KATHMANDU: On the occasion of International Customs Day, senior officials and industry leaders emphasized the need for a realistic, transparent, and business-friendly customs administration in Nepal.
Customs Secretary Ghanshyam Upadhyaya highlighted that customs administration must be grounded in reality to ensure transparency in revenue collection.
He pointed to recent reforms, including integrating GST valuation into an online system and exchanging GST-related data with neighboring countries under MoUs, as significant steps toward a more credible and unified customs system.
“Recent efforts to link GST valuation with online systems, collaborate with neighboring countries for GST data exchange, and strengthen a one-window system are excellent steps in making customs administration more realistic, reliable, and transparent,” Secretary Upadhyaya said. He also stressed the need to standardize valuation processes across different customs offices through the online system.
Nepal Chamber of Commerce Chair Kamlesh Agrawal raised concerns about overly strict penalties in the Customs Act, 2082, calling them “excessive, impractical, and difficult to implement.”
Speaking at the same event, he said such measures, introduced in the name of revenue collection, discourage the private sector and may even encourage smuggling.
Agrawal urged the government to balance trade facilitation, revenue collection, and customs inspection. Citing recent GST rate cuts in India, he stressed that Nepal must adjust customs rates to remain competitive. He recommended maintaining a maximum customs rate of 25% to control smuggling and increase revenue.
Agrawal further proposed introducing differentiated VAT rates for essential and luxury goods, arguing that a uniform rate is socially unfair and that variable rates could enhance transparent trade and help curb over Rs 50 billion in informal smuggling. He also demanded the removal of excise duties on domestically produced goods except for items on the negative list, criticizing the past classification system that taxed local products unfairly.
He emphasized the need to establish international-standard quarantine facilities at customs points, noting that the lack of such infrastructure has imposed additional costs and difficulties on businesses.
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Chair Chandraprasad Dhakal said that now is the ideal time for policy reforms.
Citing past delays caused by political interference, he urged the current government to prioritize and implement reforms efficiently, under the guidance of an informed finance minister.
President Dhakal emphasized that revenue from customs should be collected without hindering entrepreneurship. He also urged the government to ensure that policies promoting industrial development are fully implemented, noting complaints from the hotel and tourism sectors regarding benefits that other industries receive but they do not.
Highlighting specific issues, Dhakal drew the finance minister’s attention to matters such as recent issuances by the Securities Board that require timely intervention to foster entrepreneurship.
