Customs Duty & Landed Cost Estimator Nepal

Under Nepal Customs Act 2064 and VAT Act 2052: (1) First, the Assessable Customs Value (CIF) is calculated as (Invoice Value + Overseas Freight + Transit Insurance) converted to NPR using NRB customs exchange rates. (2) Customs Duty is levied on the CIF Assessable Value. (3) If applicable, Excise Duty is levied on (CIF + Customs Duty). (4) Import VAT (13%) is then calculated on (CIF + Customs Duty + Excise Duty). (5) Finally, Advance Income Tax (AIT, typically 1.5% or 2.5%) is charged on CIF for commercial trading goods.

Section 12 of the Nepal Value Added Tax Act 2052 explicitly mandates that for imported goods, the taxable base for VAT is the sum of the customs assessable value plus the customs duty and any excise duty paid at the border. Taxing the post-duty value ensures that imported goods compete fairly with domestic manufactured goods that already reflect production duties.

Nepal Department of Customs applies statutory notional additions when actual documentation is absent. Typically, customs adds notional freight and notional transit insurance (commonly calculated as up to 10% of the FOB invoice value) to arrive at the statutory CIF Assessable Value.

Under Section 95Ka of Nepal Income Tax Act 2058, customs authorities collect Advance Income Tax (usually 1.5% or 2.5% depending on whether the importer is an industrial user or commercial trader) on the assessable value of imported finished goods. Importers can adjust this AIT credit against their annual corporate income tax liability when filing their D1/D2/D3 tax returns with IRD.

Yes. Registered VAT taxpayers in Nepal who import taxable goods can claim 100% of the Import VAT paid at customs (recorded in Box 47 / 48 of the Customs Declaration 'Pragyapan Patra') as Input Tax Credit (ITC) in their monthly IRD VAT return (Kharid Khata), offsetting it against output VAT collected from sales.

While customs taxes are assessed only on the border CIF value, an importer's true Landed Cost per unit must include port demurrage, customs clearing agent (Bhadar) fees, local loading/unloading, and inland truck transport from the border (e.g. Birgunj or Tatopani) to the Kathmandu or Pokhara warehouse. Excluding these expenses leads to underpricing and distorted gross margin calculations.