Nepal Govt Keeps EV Taxes Unchanged, Unveils New Tax Reforms

The government has decided to keep the existing customs and other taxes on electric vehicles (EVs) unchanged.

Finance Minister Bishnu Prasad Paudel, while presenting the budget for the fiscal year 2082/83 in Parliament on Wednesday, said that the current tax rates on electric vehicles will remain the same to encourage their use.

Amid rumors that the government might raise taxes on EVs, many traders rushed to import vehicles, causing a backlog at the Chobhar dry port.

Paudel also said that income earned from working in the information technology sector while staying in Nepal will be taxed at a flat rate of 5%, which will be the final tax.

He announced an increase in taxes on tobacco and alcohol.

The Finance Minister also mentioned that laws related to VAT, excise duty, and income tax will be revised. A study will be conducted on introducing multiple VAT rates. Additionally, IT-based industries and hotels will receive income tax exemptions.

For the import of football, cricket, and stadium equipment, only 1% customs duty will be charged.

He also announced customs duty discounts for green hydrogen machinery and 1% duty on battery imports for solar energy.

EV assembling industries will also be charged only 1% customs duty. Similarly, private sector imports of tunnel boring machines will be taxed at just 1%.

VAT on digital payment adjustments has been removed, and the advance income tax on fruit and vegetable imports has also been scrapped.

The Rs 16 tax limit on ambulance imports has been removed.

Finally, Minister Paudel said the government aims to improve tax compliance, increase tax system productivity, expand the tax base, and make the tax system more taxpayer-friendly.