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🇳🇵 Nepal /Economy & Trade

Nepal budget shifts EV duties to value, boosts digital payments

From Kathmandu Post · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Sources not specified New plan
  • Nepal's upcoming fiscal year 2026-27 budget shifts customs duty on electric vehicles from motor capacity to value.
  • The budget also promotes domestic production, charging stations, and battery management for EVs, alongside boosting exports of Nepali alcoholic beverages.
  • Tax reforms include increased excise duties on cigarettes and liquor, a higher customs duty on gold, and a 10 percent VAT discount for digital payments.

Nepal's Finance Minister Swarnim Wagle presented the budget for fiscal year 2026-27, introducing significant changes to customs duties on electric vehicles (EVs). The new provision shifts the basis for EV import duties from motor capacity to the vehicle's value. This move aims to support domestic EV production, the development of charging infrastructure, and battery management systems.

From the upcoming fiscal year, I have made a provision to register microbreweries as liquor industries and bring them within the scope of excise duty.

— Swarnim WagleAnnouncing changes to excise duties on liquor industries.

The budget also seeks to promote the export of Nepali-brand alcoholic beverages by encouraging quality spirit production and maturation. Microbreweries will be registered as liquor industries and brought under excise duty. Furthermore, excise duties on cigarettes, liquor, and beer have been increased. The customs duty on gold has doubled to 20 percent from 10 percent, though a luxury tax on gold introduced previously has been removed.

In a bid to encourage digital transactions, consumers using digital payment methods will receive a 10 percent discount on value-added tax (VAT) at the point of sale. The government also plans to automate the VAT refund system and form a committee to study a multi-rate VAT system. Finance Minister Wagle emphasized a policy shift towards making tax compliance a partner in development, introducing a special scheme for tax exemptions and facilities to resolve long-standing disputes and create a business-friendly environment.

We will implement a system in which consumers making purchases through digital payment methods receive a 10 percent discount on value added tax at the very time the invoice is issued. We will automate the Value Added Tax refund system.

— Swarnim WagleDescribing measures to encourage digital payments and streamline VAT refunds.

Tax reforms also include raising the income tax exemption threshold to Rs1 million for individuals and reducing the maximum personal income tax rate by 10 percentage points. Under the new structure, income up to Rs1 million will be taxed at 1 percent, with a 10 percent rate on income between Rs1 million and Rs1.5 million.

We have adopted a policy of making tax compliance not a punishment, but a partner in development.

— Swarnim WagleStating the government's approach to tax compliance and dispute resolution.
DistantNews Editorial

Originally published by Kathmandu Post in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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