Highlights of Budget 2081/2082 of Nepal

Key insights for Businesses, Taxation, Industries, ICT and Startup Businesses:

This budget significantly emphasis in the outlined principles and priorities is on strengthen the financial sector aiming to foster the development of healthy, private sector promotion, competitive, reliable and financial environment.

Government of Nepal brings NPR 1. 86 trillion budgets for the fiscal year 2081/2082.

Allocated amount for different sectors:

Sources of Budget (Revenue and Financing):

Major Provisions: –

• Formulation of new Custom Act for trade facilitation and investment promotion.
• Expansion of economic activities by improvement of revenue system, investment promotion and domestic production.
• Reformation of integrated tax payer information system.
• Expansion of scope of revenue, protection of tax payer, development of transparent revenue system.
• Capacity building of revenue administration.
• Financial literacy program to taxpayer.
• Upliftment of private sector by creating investment friendly environment.
• Development of Double Tax Avoidance Agreement Model for investment inflows from potential courtiers.
• Prior description of tax exemption shall be given via digital means by all public office through PAN.
• A system shall be developed to enable the taxpayer to obtain a tax payment certificate with QR Code.
• Implementation of e-assessment and faceless audit for fair tax examination.
• Promotion of digital and green economy.
• Promotion of investment through private equity and venture capital.
• The environment of exporting Nepali branded cement shall be managed.
• Legal provision related to derivatives (legally binding contracts) shall be enacted.

Startup Entrepreneurship Sector:

• Support for startup business: allocated fund-Rs 1.25 billion.
• Startup ecosystem shall be developed for the growth of economic innovation and entrepreneurship.
• Venture capital and private equity fund shall be encouraged to invest in startup enterprises.

IT Sector:

• Remove of minimum threshold for foreign investment in IT sector.

Industrial Sector and Trade Facilitation:

• Access to finance will be facilitated in the operation and establishment of the industry.
• The land acquisition process required for the operation of the industry will be simplified
• The encouragement of “Made in Nepal” and “Make in Nepal”
• Foreign investment in industrial development shall be promoted.
• Exports get accreditation for goods currently in high demand such as carpets, yarns, ready-made garments and cement.
•  The government intends to establish and implement uniform quality standards for imported goods and services and at the same time try to conclude agreements with neighboring countries on internationally recognized quality criteria.

Taxation:

• Dismissal of VAT on fruits, vegetables and local products to promote domestic product.
• Exemption of custom and excise duty for following products: – Medicines, Induction, Helmet, Essene, Sanitary Pad and metal springs sheet.
• Corporate tax rates remain unchanged.
• Exemption from capital gain tax if IT industry able to register profit.
•  Tax concession given to increase entrepreneurial capacity in connection with the capital increase of start-up companies, private equity investment companies and joint ventures.
• To attract foreign capital income, reduction of income tax while paying interest of loan.
• Export price limit has been raised to 25 thousand USD from 10 thousand USD to promote small and middle level export industry.
• Duty exemption for animal husbandry firm livestock farming for the promotion of sustainable farming.
• To safeguard domestic industry, the government has suggested increasing import and excise charges on specific prepared goods.
• Increment of excise duty imposed on alcohol, tobacco and cigarettes.
• The existing threshold for registration under Value Added Tax (VAT) has been increased to Rs. 30 lakhs from 20 lakhs.
• Imposition of green tax on import of petroleum and coal product for reduction of carbon emission in Nepal.
• Increment of excise duty and internal tax on Electric Vehicles by 5 to 20%.

Regulatory Changes:

The processes for registration, regulation, and termination will be made simpler by revisions to the Company Act. There will be updates to the Hedging Regulations, Industrial Area Operation and Management Regulations, Sale of Goods Act, Insolvency Act, Labor Act, and Industrial Enterprise Act. The purpose of these updates is to improve the business environment in Nepal.