KATHMANDU: Nepal’s new value-based taxation system is creating fresh challenges for automobile importers. Companies say they are being forced to adjust declared vehicle values to manage rising tax burdens.
The shift to CIF-based taxation means taxes are calculated at the customs point based on the vehicle’s import value. This has increased uncertainty, especially for EVs imported in foreign currencies.
Importers say the real impact will fall on consumers. Vehicle prices are set after adding margins on the import cost. Any increase in tax directly raises retail prices.
The new policy has also created instability in pricing. Models priced near key tax thresholds, such as around Rs. 2 million, face a constant risk of moving into higher tax slabs.
Under the revised structure, all electric vehicles now attract 20 percent customs duty. Additional charges include the Clean Infrastructure Investment Fee and Road Construction Fee, both based on value slabs.
At the lower end, EVs priced up to Rs. 2 million face a 2.5 percent clean infrastructure fee and 2.5 percent road tax. Rates increase sharply with vehicle value. Models priced between Rs. 2-3 million face a 25 percent fee, while Rs. 3-4 million vehicles attract 35 percent. The rate jumps to 90 percent for Rs. 4-5 million vehicles. A 5 percent road tax applies across higher segments.
Currency fluctuation has become a major concern. Since CIF value is calculated using the exchange rate at the time of customs clearance, even small changes can shift a vehicle into a higher tax bracket.
For example, a vehicle valued at Rs. 2.99 million may attract a 20 percent fee on one day. If the exchange rate increases the next day, pushing its value above Rs. 3 million, the tax rate could jump to 35 percent.
The US dollar has been steadily strengthening. Over the past one and a half years, it has increased by around 15 percent. In the last year alone, it has risen by Rs. 17, from Rs. 136 to Rs. 153. Other major currencies such as the euro, pound, and yuan have also appreciated.
As a result, the effective cost of imported vehicles continues to rise in Nepali rupees. Since taxes are applied on this higher value, the overall tax burden also increases.
Industry stakeholders say the combined effect of value-based taxation and currency fluctuation will make vehicle pricing highly volatile. The final impact is expected to be borne largely by end consumers.
