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Tax Structure Other Link : Incentives And Facilities Contents Company Taxation General Section General Information Infrastructure Introduction Surface Transport Roads Telecom Energy Power Banking Banking Travel Travel Policies Exim Policy Trade Policy Economic Policy Trade Trade Exim Tax Structure Tax System Important Contacts Important Contacts 25 percent on balance. Royalties, Technical Services Fees and Management Fees Royalties, technical service fees and management fees will be taxed only at a concessionery rate of fifteen percent. Income tax will not be levied on the interest on foreign loan. Deduction The Income Tax Act of 1974 has provision for deduction of expenses from taxable corporate and personal income. Expenses wholly and exclusively incurred in the generation of income are deductible from taxable income. Furthermore, five percent of the total gross income of industrial units will be allowed for deductions for advertisement , entertainment and other contingencies. Depreciation Industries are entitled to depreciate the fixed assets either on a straight line method or on reducing 15 percent on the first additional Rs. 75,000 Rates of Income tax The single or married status of an individual determines the relief to which he/she is entitled. Taxable income includes profits from a business, income from salaries along with other benefits provided by the employer, income from house rent, interest, dividends and other sources. The first Rs. 50,000 of income of a married couple or family are exempt from income tax. In the case of an individual, the exemption limit is 40,000. The rates of income tax are as below. Personal Taxation The present rate of corporate tax is 25 percent. However, industries, other than cigareette, bidi, cigar, khainy, tobacco, alcohol or beer, will not be imposed more than 20 percent income tax on their industrial come.

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instalment system. All plant, machinery and equipment qualify for depreciation at the rate of five to twenty five percent per annum. While calculating depreciation on the fixed assets, industries shall be entitled to depreciate additional one third of the rate of depreciation that prevails to others. Value Added Tax In order to replace the existing sales tax by value added tax the Department of Value Added Tax (VAT) has been established by which tax system will be made more realistic and transparent. The tax will be ascertained on the basis of value addition and based on records.

Double Taxation Agreements In order to avoid the double taxation on incomes of foreign investors, the government will take necessary action to conclude agreements for the avoidance of double taxation with the countries of the concerned foreign investors. At present, agreements for the avoidance of double taxation have been concluded with India, Norway and Thailand

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enter any scroll down to see more currencies amount Feedback | Contact Us | Link Us | Site Map | Press Release | News Coverage | Terms & Conditions | Important Contacts | Sales Agreement About Us | Advertise | New Visitors | Benefits | Buy/Sell Guide | Bidding Guidelines | Members Login 2000 - 2010 Matrix net-on-line Limited All Rights Reserved /Disclaimer The production and quality of exportable products will be raised to make them competitive in the international market. Necessary efforts will be made to increase and diversify exports of goods and services with objective of increasing foreign exchange earnings. Exports will be promoted by raising the producing and quality of traditional as well as new products. Similarly, more emphasis will be placed on the export of profitable but processed and finished products. For the export promotion of these products, new markets will be identified. Foreign exchange earnings will be increased and opportunities for gainful employment will be created by identifying and increasing the production of new products. Service-oriented activities will be promoted to increase foreign exchange earnings. Encouragement will be given to the export of hydro-electricity on a profitable basis. For the effective utilization of manpower, stress will be given to the development of appropriate and potential skills to promote service sector as well as export of skilled manpower in an organized way. Appropriate monetary, foreign exchange and fiscal policies will be formulated and necessary changes will be made in the administrative procedures to make them liberal, simple and dynamic in order to implement above policies on an efficient, smooth and transparent basis. Policies (Trade Policy) The role of public sector will be minimized and used as a catalyst to expand the role of private sector in trade. A liberal and dynamic trade policy will be pursued with the objective to improve balance of payments position by promoting exports to increase foreign exchange earnings as well as by fulfilling internal demand of economic and quality products. Production of quality goods and services will be increased for internal consumption as well as for exports through effective and appropriate utilization of economic resources. Policies (Economic policies)

Nepal is classified as a least developed country on account of a low per capita income of around US$ 220, low contribution of manufacturing sector in GDP (less than 10 percent) and low indices in the social indicators of development. The landlocked nature and the rugged mountain terrain of a large part of the country add to the economic rigidities of Nepal. Nepal started programmes of planned economic development as early as mid fifties with the launching of the First Five Year Plan in 1956 with others to follow. The Government has expressed a strong commitment to achieve optimum growth of national production and its equitable distribution. Several new policy measures have been adopted in line with the free market oriented liberal economic policy to stabilise the economy and pave the way for accelerated economic and social development. Monetary policy is being fine-tuned to increase domestic resource mobilization, enhance efficiency of capital and provide credit to the priority and productive sectors. Steps are also being directed towards maintaining satisfactory balances in internal and external payments. In the field of industry and commerce, government policy is aimed at giving the private sector a dominant role. Private enterprises are expected to increase efficiency and productivity in industrial and commercial operations. The Government's role will be that of a facilitator providing infrastructure facilities and a conducive environment in which the private sector could perform effectively. Moreover, the private investment is also being encouraged in the development of infrastructure and operation and management of services like road, transport, water supply, etc. The government has implemented a bold privatization program. Likewise, private foreign investment has been highly encouraged. The trade policy is also directed towards reducing the trade imbalance through improved import management, export promotion and diversification. To make economy more competitive, tariff rates have made lowered and Nepali currency have been made fully convertible in all current account transactions. Quantitative restrictions and import licensing system are abolished to make congenial and investment friendly economic environment to help promote industrial development and make products more competitive. Export procedures have been simplified, and bonded warehouse and duty drawback facilities have been introduced to make trade competitive. Besides, a wide ranging financial reform measures have also been carried out to strengthen the liberalisation process. Joint venture banks as well as finance companies have increased significantly in number. The Government has already initiated the effort of legal and procedural arrangements necessary for the implementation of the policies for permitting of up to 25 percent foreign investment on tourism (aviation companies and big hotels), water resources (power and drinking water), mines and mineral related industries and goods production and processing sources through stock market. This is in line with the government policy of opening foreign investment through the secondary market. The limitation of 25 percent foreign investment and its scope could be further extended in future based on the experiences. Government owned banks and financial institutions are also being either restructured or divested. Furthermore, formulation of necessary legislative measures are underway to establish off shore banking facility in Nepal

Special efforts will be made to promote and diversify trade both in the range of commodities and country destinations. Liberal procedures will be adopted for encouraging interactions between trade and industry for sustained export promotion and for fulfillment of internal demand through increased domestic production. Emphasis will be given on modernizing management and technology, on promoting market and on attracting direct foreign investment in order to identify and develop new products as well as raise the production and quality of the traditional products. The public sector trading corporations will gradually be privatized taking into considerations the development and efficiency of the private sector. In support to above policy measures, necessary steps-as pre-conditions-relating to foreign exchange, monetary and fiscal policies, will be taken up towards (full ) convertibility of the Nepalese currency in trade and service sectors. For this purpose, major changes will be made in the administrative procedures to make them simple, transparent and dynamic. Taxation system will be simplified by introducing necessary changes in order to foster competition in trade. Emphasis will be laid on institutional development and information network as well as on monitoring system and quality improvement for the promotion of foreign trade. The existing trade treaties and agreements with various countries and international agencies will be effectively implemented and new ones will be concluded, as and when necessary, for the promotion of international trade