Import/Export Business Requirements in Nepal

Overview of Import/Export Regulations

Nepal regulates import and export activities through the Foreign Trade Policy and the Customs Act, 2064 (2007). All businesses engaged in cross-border trade must comply with statutory requirements established by the Department of Customs and the Ministry of Industry, Commerce and Supplies. The regulatory framework ensures that goods entering or leaving Nepal meet quality standards, health requirements, and tariff obligations. Businesses must obtain necessary licenses, registrations, and permits before conducting import/export operations. Understanding these requirements prevents legal violations and ensures smooth trade operations.

Legal Framework and Governing Acts

Legislation	Year	Primary Function
Customs Act	2064 (2007)	Regulates customs procedures, import/export clearance, and tariff collection
Foreign Trade Policy	2015	Establishes trade guidelines, export promotion, and import/export regulations
Trade and Tariff Act	2064 (2007)	Determines duty rates, trade classifications, and tariff structures
Standards and Metrology Act	2065 (2008)	Ensures product quality, safety, and compliance with national standards
Plant Quarantine Act	2063 (2006)	Controls import/export of agricultural products and prevents pest/disease entry

The Customs Act, 2064 (2007) forms the foundation of Nepal’s import/export regulatory system. This legislation outlines customs procedures, duty assessments, and penalty provisions for non-compliance. The Foreign Trade Policy, 2015 provides strategic direction for trade promotion and export development. The Trade and Tariff Act, 2064 (2007) establishes the Harmonized System (HS) classification and applicable duty rates. Additional sector-specific laws govern imports of agricultural products, pharmaceuticals, and hazardous materials.

Business Registration Requirements

All import/export businesses must register with the Office of the Company Registrar and obtain a Permanent Account Number (PAN) from the Inland Revenue Department. Sole proprietorships, partnerships, and private companies follow distinct registration procedures. The business must maintain a registered office address in Nepal and comply with tax filing obligations. Registration documents include the memorandum of association, articles of association, and identity verification of proprietors or directors. The registration process typically requires 7–15 working days.

Registration Process Steps

The applicant submits the business registration form to the Company Registrar’s office with required supporting documents.
The registrar verifies the business name availability and examines submitted documentation for completeness.
The applicant receives a certificate of registration upon approval and successful payment of registration fees.
The business obtains a PAN from the Inland Revenue Department within 15 days of company registration.
The business registers with the Value Added Tax (VAT) office if annual turnover exceeds the prescribed threshold.

Import License and Permits

The Department of Customs issues import licenses for restricted and prohibited goods. Importers must apply for specific licenses depending on the product category. General goods do not require pre-import licenses but require customs declaration at the point of entry. Restricted items include certain pharmaceuticals, chemicals, and agricultural products. Prohibited items cannot be imported under any circumstances, including narcotics and counterfeit goods.

Categories of Import Licenses

General Import License: Applies to unrestricted goods and requires only customs declaration and duty payment.
Restricted Import License: Required for goods including pharmaceuticals, chemicals, and certain agricultural products subject to quota limitations.
Conditional Import License: Issued for goods requiring compliance with specific technical or health standards before clearance.
Prohibited Items: Cannot be imported regardless of license status, including narcotics, explosives, and counterfeit merchandise.

Export License and Certification

Export licenses apply to specific product categories including agricultural goods, minerals, and wildlife products. The Department of Customs and relevant sectoral ministries issue export licenses. Exporters must obtain quality certificates from recognized testing laboratories. Agricultural exports require phytosanitary certificates from the Plant Quarantine and Pesticide Management Centre. Mineral exports require permits from the Department of Mines and Geology.

Export Documentation Requirements

The exporter obtains a quality certificate from an accredited testing laboratory or government agency.
The exporter applies for an export license from the relevant ministry or department based on product type.
The exporter submits the export declaration form to customs with supporting documents and certificates.
The customs authority verifies documentation and issues an export permit upon compliance verification.
The exporter arranges transportation and submits the bill of lading or airway bill to customs for final clearance.

Customs Declaration and Documentation

Importers and exporters must submit detailed customs declarations for all shipments. The declaration includes the Harmonized System (HS) code, product description, quantity, value, and origin. Supporting documents include commercial invoices, packing lists, bills of lading, and certificates of origin. Customs officials assess duty liability based on declared values and applicable tariff rates. Undervaluation or misclassification results in penalties and legal action.

Required Document	Issued By	Purpose
Commercial Invoice	Exporting Supplier	Confirms transaction details, pricing, and terms of sale
Packing List	Exporter	Details contents, quantity, and packaging specifications
Bill of Lading	Shipping Company	Proves shipment ownership and outlines transport responsibilities
Certificate of Origin	Chamber of Commerce	Establishes product origin for tariff benefits and trade agreements
Quality Certificate	Testing Laboratory	Confirms product meets required safety, quality, and technical standards

Tariff Classification and Duty Assessment

The Harmonized System (HS) code determines the applicable duty rate for imported goods. Nepal uses the six-digit HS classification system aligned with international standards. Duty rates vary from zero percent for certain raw materials to 40 percent for luxury goods. The Trade and Tariff Act, 2064 (2007) establishes the duty schedule. Customs officials classify goods based on product composition, intended use, and technical specifications.

Duty Rate Categories

Zero Duty: Applied to essential raw materials, capital equipment, and goods under bilateral trade agreements.
Reduced Duty: Ranges from 1–10 percent for intermediate goods and semi-finished products.
Standard Duty: Ranges from 11–25 percent for most consumer goods and manufactured products.
High Duty: Ranges from 26–40 percent for luxury items, certain agricultural products, and protected domestic industries.

Valuation Methods for Customs Duty

Customs authorities determine the dutiable value using the transaction value method as the primary approach. The transaction value represents the price actually paid or payable for goods. If the transaction value cannot be determined, customs applies alternative valuation methods in sequential order. These methods include the value of identical goods, similar goods, deductive value, and computed value. The Customs Act, 2064 (2007) Section 27 outlines valuation procedures.

Restricted and Prohibited Goods

Nepal prohibits the import of narcotics, explosives, counterfeit goods, and certain hazardous materials. Restricted imports include pharmaceuticals, chemicals, and agricultural products subject to licensing and quality verification. Wildlife products require permits from the Department of National Parks and Wildlife Conservation. Weapons and ammunition require special authorization from the Ministry of Home Affairs. Violation of import restrictions results in confiscation and criminal penalties.

Prohibited Import Categories

Narcotics and psychotropic substances as listed under the Narcotic Drugs Control Act, 2033 (1976).
Counterfeit currency, stamps, and documents as prohibited under the Counterfeiting Act.
Hazardous waste and toxic substances as restricted under the Environment Protection Act, 2053 (1997).
Endangered wildlife species and products as prohibited under the National Parks and Wildlife Conservation Act, 2029 (1973).
Weapons, ammunition, and explosives without authorization from the Ministry of Home Affairs.

Quality Standards and Testing Requirements

Imported goods must comply with Nepali quality standards established by the Nepal Bureau of Standards and Metrology (NBSM). Products including food items, pharmaceuticals, and electrical goods require quality certificates. Testing laboratories accredited by NBSM conduct conformity assessments. The Standards and Metrology Act, 2065 (2008) mandates quality compliance. Non-compliant goods face rejection and re-export at the importer’s expense.

Health and Sanitary Requirements

Food and agricultural imports require health certificates from the exporting country’s competent authority. The Department of Food Technology and Quality Control issues import permits for food products. Pharmaceutical imports require registration with the Department of Drug Administration. Meat and animal products require veterinary health certificates. Plant-based products require phytosanitary certificates from the Plant Quarantine and Pesticide Management Centre.

Tax Obligations for Import/Export Businesses

Import/export businesses must register for Value Added Tax (VAT) if annual turnover exceeds NPR 5 million. VAT applies at 13 percent on imported goods, with certain exemptions for essential items. Businesses must file monthly VAT returns and maintain detailed transaction records. Income tax applies to business profits at progressive rates ranging from 1–30 percent. Customs duty, VAT, and income tax represent the primary tax obligations.

Banking and Foreign Exchange Requirements

The Nepal Rastra Bank regulates foreign exchange transactions for import/export businesses. Importers must obtain foreign exchange through authorized banks for payment to foreign suppliers. Exporters must repatriate foreign exchange earnings within specified timeframes. The Foreign Exchange Regulation Act, 2019 governs currency conversion and transfer procedures. Businesses must maintain documentation of all foreign exchange transactions for customs and tax purposes.

Customs Clearance Procedures

Customs clearance occurs at designated ports of entry including Kathmandu, Birgunj, and Biratnagar. The importer or customs broker submits the customs declaration with supporting documents. Customs officials examine goods and verify documentation accuracy. Duty assessment and payment occur before goods release. The entire clearance process typically requires 2–5 working days for standard shipments.

Clearance Process Steps

The importer or customs broker submits the customs declaration form with all required supporting documents to customs.
Customs officials conduct document verification and assess duty liability based on HS classification and valuation.
The importer pays assessed customs duty, VAT, and other applicable fees to the customs authority.
Customs officials conduct physical examination of goods if required based on risk assessment protocols.
The customs authority issues the customs clearance certificate and releases goods for collection.

Penalties and Non-Compliance Consequences

The Customs Act, 2064 (2007) establishes penalties for customs violations. Undervaluation results in penalties ranging from 10–50 percent of the duty difference. Misclassification incurs penalties from 5–25 percent of the applicable duty. Smuggling and illegal import/export result in confiscation and criminal prosecution. Penalties increase for repeat violations. Businesses must maintain compliance records to avoid legal action.

Frequently Asked Questions

What is the minimum registration requirement for import/export businesses in Nepal?

All import/export businesses must register with the Company Registrar and obtain a PAN from the Inland Revenue Department. Sole proprietorships, partnerships, and companies follow distinct registration procedures. Registration requires submission of business documents and identity verification.

Which goods require import licenses in Nepal?

Restricted goods including pharmaceuticals, chemicals, and agricultural products require import licenses. Prohibited items including narcotics and counterfeit goods cannot be imported. General goods require only customs declaration and duty payment without pre-import licenses.

How is customs duty calculated in Nepal?

Customs duty is calculated by multiplying the dutiable value by the applicable HS code duty rate. The dutiable value includes the transaction price plus freight and insurance costs. Duty rates range from zero to 40 percent depending on product classification.

What documents are required for customs clearance?

Required documents include commercial invoices, packing lists, bills of lading, certificates of origin, and quality certificates. Additional documents may be required based on product type and origin. All documents must be submitted with the customs declaration form.

What are the penalties for customs violations in Nepal?

Undervaluation results in penalties of 10–50 percent of the duty difference. Misclassification incurs penalties of 5–25 percent of applicable duty. Smuggling results in confiscation and criminal prosecution under the Customs Act, 2064 (2007).

How long does customs clearance typically take in Nepal?

Standard customs clearance requires 2–5 working days. Clearance time depends on document completeness, goods examination requirements, and customs workload. Expedited clearance may be available for certain goods categories.