Export Promotion Manual for Nepalese Missions Abroad - Chapter II

Chapter II

2.1 ACTS, REGULATIONS AND POLICIES RELATED TO FOREIGN TRADE

The following are the export trade related acts, rules and regulations and policies enacted by the government.

2.1.1 EXPORT AND IMPORT (CONTROL ) ACT, 1957 (2013)
2.1.2 EXPORT AND IMPORT RULES, (1978)
2.1.3 CUSTOMS ACT, 1962
2.1.4 CUSTOMS REGULATIONS, 1969
2.1.5 FOREIGN EXCHANGE ACT, 1962
2.1.6 FOREIGN EXCHANGE RULES, 1963
2.1.7 COMMERCIAL POLICY, 1992
2.1.8 INDUSTRIAL POLICY, 1992
2.1.9 INDUSTRIAL ENTERPRISES ACT, 1992
2.1.10 FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT, 1992
2.1.11 FOREIGN INVESTMENT AND ONE WINDOW POLICY, 1992
2.1.12 PRIVATE FIRM REGISTRATION ACT, 2014
2.1.13 PRIVATE FIRM REGISTRATION REGULATIONS, 2034
2.1.14 PARTNERSHIP ACT, 2020
2.1.15 COMPANY ACT, 1964 (2021)
2.1.16 NEPAL AGENCY ACT, 2014
2.1.17 AGENCY RULES, 2019
2.1.18 ARBITRATION ACT, 2038
2.1.19 PATENT DESIGN AND TRADE MARK ACT
2.1.20 NEPAL MINE ACT, 2023
2.1.21 INCOME TAX ACTS
2.1.22 SALES TAX AND EXCISE ACTS
2.1.23 PLANT PROTECTION ACT, 2029 AND RULES, 2031

2.2 POLICY

2.2.1 OBJECTIVE OF 1992 COMMERCIAL POLICY

1. enhancing the contribution of trade to the national economy and

2. creating liberal atmosphere for the private sector participation in diversification and expansion of sustainable trade.

2.2.2 POLICY FEATURES

• minimizing the role of public sector and privatizing public sector enterprises,

• improving balance of payments situation by strengthening export competitiveness and capabilities,

• diversifying trade-country-wise and commodity/service-wise,

• introducing liberal procedures for export promotion of industrial goods,

• introducing full-convertibility of Nepalese Rupees on current account,

• introducing simple, transparent and dynamic monetary, fiscal and foreign exchanging policy and administrative measures,

• developing institutions (Board of Trade, Foreign Trade Policy and Research Institute and Nepal Trade Promotion Organization).

• information net-work, monitoring system and quality improvements,

• implementing trade treaties and agreements effectively.

2.3 RULES, REGULATION AND PROCEDURES

The rules and regulations under the main and related acts are mentioned in the following paragraphs :

2.3.1 INDUSTRIAL POLICY AND FOREIGN INVESTMENT ACTS

According to Industrial Policy of 1992, some of the exportable products fall under the national priority industry and hence income tax is automatically exempted for a period of seven years. There is no double taxation and nor income tax is imposed on dividends received from investment on industries. The customs duty, excise duty and the sales tax on procurement or import of all materials required for production of export products are exempted.

Foreign investment is permitted under the Industrial Policy as well as Foreign Investment and One Window Policy and the Industrial Enterprises Act 1992. Foreign investment is permitted up to 100 percent ownership in large and medium scale industries. Permission of the Department of Industry is required for foreign investment or technology transfer. All such industries should be registered. The Act also guarantees non-nationalization of industries under foreign investment.

2.3.2 EXPORT IMPORT ACT, RULES AND REGULATIONS

Export Import (Control) Act, 2013 (1957) empowers HMG to notify through order, if necessary to prohibit or control throughout the Kingdom of Nepal or in any part thereof the export of any such commodity from the date of such order. The foreign trade is also governed by the Export Import Rules of 2034 (1978). Under these Act, and Rules the exports are subjected to the following provisions:

1. Free Export Product: Most export products fall under the third category of products, neither is it banned nor does it fall under the quantitative restriction items. Some of the items such as sugar are subjected to quantitative restriction.

2. Open General License : All products under free export require no export license. Export license is automatically given by the Customs Authority without any special documentary requirement.

3. Export Through Registered Firm or Company: Export for commercial purposes should be channeled only through a registered firm or company in Nepal.

2.3.3 CUSTOMS ACTS AND TARIFFS

Any person wishing to export any goods or materials, whether subject to payment of customs duty or not, should complete a Customs Declaration Form as prescribed and submit to the Customs Officer at the point of exit from the country. The Customs Officer certifies the declaration form after he is satisfied that all documents and other formalities are completed. Goods can be transported across the border only after such a certificate is issued.

Valuation of Export Products : At present HMG has waived the export product valuation system by the Valuation Committee. Therefore, the value mentioned in the bill or invoice submitted by the owner or exporter of goods thereof is regarded as the value of such goods for customs purpose also. However, in case the Customs Officer is not satisfied with the bill or invoice submitted to him, he may determine the value of such goods on the basis of the previous records, In case no previous record is found, he may refer the case to the HMG through the Department of Customs for the purpose of valuation.

Irrespective of the above mentioned provision, the Customs still demand certification of valuation for garments from the Garment Association of Nepal, and for handicrafts from the Handicraft Association of Nepal.

Customs Duty : Exports are not levied to customs duties and the following documents are required for the customs clearance.

• Customs Declaration Form
• Invoice (in case of handicraft products, the invoice must be certified by the Handicraft Association of Nepal)
• Packing List
• Certification of Origin from the local Chamber of Commerce
• Letter of credit certificate of Payment received from a bank
• Firm or Company Registration Certificate (Photo-copy)
• Income Tax registration certificate (Photo-copy)
• Phytosanitary Certificate for agricultural products/plants
• Generalized System of Preferences (export preference scheme unilaterally introduced by advanced countries. The GSP form is issued by the Carpet and Wool Development Board for carpet export and by the Trade Promotion Center for export of other products)
• Foreign Exchange Declaration Form of Nepal Rastra Bank
• Letter of Authority to clear the consignment.
• Certificate of valuation and quota allocation from the Garment Association and visa stamping from garment visa office of the National Productivity and Economic Development Center.
• Certificate from the Department of Archaeology for the export of statues, art-works, carvings, etc.

2.3.4 FOREIGN EXCHANGE ACT 2019 AND RULES (2020)

The exporters should declare the value of export goods in a prescribed form and submit to the Customs Officer for certification. According to the Acts and rules, exporter is responsible to receive the total payment for exported goods in terms of any convertible currency within six months from the date of shipment from Nepal¹.

Payment Rules: No export transaction can be effected on consignment basis. Payment for export of any product should be made either in advance of shipment or on the basis of irrevocable letter of credit² have minimum risk for the exporter. But the genuine importers in a foreign country find it cumbersome and costly to import small volume of goods on the basis of L/C from Nepal.

2.3.5 PLANT PROTECTION ACT AND RULES

Phytosanitary Certificates (PC) are issued from the Plant Quarantine Posts under the Plant Protection Act and rules after a thorough examination and a proper treatment of exportable seeds or plants or plant products, if it is required.  

1.This rule is waived in case of export to India.
2.This regulation is waived for export of samples up to a maximum value of US$ 150.00

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