Importers Call for Urgent Reform in Nepal’s Customs Valuation System

Kathmandu — Businesses involved in Nepal’s import trade have called for immediate and practical reforms in the customs valuation and classification system, arguing that existing practices continue to create uncertainty, delays, and additional financial burden. While recent reform initiatives introduced by Finance Minister Rameshwor Khanal have been welcomed in principle, importers say the changes have yet to translate into relief at the operational level.

In a set of recommendations submitted to the Department of Customs, importers praised the decision to abolish the long-criticized valuation reference book. However, they claim that the reform has exposed new gaps in implementation. According to business representatives, several customs officials remain unclear about the revised procedures due to a lack of proper training and continue to apply outdated valuation logic in practice.

One of the most contentious issues raised relates to the use of Maximum Retail Price (MRP) for customs duty assessment. Importers argue that levying customs duties based on MRP printed in Indian rupees or U.S. dollars is highly impractical. While regulations require consumer packages to display MRP, the same price is then used to impose higher duties, effectively inflating tax liabilities and creating confusion for traders.

Business owners say they are willing to print MRP in Nepali rupees based on domestic selling prices. However, applying duties on foreign-currency MRPs, they argue, imposes unnecessary costs and undermines price competitiveness in the local market. Importers also report difficulties when importing free promotional goods provided by suppliers for new product launches, as such items are often subjected to valuation disputes despite having no direct purchase cost.

Concerns have also been raised over the Customs Wide Area Network (WAN) system. Importers note that customs officials frequently raise valuation or classification queries through direct digital messages without maintaining formal records. This practice, they argue, reduces transparency and accountability, prompting calls for an end to undocumented communications and the adoption of a fully traceable system.

Under current practice, disputed goods can be cleared by depositing a guarantee while the valuation or classification is reviewed. However, business groups complain that review decisions often take several months, tying up capital and disrupting supply chains. They have urged authorities to ensure that such cases are resolved within 30 days, warning that prolonged delays discourage imports and weaken overall business confidence.

Nepal’s status as a landlocked country adds another layer of complexity. Importers say transit times often stretch from 60 to 120 days, significantly increasing costs. In this context, they have requested permission to import third-country goods via India, particularly for essential industrial raw materials and machinery parts. According to them, this is not a preferred option due to higher costs but has become unavoidable for keeping industries operational.

“Buying third-country goods through India benefits no one in Nepal, but without this flexibility, industries suffer,” importers argue, adding that such restrictions do not affect India but disproportionately harm Nepali manufacturers. They also stressed the need to strengthen accountability within customs offices, pointing out that officials face little consequence even when importers are charged excessive duties later proven unjustified.

To address these concerns, businesses have proposed introducing an online performance evaluation system for customs officials. They suggest linking incentives and penalties to timely and accurate decision-making. Importers have also emphasized the importance of encouraging consumers to demand VAT and PAN bills, arguing that wider compliance would help curb the grey market and strengthen revenue collection.

Overall, importers say meaningful customs reform must go beyond policy announcements and focus on consistent implementation, transparency, and accountability. Without such changes, they warn, Nepal’s import-dependent economy will continue to face higher costs, operational uncertainty, and weakened industrial competitiveness.