Nepal Implements Database-Based Customs Valuation System Nationwide

Kathmandu — Nepal has officially rolled out a database-based online customs valuation system across all customs offices nationwide, marking a major reform aimed at making international trade more transparent, efficient, and cost-effective. The system came into force on Friday, according to the Department of Customs.

The nationwide implementation was formally launched during a Customs Management Seminar held in Kathmandu, where Rameshwar Khanal virtually inaugurated the system in the remaining 18 customs offices. With this move, the new valuation mechanism has now become mandatory at all customs points across the country.

Following Finance Minister Khanal’s appointment, the Department of Customs had initiated the system on a pilot basis at the Biratnagar Customs Office. It was later expanded to Birgunj Customs, the country’s largest customs point in terms of revenue collection. The full-scale rollout now completes the transition to a unified valuation framework nationwide.

What Is the Database-Based Customs Valuation System?

Customs valuation is the process of determining the value of imported goods in order to calculate applicable taxes and duties. Previously, Nepal relied on a reference price-based valuation system, under which customs values were determined using fixed benchmark prices. However, since reference prices could not be updated frequently while market prices fluctuated rapidly, the system often created practical complications.

In some cases, importers were required to pay higher taxes than warranted by actual purchase prices, while in other cases undervaluation led to customs evasion. These discrepancies frequently resulted in disputes between traders and customs officials and, at times, affected business audits due to mismatches between customs and sales values.

The newly introduced online customs valuation database system is based on the valuation principles of the World Trade Organization’s General Agreement on Tariffs and Trade (GATT). Under this system, transaction value—the actual price paid by the importer—will serve as the primary basis for customs valuation, replacing the long-standing reference price approach that had been in place since 1998 (2055 BS).

To prevent undervaluation and revenue leakage, the system maintains a scientific database that includes global market prices and historical transaction data. If an importer declares an unusually low value, customs officials can verify it against the database to determine a realistic and acceptable price.

Greater Transparency and Faster Clearance

Because all procedures are conducted online, the Department of Customs expects the new system to significantly reduce delays in customs clearance. It also limits discretionary decision-making by customs officials, promoting a more system-driven, transparent, and predictable valuation process.

Finance Minister Khanal described the full implementation of the GATT-based valuation system as a historic achievement, stating that it ends decades of dependence on reference pricing. He added that the reform would also eliminate the pressure on traders to use fake invoices and improve overall compliance.

Looking ahead, Khanal said the government aims to develop customs administration as a backbone of a production- and export-oriented economy, strengthening Nepal’s integration into global trade.

Positive Response from Private Sector

Director General of the Department of Customs, Shyam Prasad Bhandari, said the expansion of the new system would not only facilitate trade but also improve the accuracy and credibility of revenue collection. He emphasized that increased use of technology would make customs administration more professional and scientifically grounded.

The private sector has largely welcomed the reform. Representatives from Federation of Nepalese Chambers of Commerce and Industry, Nepal Chamber of Commerce, and Confederation of Nepalese Industries praised the system for enhancing transparency and reducing uncertainty in trade.

However, private-sector stakeholders also urged the government to review certain penalty and fine provisions in the Customs Act, calling them impractical. They further recommended stronger policies to curb smuggling and provide greater protection and incentives for domestic industries.

With the nationwide adoption of the database-based valuation system, Nepal has taken a significant step toward modernizing its customs administration, aligning it more closely with international standards and strengthening trust between the state and the trading community.