Government of Nepal Ministry of Industry, Commerce and Supplies Trade and Export Promotion Centre
Nepal government provides cash subsidies ranging from 3-5 percent of the value of export transactions for a select group of products. According to the scheme, exporters can avail a certain amount of their total export depending on the products exported and value addition.
The products that are eligible for 5 percent cashback are: processed tea; processed coffee; handicraft and woodcraft items; processed leather and its products; processed herbs and essential oils; processed semi-precious stones and jewelries with those stones; allo products; processed water/mineral water; processed turmeric; vegetables; processed honey; processed black cardamom; and processed ginger and its products. All these products need to prove that domestic value addition is more than 30 percent to avail of the facility.
The products that are eligible for 3 percent cashback are; domestically produces textiles; readymade garment; carpet and wool products; items made from ‘Chyangra’ Pashmina; jute and jute products; gold and silver jewelry; semi0processed leather; medicines; felt products; yarns of polyester, viscose, acrylic and cotton; and items made from bronze. These items can avail up to 5 percent cash incentive if the value addition of their products is 50 percent. Similarly, if the value addition of these products is higher than 40 percent and they are exported under a collective trademark then such products can avail 4 percent cash back.
The exporters need to get a value addition certificate issued by the Department of Commerce, Supplies and Consumer Protection for the exportable products at the beginning of each fiscal year. The value addition rate for an item is determined based on export price (free on board) and the value of foreign-originated material used.
The exporters can contact their banks used for export procedures to receive the cash subsidy. The documents required are, EXIM code; copies of PAN and VAT Certificates; copies of the commercial invoice and Single Administrative Document submitted to customs; advance payment certificate or bank state to prove exporters had received the payments from foreign buyers; and tax clearance certificate.
For detailed information Click here Further ammendment: Click here.
Further ammendment: Click here.
Nepal government provides refund of taxes and duties paid during the import of raw materials and auxiliary raw materials (such as packing materials not produced in Nepal) provided the products thus manufactured are exported. The facility can be ontained by submitting application to the customs office concerned in specified form within 12 months of the import for release or refund of the deposit along with required certificates, such as
For more information: Refer to Customs Tariff 2018/2019
The Generalised System of Preference provides for preferential duty treatment –in the form of reduced rate of import duty or duty-free-quota-free form, of imported goods originating in beneficiary countries. The principle was agreed at the United Nations Conference on Trade and Development (UNCTAD), and is a facility granted to developing countries ("beneficiary countries") by certain developed countries ("donor countries"). Nepal, being a least developed country, is provided with GSP facility offered by European Union (includes 28 member countries), the USA, Australia, Canada, Japan, Turkey and South Korea provided Nepal fulfils certain criteria related to Certificate of Origin.
Nepal can avail to full duty-free-quota-free access for all products except arms and ammunitions provision, also known as Everything But Arms, offered to all the Least Developed Countries. Nepal has duty-free-quota-free access for over 7000 tariff lines provided Nepali exporters can fulfil certain criteria listed below:
In order to apply economic nationality to the commodities being imported to the EU member states, the EU ensures that the products satisfy its Rules of Origin. In order to be eligible for the EBA GSP facility, Nepali products need to prove they have originated in Nepal. The basic criteria are:
As per condition (1), products are wholly obtained in Nepal if only Nepal has been involved in their production. However, not all raw materials and production process can be sourced within Nepal. Thus, condition (2) makes possible for products that are not wholly obtained within Nepal yet be eligible for originating status. The information regarding conditions for qualifying under this option can be obtained from here. At the same time, the EU recognises production process and raw material sourcing undertaken within SAARC countries as satisfying the ROO criteria based on regional cumulation. Hence, an exporter sourcing their inputs from SAARC member states can qualify for the GSP.
The United States of America provides Nepal special treatment in regard to duty free access through its GSP facility for the LDCs and with Nepal Trade Preference Program. Approximately 5,000 different products from Nepal are eligible to enter the United States dutyâfree under the GSP program.
Likewise, under the Nepal Trade Preference Program, Nepali products covered by 77 Harmonised Tariff Schedule, such as certain kinds of carpets and rugs, shawls, scarves, luggage articles, handbags, pocket goods (such as wallets), travel bags and other containers, headbands, blankets, hats, and gloves are granted duty-free entry into the US till December 31, 2025.
Japan grants preferential tariff treatment to Nepal under its GSP scheme for the LDCs. However, the ROO must be fulfilled to enjoy the privilege of zero duty and quota free treatment.
Criteria: In order for the goods exported from a preference-receiving country to be eligible for preferential tariff treatment, they must be recognized as originating in that country under the Japanese GSP scheme’s origin criteria and transported to Japan in accordance with its transportation rules.
Japan’s donor country content rule permits flexibility in origin criteria by providing preferences to countries that import materials from Japan and use them in the production of goods exported back to Japan.
(1) For goods produced in a preference-receiving country wholly from materials imported from Japan, or those produced in a preference- receiving country entirely from materials wholly obtained in the preference-receiving country and materials imported from Japan, such goods will be regarded as being wholly obtained in that country.
(2) Any goods exported from Japan which have been used as raw materials or components for the production of any goods produced other than those goods as provided for in the above-mentioned paragraph (1) shall be regarded as wholly obtained in that country.
Nepal is eligible to Australian System of Tariff Preferences (ASTP) based on the general principle of a five percentage point margin of preference, where the General Tariff (GT) rate is 5 per cent or higher, for goods from beneficiary countries. Where the GT rate is less than 5 per cent, the ASTP rate is zero.
The preference margin does not apply to the excise duty component of import duties applying to certain potable spirits, tobacco and petroleum products because Australian-made products of the same kind are also subject to excise duties.
RULES OF ORIGIN
To be eligible for preference under the ASTP, goods must comply with two rules of origin requirements:
(a) The final process of manufacture must have been carried out in the country claiming preference: and
(b) At least half of the total factory or works cost of the goods must consist of the value of labour and/or materials of one or more developing countries (for the purposes of this requirement any Australian content may be counted as if it were developing country content).
Treatment to handicraft items
The Handicraft By-Law (9340047) allows duty-free entry for all goods which conform with it.
(a) Textile fabric printed or dyed according to:
(b) Goods made by hand from the fabrics specified in subparagraph (a) above, being goods the Collector is satisfied are made by one or more of the following processes, and by no other process:
(c) Garments printed or dyed by one of the methods specified in subparagraph (a) above, after making up, being goods the Collector is satisfied are made by one or more of the following processes, and by no other process:
The Swiss GSP for Nepal covers all industrial goods and agricultural products and provides preferential treatment in
the form of duty-free quota-free access. The Swiss GSP is designed to help increase and diversify exports of developing countries, however, be remembered that the Swiss market is exacting and that quality is often more important than price.
Rules of Origin:
The Swiss GSP, which includes rules of origin the products must comply with to qualify for GSP treatment, is identical to those of the EU for industrial products (HS chapter 25 to 97). With respect to agricultural products (HS chapters 1 to 24), the rules of origin are specific to the Swiss GSP and apply the method of tariff heading change (HS 4-digit level) with the exception of four products, i.e. HS 1108 (starches), 1901 (malt extract), 1904 (cereal products), and 1905 (bread, pastry, cakes).
According to Swiss rule, yhe following are considered as wholly obtained in a beneficiary country:
(a) Mineral products extracted from its soil or from its seabed;
(b) Vegetable products harvested there;
(c) Live animals born and raised there;
(d) Products obtained from live animals there;
(e) Products from slaughtered animals born and raised there;
(f) Products obtained by hunting or fishing conducted there;
(g) Products of aquaculture where the fish, crustaceans and molluscs are born and raised there;
(h) Products of sea fishing and other products taken from the sea by vessels flying the flag of the beneficiary country or Switzerland;
(i) Products made on board its factory ships flying the flag of the beneficiary country or Switzerland, exclusively from products referred to in point (h);
(j) Used articles collected there fit only for the recovery of raw materials;
(k) Waste and scrap resulting from manufacturing operations conducted there;
(l) Products extracted from the seabed or below the seabed, which is situated outside any territorial sea but where it has exclusive exploitation rights;
(m) Goods produced there exclusively from products specified in points (a) to (l).
General tolerance rule
Under the general tolerance rule, non-originating materials which, according to the conditions set out in the sufficient working or processing list (annex 4), are not to be used in the manufacture of a given product may nevertheless be used, provided that their total value does not exceed 15 per cent of the ex-works price of the products. The general tolerance rule does not apply to textiles and clothing products (HS chapters 50 to 63).
Temporary derogations for LDCs
A temporary derogation from the rules of origin may be granted for LDCs, when so justified due to the reasons such as development of existing industries or creation of new industries. For this purpose, the LDC concerned shall submit to the Swiss Government a request for derogation together with the fullest possible information justifying the request.
Documentary evidence of origin
The importers’ claim for GSP treatment has to be supported by documentary evidence of origin. Products originating in a beneficiary country shall benefit from the GSP benefits on submission of:
(a) A certificate of origin Form A; or
(b) A replacement certificate of origin Form A issued by the Customs authorities of an EU State, Norway or Turkey (concerning Turkey please refer to endnote 1) based on a Form A, endorsed by a competent authority in the country of origin; or
(c) An invoice declaration
Nepal has duty- and quota-free access to Turkish markets for all industrial products falling under chapters 25-97 (except chapter 93). Duties are eliminated for the least developed countries on the basis of the EC’s Everything But Arms (EBA)
All product originating in LDCs countries are provided with duty-free and quota-free treatment
Rules of origin
The rules of origin of the Turkey GSP scheme are aligned to those of the EU.
Canada provides duty-free access to all products from LDCs with the exception of over-quota tariff items for dairy, poultry and egg products. Nepal had been granted favourable treatment than product coverage and the rules of origin of the Canadian GSP scheme.
Rules of origin for LDCT textiles and clothing
The textile and clothing products that are included in the schedule in the regulations are eligible for LDCT benefits, and the special rules of origin discussed below apply to these products.
Yarns and sewing threads acquire originating status if they are spun or extruded in a least developed country and do not undergo further processing outside an LDC.
Fabrics are deemed to be originating if they are produced in an LDC with yarns originating in an LDC, a GPT beneficiary country, or Canada. Two conditions, however, need to be met: (a) the yarns do not undergo further processing outside an LDC, a GPT beneficiary country, or Canada; and (b) the fabrics do not undergo further processing outside an LDC.
Apparel products are deemed originating in an LDC if they are assembled in an LDC from fabric cut in that country or in Canada, or from parts knit to shape, provided the fabric, or the parts knit to shape, are produced in any of the following countries:
(a) Any LDC or Canada from yarns originating in an LDC, a GPT beneficiary country or Canada, provided the yarns or fabric do not undergo further processing outside an LDC or Canada; or (b) A GPT beneficiary country from yarns originating in an LDC, a GPT beneficiary country or Canada, provided;
(i) The yarns and fabric do not undergo further processing outside an LDC, a GPT beneficiary country or Canada;
(ii) the value of any materials, including packing, that are used in the manufacture of the goods and that originate outside the LDC in which the goods are assembled is no more than 75 per cent of the ex-factory price of the goods as packed for shipment to Canada.
Made-up textile articles are deemed to be originating if they are cut, or knit to shape, and assembled in an LDC from fabric produced in any LDC or Canada from yarns originating in an LDC, a GPT beneficiary country or Canada. The yarns and fabric used cannot undergo further processing outside an LDC or Canada.
Rules of Origin
Wholly obtained goods
The following goods shall be deemed to be a bona fide product of a beneficiary country and to have originated in the beneficiary country:
(a) Mineral products extracted from the soil or seabed of the country;
(b) Vegetable products harvested in the country;
(c) Live animals born and raised in the country;
(d) Products obtained in the country from live animals;
(e) Products obtained by hunting or fishing in the country;
(f) Products of sea fishing and other marine products taken from the sea by vessels of the country;
(g) Products made on board factory ships of the country exclusively from products referred to in paragraph (f);
(h) Waste and scrap resulting from manufacturing operations of the country;
(i) Used articles of the country imported into Canada for use only for the recovery of raw materials;
(j) Goods produced in the country exclusively from the products referred to in paragraphs (a) to (h)
Goods with import content
Products manufactured in a beneficiary country are deemed to be originating if the value of the import content is not more than 40 per cent for GPT and not more than 60 per cent for LDCT, of the ex-factory price of the goods as packed for shipment to Canada. In other words, originating contents need to be equal or greater than 60 per cent for GPT and equal or greater than 40 per cent for LDCT, in order to benefit from GPT and LDCT market access. The value of import content is defined as their customs value at the time of importation into the preference-receiving country or, in the case of inputs of undetermined origin, the earliest ascertainable price paid for them in that country. The ex-factory price is the total value of: (a) materials, (b) parts, (c) factory overhead, (d) labour, (e) any other reasonable cost incurred during the normal manufacturing process (e.g. duties and taxes paid on materials imported into a beneficiary country and not refunded when the goods were exported) and (f) a reasonable profit. Any costs incurred subsequent to the goods leaving the factory, such as freight, loading and temporary storage, are not included in the ex-factory price calculation.
Global cumulation and donor country content
All GPT beneficiary countries are regarded as one single area. Therefore, to calculate GPT originating content, all value-added and manufacturing processes performed in the GPT area may be cumulated as the originating content. Also, any Canadian originating content can be regarded as GPT content. Any parts, materials or inputs used in the production of the goods that have entered the commerce of any country other than a GPT beneficiary country or Canada lose their GPT originating status.
Likewise, all LDCT beneficiary countries are regarded as one single area. Therefore, to calculate LDCT originating content, all value-added and manufacturing processes performed in the area may be cumulated as LDCT content. Any Canadian originating content can be regarded as LDCT content. Also, up to 20 per cent of the ex-factory price of beneficiary country content other than an LDC can be cumulated as LDCT originating content. Furthermore, packing required for the transportation of the goods concerned can be counted as originating content. Packing in which the goods are ordinarily sold for consumption in the LDC concerned is excluded. It should be noted that any parts, materials or inputs used in the production of the goods that have entered the commerce of any country other than an LDCT beneficiary country or Canada lose their LDCT status.
Unit of qualification
For the purpose of determining the origin of goods, each article in a shipment shall be considered separately, except where a tariff item specifies that a group, set or assembly shall be considered to be one article. Furthermore, tools, parts and accessories imported with an article that constitute the standard equipment customarily included in the sale of articles of that kind, and the price of which is included in that of the article and for which no separate charge is made, shall be considered as forming a whole with the article. An unassembled article that is imported in more than one shipment because it is not feasible for transport, or production reasons to import it in one shipment shall be considered to be one article.
The goods for which preferential treatment is claimed must be shipped directly from the preference-receiving country of origin to a Canadian consignee in Canada.
Goods imported into Canada from a beneficiary country but passing in transit through the territory of an intermediate country will lose their GPT or LDCT eligibility unless the following conditions are met:
(a) They remain under customs transit control in the intermediate country;
(b) They do not undergo any operations in the intermediate country other than unloading, reloading, splitting up of loads or operations required to keep the goods in good condition;
(c) They do not enter into the trade or consumption in the intermediate country;
(d) They do not remain in temporary storage in the intermediate country for a period exceeding six months.
Documentary evidence on proof of origin
The goods for which GPT or LDCT is claimed shall be invoiced separately from other goods, and they must be accompanied by a GSP Certificate of Origin Form A or an Exporter’s Statement of Origin as documentary evidence on proof of origin. To claim LDCT status for textiles and clothing (HS Chapters 50–63), however, a different form (Form B255 Textiles and Apparel Goods Originating in a Least Developed Country) must be submitted. Canada does not require the GSP Certificate of Origin Form A to be stamped and signed by an authority designated by the beneficiary country. Therefore, Certificate of Origin Form A does not have to be an original and field No. 11 in the certificate may be left blank. Certificate of Origin Form A or the Exporter’s Statement of Origin must be signed by the exporter in the beneficiary country from which the goods were consigned to Canada. It must contain a full description of the goods and the marks and numbers of the package, and must be crossreferenced to the customs invoice.
Certain goods of the six product categories listed below must be marked with the country of origin in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (Non-NAFTA Countries)
Regulations. These categories include the following:
Canada grants duty-free entry for handicraft products classified under Tariff Item No. 9987.00.00 of the Canadian Customs Tariff. Detailed information on duty-free handicraft products is set out in the Customs Tariff, Tariff item No. 9987.00.00 of Schedule. This treatment is granted provided that the products concerned meet the following conditions:
(a) They qualify for GPT treatment;
(b) They are listed in the schedule of handicraft goods;
(c) They meet the definition laid down for that purpose;
(d) They are covered by special documentary evidence.
Handicraft goods are defined as follows:
(a) Originate in a country entitled to the benefits of the GPT;
(b) Bear shapes or decorations that are traditionally used by indigenous people or represent any national, territorial or religious symbols of the geographical region where produced;
(c) Acquired their essential characteristics by the handiwork of individual craftsmen using tools held by hand or tools not powered by machines other than those powered by hand or foot;
(d) Are non-utilitarian and not copies or imitations of handicraft goods of any country other than the country in which they originate, and are not produced in large quantities by sophisticated tools or by moulding.
The following are the definitions of the terms used to characterize handicraft goods:
(a) traditional characteristics – any shape or decoration that has been used widely or habitually by the indigenous people of the geographical region where produced, or that represents any accepted national, territorial, or religious symbol of the country of manufacture, such as, the maple leaf or beaver in Canada’s case;
(b) artistic characteristics – any shape or decoration developed from a traditional shape or design, but carried out in a contemporary idiom;
(c) geographical region – the country of manufacture being a country entitled to the benefits of the General Preferential Tariff, or a specific region of that country;
(d) non-utilitarian – goods that may have a function or a purpose but are obtained or valued for their artistic, religious, or cultural features;
(e) traditional manual skills – skills handed down from generation to generation, such as: appliqué work, knitting, beating, knotting, branding, moulding, carving, needlework, chasing, netting, crocheting, painting, cutting, plaiting, drawing, printing, dyeing, punching, embossing, quilting, embroidering rubbing, enamelling, scraping or scratching, engraving, studding, etching, tatting, filigreeing, tooling, hammering twisting, inlaying weaving or joining.
Documentary evidence of handicraft goods
A claim for duty-free entry of handicraft products must be supported by a special Certificate of Handicraft Goods.
The Certificate of Handicraft Goods does not exist as an already printed form, and it has to be produced in duplicate in the form set out below and has to contain the information required therein. Handicraft goods to be declared must be classified as Tariff item No. 9987.00.00 in the form.
In addition to the Certificate of Handicraft Goods, it would be useful for importers to have on hand a GSP Certificate of Origin Form A or an Exporter’s Statement of Origin required for GPT qualification; the products that do not qualify for entry as handicraft products may be eligible for entry at GPT rates of duty. It is therefore recommended that exporters of handicraft articles complete both a special Certificate of Handicraft Goods and GSP Certificate of Origin Form A or Exporter’s Statement of Origin.
China provides zero-tariff treatment to about 8000 goods originating in Nepal that are exported to China. These goods make up to 95 per cent of the total export of Nepal to China. To avail to Chinese zero-tariff facility, goods need to fulfil certain rules of origin conditions. Click here for the list.
Goods wholly obtained or produced entirely in Nepal shall be regarded as originating in Nepal. Such as,
(a) live animals born and raised in Nepal;
(b) goods obtained in the beneficiary country from the animals specified in paragraph (a) above;
(c) plants and plant products harvested, picked or collected in Nepal;
(d) goods obtained by hunting or fishing in Nepal;
(e) fish, shellfish and other marine life taken outside the territorial waters by vessels registered or recorded in Nepal and entitled to fly the flag of Nepal ;
(f) goods obtained from the processing of goods listed in paragraph (e) above on board a factory ship registered or recorded in Nepal and entitled to fly the flag of Nepal;
(g) minerals and other naturally occurring substances extracted in Nepal or goods, exclusive of fish, shellfish and other marine life, taken or extracted from the waters, seabed or subsoil beneath the seabed outside the territorial waters of Nepal, provided that the beneficiary country has the right to exploit such waters, seabed or subsoil beneath the seabed.
(h) used goods collected in Nepal which are produced from consumption in that country and fit only for the recovery of raw materials;
(i) waste and scrap which are produced from processing or manufacturing operations in Nepal and fit only for the recovery of raw materials;
(j) goods obtained through processing
Goods not wholly obtained or produced entirely in Nepal shall be regarded as originating provided that the last substantial transformation has been performed in Nepal. The criterion for “substantial transformation” under this rule shall be “ad valorem percentage” (the ad valorem percentage shall be no less than 40%), or “Change in Tariff Classification” (four-digit tariff heading changes under the “Harmonized System”). Whereas the goods listed in the “Product Specific Rules” (PSR) are not subject to the said
Further, simple diluting, mixing, packaging, bottling, drying, assembling, sorting or decorating shall not be regarded as substantial transformation.
Goods claimed to be eligible for the Duty-free Treatment shall comply with the following direct consignment rule:
(a) goods are transported directly from Nepal to ports of entry in China;
(b) For goods which are transported to China through a third country or region, for geographical reasons or by consideration related exclusively to transportation, with or without transshipment or temporary storage of up to 3 months in such country or region:
(i) the goods do not enter into trade or consumption there; and
(ii) the goods do not undergo any operation there other than unloading and reloading or any other operation required to keep them in good condition.
(c) the goods which are put in a temporary storage in a third country or region shall be subject to customs control in such country or region.
The Government of Republic of Korea provides preferential duty access to Nepali goods. The preferential tariff rate is zero for all products without quotas (see annex). In the case of products eligible for minimum market access under the Presidential Decree on Tariff Concessions Granted Pursuant to the World Trade Organization Agreement and Other Agreements, preferential tariffs apply only to the in-quota amount.1
The total number of items that preferential tariffs are applied to is 4,802 out of 5,052 items on an HS 6-digit basis, which amounts to 95 per cent. For a comprehensive list of the products covered, see annex 2.
(1) Products eligible for preferential tariffs shall be wholly produced or obtained in the exporting country. The following products shall be considered as wholly produced or obtained in the exporting country:
(a) Raw materials or mineral products extracted from the soil, waters or seabed of the exporting country;
(b) Agricultural and forestry products harvested in the exporting country;
(c) Animals born and raised in the exporting country and products obtained from such animals;
(d) Products obtained by hunting or fishing conducted in the exporting country;
(e) Marine products caught on the high seas by vessels of the exporting country and products manufactured or processed, using such products as a material. In this case, “vessels of the exporting country” refers to vessels registered in the exporting country, at least 60 per cent of the equity of which is owned by a citizen(s) or the Government of the exporting country, or corporation or association legitimately registered in the exporting country;
(f) Used articles collected in the exporting country, fit only for the recovery of raw materials;
(g) Waste and scrap resulting from manufacturing operations conducted in the exporting country;
(h) Goods produced in the exporting country exclusively from the products referred to in subparagraphs (a) to (g) above.
(2) Products which are finally manufactured or processed in the exporting country by using products, as input, which originate from countries other than the exporting country, or the origin of which is not determined, shall be eligible for preferential tariffs if the value of the inputs does not exceed 60 per cent of the FOB price of the final products. In this case, if the final products include products originating from the Republic of Korea as input, the value of these products shall be excluded from the calculation of the total value of inputs.
(3) The value of inputs referred to in paragraph (2) above shall be calculated in the following order:
(a) The value including freight and insurance cost at the time of importation to the exporting country (cost, insurance and freight (CIF) price);
(b) The ascertainable price paid first for the inputs in the exporting country.
(4) Those who wish to receive preferential tariffs shall submit a certificate of origin (see annex 3) issued by the Government of the exporting country or an authority designated by the Government of the exporting country