Area Specific Incentives

Special Economic Zone (SEZ) is envisioned by the government to create a specific commercial area for promotion of foreign trade. The regulation within this commercial area is more liberal which intends to avoid restrictions placed within the domestic legislation of Nepal. Industries established within the SEZ have special privileges which are placed to support their industrial productions. The focus of the government is to maintain trade balance through export promotion and import substitution.

Check how to establish Industry under SEZ

Infrastructure available inside SEZ

Other Incentives (As per SEZ ACT 2073)

• Clause 30: Deemed export provision: For goods and services produced and sold inside the SEZ
• Clause 32: Opening of bank account and transaction in convertible currency
• Clause 48: Ownership transfer via Sale of Shares: Need approval from SEZA for sale of shares above 50%
• Clause 51: Dispute settlement Mechanism
  1. Intermediary role by Ministry of Industry
  2. As per UNCITRAL Arbitration Rule: Location: Kathmandu and as per the law of Nepal

Fiscal Incentives

Income Tax Exemption:

• General: 100% tax exemption for first 5 years after Commercial Operations Date (COD) and thereafter 50% tax exemption for the remaining period of contract.
• Hilly or Mountain District: 100% tax exemption for first 10 years after Commercial Operations Date (COD) and thereafter 50% tax exemption for the remaining period of contract.

Dividend:

• 100% exemption for first 5 years after Commercial Operations Date (COD) 50% exemption for the subsequent 3 years.
• Rebate on Lease Rate:
• Rebate on rent and or lease of house, land as 50%, 40% & 25% in 1st, 2nd & 3rd years respectively.

Value Added Tax Exemption:

• 0% VAT on export of products and services that are produced by industry inside SEZ
• 0% VAT on raw material and products sold to industry in SEZ.

Customs Duty:

• 1% customs duty on import of 1 vehicle to be used for transport of employees and for vehicles to transport good and services.
• Import of plant and machinery, tools & spare parts, packaging, raw materials and auxiliary parts, on bank guarantee.
• Duty refund on sells of goods/ raw materials to industry inside SEZ.

Industry Established in Industrial areas/industrial Village

50% Concession for 3 years from the date of commencement and 25% Concession for next 5 years.

Industry Established in Remote, Less Developed and under developed Area

(Concession for 10 Years commencing from the year of commercial production.)

Industry operating a Zoological/Geological or Biotech Park or industry established in Technology Park /Information Technology–Park

Industry established in technology/information technology parks are related to software development, data processing, cyber cafe, digital mapping 50% concession on applicable tax rate.