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Presentation on Customs Reform In Nepal

Revenue Mobilization and Development Conference Washington D.C. April 17-19, 2011

Presented By

Krishna Hari Baskota Secretary

Ministry of Finance Government of Nepal

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Trend Analysis of Revenue

Nepalese Customs: Bird's Eye View.

Why Reform in Customs ?

Customs Reform and Modernization

Recent Prominent Reforms Initiatives

Supports of Development Partners

Problems in Customs Reform

Way forwards

Content

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2.0

4.0

6.0

8.0

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12.0

14.0

16.0

As

% o

f GD

P Trend Analysis of Revenue, Tax Revenue and

Customs as % of GDP

Customs as % of GDP

Tax Revenue as % of GDP

Revenue as % of GDP

Source: Economic Survey, 2010,MOF

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0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0 A

s %

of T

ax R

even

ue

Trend Analysis of Revenue

Excise Duty as % of Tax Revenue

Income Tax as % of Tax Revenue

VAT as % of Tax Revenue

Customs as % of Tax Revenue

Source: Economic Survey, 2010, MOF

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Customs Offices In Nepal

Offices North South Total Main Customs 9 20 + Airport+PCA =22 31

Sub Customs 6 136+ Post office = 137 143

Total Customs 15 159 174

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Why Reforms in Customs ?

Global Standard/ Internationally

competitive customs administration

Values Mutual Respect Equality Integrity and

honesty Transparency Courtesy,

dedication and Excellence

Vision Economic and Social

Prosperity of the Country

Mission Promoting and

facilitating legitimate trade

Protection of society Collecting the

revenue

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CUSTOMS DEPARTMET

52%

INLAND REVENUE DEVEPARMRNT

43%

Others 5%

Share of Department in the Tax Revenue

customs duty 21.91 % Imports VAT 23.48%

Imports Excise 6.83%

Domestic VAT 12.20%

Domestic Excise 9.10%

Income Tax21.11%

As per the annual target Rs. 216.70 billion of fiscal year 2011

Customs Reform and Modernization Background

Adopted Liberal Economy after first People's Movement in 1990

Became a member of WTO in 2004

History

ASYCUDA System implemented in 1996

Customs Clearance and Accounting Module

1st Phase (2003-2006) introduced in 2003.

Cargo Clearance and Passengers Clearance Module

2nd Phase (2006-2009) in 2006 and 3rd Phase (2009-2013) in 2009.

Broker, Risk Management Module, Single Entry System and Wide Area Network(WAN)

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Tariff Rates: 5, 10,15,20,40 and 80 % Average Tariff Rate 6.5% Two third trade with India

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Customs act has been amended as per the commitment on WTO

Post Clearance Audit Office established.

Computerized Declaration (Broker Module) in Main

Customs Offices.

Manual registration has been removed and electronic automatic registration has been introduced.

No duty on exports

Tariff rates have been adjusted in line of SAFTA and BIMSTEC

Recent Prominent Reform Initiatives

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Risk Based Clearance System has been introduced in

Major Customs Offices.

Provision of Single entry system

GATT valuation provision has been adopted

Performance Based Incentives Scheme has been

implemented

Recent Prominent Reform Initiatives

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Customs Procedure re-engineering and deployment of ASYCUDA world - ADB

Improvements in Customs Automation - World Bank

Nepal Customs Modernization - South Korea

Integrated Check Post development at 4 major Customs points- India

Inland Container Depot development in Northern Region - China

Overall reform of revenue administration- IMF

Assistance /Supports of Development Partners

Problems in Customs Reform

To implement Scientific Valuation System

Open Border with India

Harassing Domestic Industries

Corruption

Inadequate Intelligence

Lack of trained and skilled Human Resource

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Way Forwards

Effective and efficient implementation of Customs

Reform and Modernization action plan

Heading towards IT based Customs

Trying to shift in web- based customs systems

Preparing to establish Independent Revenue Board

To be an international standard in all aspects

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Thank You All for Your Attention!

Welcome you all for the grand success of the Nepal Tourism Year , 2011

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