Understanding Nepal's EV Tax: Its Impact and Purpose
June 16, 2024
Understanding Nepal's EV Tax: Its Impact and Purpose
June 16, 2024
Buying a new EV in Nepal means understanding your EV taxes. Continue with the blog to learn about the latest EV tax in Nepal, the changes in the recent 4 years, and its effects on full EV adoption.
Taxes are levied on the items when they are bought and sold. They are the major source of revenue for the country. Since most of the vehicles on the roads in Nepal are imports from other countries, the government of Nepal (GoN) applies several taxes, such as customs duty, excise duty, and value-added tax (VAT). Every electric vehicle is subjected to these EV taxes in Nepal. Although the EV tax in Nepal had a comparative rise in the last few years, the EV tax for fiscal year 2082/2083 remains unchanged compared to the last fiscal year of 2081/2082.
Electric vehicles (EVs) face various taxes implemented to support the country, develop infrastructure, and promote certain goals. The following are the EV taxes in Nepal:
Value-added tax, or simply VAT, is a consumption-based tax. VATs are added to each stage of the production or distribution of items. These taxes apply to EVs and cars, along with all other goods and services, whether imported or locally produced. Some goods are exempt from VAT, while for the rest, including EV tax, Nepal has a single rate of 13%.
EV owners must pay a one-time registration fee when registering their EVs with the Department of Transport Management. The cost of registration depends on the capacity and type of the EV.
GoN imposes customs duty on every good imported into the country. It is designed to protect domestic industries or reduce the import of those items. Custom duty on EVs also depends on the type and capacity of the EV. In Nepal's context the customs duty on EVs has seen a rise in the last 4 years for all types and capacities of EVs.
Excise duties are the form of taxes levied on specific goods. Only a handful of goods are subject to excise duty as a tax, and the EV tax in Nepal is one of them. Sellers wrap excise duty into the price of the EV, so the end consumer or EV owner might not even know about it.
Unlike the above taxes, which are charged only once during the purchase, the road development fund fee is incurred annually. The tax goes by many names: road development fund, road tax, vehicle tax, car tax, or motorcycle tax. The Government of Nepal collects this tax to develop the road infrastructure and maintain & improve current roads in Nepal.
Many changes have been made regarding the import and purchase of EVs in Nepal. The decisions of the Government of Nepal and the policies follow the commitment to zero net carbon emissions and COVID-19.
The following table reflects the changes in custom duty and excise duty for EVs in Nepal in the last 4 years, from fiscal year 2079 to 2082 B.S.
| 2079/2080 | 2080/2081 | 2081/2082 | 2082/2083 | |||||
|---|---|---|---|---|---|---|---|---|
| EV Capacity | Custom Duty | Excise Duty | Custom Duty | Excise Duty | Custom Duty | Excise Duty | Custom Duty | Excise Duty |
| 50 KW | 10% | 0% | 10% | 0% | 15% | 5% | 15% | 5% |
| 50-100 KW | 10% | 0% | 15% | 10% | 20% | 15% | 20% | 15% |
| 101-200 KW | 30% | 30% | 20% | 20% | 30% | 20% | 30% | 20% |
| 201-300 KW | 45% | 45% | 40% | 45% | 60% | 35% | 60% | 35% |
| 300KW above | 60% | 60% | 60% | 60% | 80% | 50% | 80% | 50% |
The tax structure for EVs in Nepal remains unchanged for the fiscal year 2082/2083. The customs duty and excise duty for all motor capacities in Nepal remain the same as the previous fiscal year. The tax structure of EVs for 2082/2083 is as follows: The cars with motor capacity up to 50 KW have 15% customs and 0% excise duty. From 51 KW to 100 KW motor capacity, the customs duty is 20% and the excise duty is 10%. For vehicles with a motor capacity of 101 to 200 KW, the customs duty is 30% and the excise duty is 30%. 201-300 KW motor capacity has a customs duty of 60% and an excise duty of 45%. The electric cars with motor capacity above 300 KW have a custom duty of 80% and an excise duty of 50%.
Note: The Road Development Fund (RDF) and 13% VAT remain the same.
Recent rises in electric vehicles have caused an uproar among many people. Some commenters believe such sudden tax increments will reduce EV sales and hinder the adoption of EVs in Nepal. Others, however, see the positive side of it. The optimistic crowd believes the revenue generated from the tax will be used to construct new charging stations and make long travel in EVs possible, further promoting the transition to electric.
Nepal has actively promoted electric vehicles in the last few years. From 2022 to date, GoN, in partnership with various companies, has constructed over 50 EV stations, totaling almost 270 EV stations across Nepal.
Similar initiatives can be seen in government policies regarding taxes on electric vehicles. EV owners enjoy various tax benefits compared to ICE (internal combustion engine) vehicles.
Similarly to gasoline-fueled vehicles, many EV taxes in Nepal are levied on electric cars and bikes. Every EV tax fulfills some specific purpose. Customs duties help to control the excessive import of automobiles, while road taxes support road infrastructure development. Not all EV owners pay the same amount of EV tax, though. The tax on EVs in Nepal depends on the type and capacity of the EV. Two-wheelers and less powerful EVs are subject to less tax than four-wheelers and more powerful EVs.
All said, EV owners have various tax benefits from government policies. Even with the rise in EV taxes, EV vehicles still have lower tax rates compared to ICE vehicles, giving drivers enough incentive to switch to electric.
