The government has also substantially reduced import tariff for equipment used in research and development by pharmaceutical companies, in a bid to support capacity building by domestic producers of medicines. [break]
The duties were slashed recently through a cabinet decision and the new rates have already come into effect. “With the cut in duty, we expect the prices of edible oil and vegetable ghee to come down,” a source told myrepublica.com.
Going by the new rates, manufacturers can now import soybean, groundnut and sunflower seed, which are raw materials for widely consumed edible oils in the country, against an Agricultural Reform Fee of 1.6 percent, a mere 20 percent of what they were otherwise required to pay.
Previously, the government was imposing 8 percent Agricultural Reform Fee on such imports.
Apart from seeds, the government has also halved import duty on raw soybean oil and raw sunflower oil and also raw palm oil used in manufacturing vegetable ghee, to 2.5 percent from 5 percent.
On top of the tax cut, manufacturers of mustard oil, other oils and vegetable ghee will enjoy 50 percent VAT refund against their sales. “However, such a facility has not been pledged to industries that merely package the finished products (imported oil and vegetable ghee),” said the source.
Likewise, import duty on oil cake and solid residue extracted from soybean oil, groundnut oil, sunflower seed and colza seed used as raw materials by various industries has been slashed to half from Rs 1 to 50 paisa per kg.
To support research and development in the pharmaceutical industry, the government has reduced import duty on electro-cardiographs and related apparatus, syringes, and instruments used in dental sciences and for physical and chemical analysis, to one percent. Previously, it had imposed 5 percent duty on such equipment.
“Apart from duty concessions, pharmaceutical manufacturers will also enjoy VAT exemption on the import of those equipment,” said the source.
The government has likewise slashed income tax for small businesses in metropolitan and submetropolitan cities to Rs 3,500 from Rs 5,000 per annum. For the municipalities, it has been lowered to Rs 2,000 and to Rs 1,500 for other places.
The cabinet has also lowered license fee for the sale of liquor outside Kathmandu Valley by 25 percent.
Under existing law, the government can lower duty and taxes on its own. But it needs permission from parliament to raise them. Because of this provision the government is mulling over raising through ordinance the import duty on gold and some other products, which have been fueling the trade deficit.
Related story
Tax reform committee proposes increasing Social Security Tax to...
