ARE RELIEF MATERIALS TAXED?

A Facebook post by Swarnim Wagle

The relief materials are arriving from abroad and many are wondering what is the proper procedure to clear customs and whether or not it will be taxed. Swarnim Wagle has posted the following on his Facebook page.

I checked with the Ministry of Finance (MOF), and this is the latest position, cleared by the cabinet, as of this evening.

GOVERNMENT'S STANCE ON RELIEF MATERIALS

GOVERNMENT'S STANCE ON RELIEF MATERIALS

• No organized relief materials are taxed. (Nepal signed a Model Agreement on Relief Consignments with the UN on May 31, 2007).
• For things that individuals bring as “relief” materials, you can either deposit them in a warehouse OR distribute them yourself through any not-for-profit agency, local or foreign, as follows:
• 1. Declare in a simple form what you have brought and which district you intend to distribute in. You do NOT need to pay any tax or duty, but your records will be kept
  2. Go to the district of your choice and consult/coordinate with the Head of the District Disaster Relief Committee (i.e., the CDO) on where the greatest needs are within that district.
  3. Within 30 days of your having distributed the relief materials, get a stamp that they were distributed as you intended
• Why is this necessary? The taxes the state is foregoing are not trivial: up to 20% customs duty and 13% VAT in many cases. It wants to ensure that the implicit state subsidy is targeted towards genuine relief. Do not under-estimate the scale of cheating that goes on when there is no monitoring or voluntary code of honor in place (I have been briefed on several episodes of serious abuse by the private sector.
• Nepal should not degenerate into a banana republic where “free-for-all” prevails. There are rules, and officials are, sooner or later, held accountable. A sovereign country needs to know what comes in and for what purpose.
• At a time like this, however, the goal is to facilitate the process to the full extent possible. “Trust, but verify,” as Reagan said, would be the approach here. If you need more clarity, please text or call the following numbers:

The Joint Secretary of MOF: Mr. Laxman Aryal at +977-98510-84622 or
The Director-General of Customs: Shishir Dhungana at +977-98510-97837 or
The Under Secretary: Dikar Dev Bhatta at +977-9841-49620 .
They have worked very hard to balance the need to expedite genuine relief while making sure that state coffer is not robbed in day light.