VAT rebate on cell phones only 40pc from next fiscal

Kathmandu, May 30

The government has revised value added tax (VAT) rebate provision on cell phones. The budget for the next fiscal year has reduced the VAT rebate amount on cell phones by another 10 percentage points. Thus, cell phone importers will get a rebate of only 40 per cent of the amount that they paid as VAT while importing cell phones in the next fiscal.

The government has been gradually decreasing VAT rebate amount of cell phones by 10 percentage points every year since fiscal 2014-15. The government had provisioned 50 per cent VAT rebate for cell phones in the current fiscal year.

Importers need to deposit 13 per cent of the import price as VAT at the customs points while importing phones, which is termed as VAT credit for the government. Traders can claim VAT rebate from the tax offices after the cell phones have been sold.

Along with the import of new-generation cell phones, the country’s annual import of mobiles stands at around Rs 16 billion to Rs 18 billion, according to cell phone traders. The government provisioned VAT rebate on cell phones to discourage the grey market of cell phones and promote genuine traders.

As Nepal Telecommunications Authority (NTA) has implemented mandatory ‘Type Approval’ for authorised cell phone dealers in Nepal to track the phones imported through the grey channel, the government has been gradually cutting the VAT rebate for traders. The IMEI number that is used by a GSM network can easily track the cell phones that are in use in the country and the system was implemented since mid-April this year.