Why Nepal has the highest vehicle import tax in the world
Look into buying a car in Nepal and you will soon find that prices are astronomically high. Trucks, cars, motorcycles, and scooters, both new and used, are subject to 288% import tax. Yes, you read that right: two-hundred and eighty-eight percent. Although that seems extreme to westerners (America has an import tax of 2.5% and the UK 10%) for South Asia it is relatively common to have such a high import tax.
India, for example, has an import tax as large as 160%. However, there are other vehicle options. Manufacturers such as Royal Enfield, Tata, Mahindra & Mahindra Ltd, and many more are made in India, meaning buyers don’t have to suffer the tax that comes with buying a foreign vehicle. The question remains, why would Nepal have an import tax as tremendous as 288% without having any local car or motorcycle manufacturers in the country itself?
The answer lies partly in the fact that Nepal itself is a completely landlocked country. Sandwiched by its superpower neighbors India and China, Nepal is fully dependent on imported goods. Although there are many resources, such as textiles and produce, that are exported regularly, other goods like vehicles and appliances need to be brought in from neghboring countries. If the import tax were to be lowered, more Nepali people would buy vehicles, meaning more petrol would be needed, as well as more parts and oil. This would mean that the number of goods needed to be imported would grow to an enormous number.
Nepal is forced to raise its taxes to control how many cars are on it’s already crowded streets. This is due to having no local vehicle or motorcycle manufacturers, and potentially by sheer necessity.
Despite all the possible explanations mentioned above, what cannot be denied is that this import tax is one of the main ways the Nepal government makes revenue. So although cheaper vehicles could potentially benefit lower-income Nepali people, who can only afford cars with minimal safety ratings, the tax doesn’t look like it will be lowered anytime soon.
Report by: Benjamin Loecken