Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged the government to reconsider the proposed 2% luxury tax on gold and the 13% Value Added Tax (VAT) on diamonds and other precious stones introduced in the budget for the fiscal year 2082/83 (2025/26). The FNCCI labeled these tax provisions as impractical, citing their potential to adversely affect businesses, employment, and consumers.
A discussion on this issue was held on Sunday at the FNCCI Secretariat, involving FNCCI President Chandra Prasad Dhakal and representatives from the Nepal Gold, Silver, Gem, and Jewellery Federation, the Nepal Gem and Jewellery Association, and the Nepal Gold and Silver Traders’ Association. The FNCCI had previously expressed concerns about these tax measures, highlighting their potential negative impact on businesses and job opportunities.
Representatives from the three organizations warned that the proposed taxes could severely damage the jewellery industry. They formally requested the FNCCI to take necessary steps to address the issue. FNCCI President Dhakal acknowledged the validity of the concerns raised, emphasizing their connection to both consumers and employment. “The proposed tax policy will have a serious impact on businesses and the general public. The FNCCI will take necessary initiatives to urge the government to review the VAT and luxury tax provisions,” he stated.
Kisan Sunar, President of the Nepal Gold, Silver, Gem, and Jewellery Federation, Suman Man Tamrakar, President of the Nepal Gem and Jewellery Association, and Diyesh Ratna Shakya, Acting President of the Nepal Gold and Silver Traders’ Association, highlighted that the proposed taxes would significantly harm the gold, silver, diamond, gemstone, and handicraft industries.
They warned that the 2% luxury tax on gold could introduce a multi-taxation system (round-tripping), forcing consumers to pay up to 6% additional costs. This could lead to a market slowdown, disrupt the buyback system, and erode consumer confidence.
Additionally, the 13% VAT on diamonds and precious stones is projected to increase the price of gold jewellery by up to 19%. The federations cautioned that this could encourage illegal imports, impose a heavy financial burden on consumers, and jeopardize the livelihoods of over 25,000 businesses and more than 1.5 million artisans and workers.
The FNCCI and associated organizations emphasized that these measures are critical to sustaining the jewellery industry, protecting employment, and ensuring affordability for consumers. They urged the government to engage in constructive dialogue to address these concerns and safeguard the sector’s economic contributions.
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