Government offers tax and customs relief to businesses affected by Gen-Z protests

KATHMANDU: The Government of Nepal has announced a wide-ranging relief package for businesses and industries that suffered damages during the recent Gen-Z protest movement. Through an official notice published in the Nepal Gazette, the government outlined customs duty waivers, tax deductions, and loan repayment extensions aimed at supporting affected economic entities.

According to the notice, the relief measures have been introduced under the authority granted by Subsection (1) of Section 18 of the Financial Act, 2082. The package includes a 50% waiver on customs duties and excise taxes for the import of goods needed to restore and restart damaged infrastructure, furniture, and equipment — provided the losses are verified by an insurance surveyor.

Luxury hotels that had previously claimed customs exemptions under Schedule 4, Section 6(3)(C) of the Customs Act, 2081, will not be eligible for a second round of similar exemptions. However, if these hotels sustained new damages during the protests and such damages are verified, they may import goods for restoration with the same level of customs relief, but only once more.

In another key provision, individuals or companies that contributed to the National Reconstruction Fund during fiscal year 2082/83 will be allowed to deduct those donations from their taxable income.

For uninsured stock losses resulting from the protest, affected taxpayers can claim deductions under the Income Tax Act, 2058 and VAT credits under the Value Added Tax Act, 2052 — based on an official on-site assessment and declaration to the relevant Internal Revenue Office.

The government has also allowed the import and assembly of vehicles and parts that meet the old emission standards until Mangsir 15, 2082 (approximately early December 2025), if proforma invoices were issued before the new pollution standards came into effect.

In a move to ease financial burdens, businesses can now benefit from extended loan repayment periods. Concessional loans with a maximum 0.5% interest rate premium will be made available to revive operations. For purchasing commercial vehicles damaged in the protests, banks will offer loans with a minimum loan-to-value ratio of 80%.

To safeguard employment, a payroll protection scheme has been introduced. Businesses committing to retain their workforce will be eligible for soft loans with a premium of up to 0.5% above the base rate. These loans will also be subsidized by 2% for six months through the National Reconstruction Fund.

The government has directed key offices — including trade facilitation bodies, banks, and tax collection agencies — to remain operational during public holidays except for Dashain, to expedite relief implementation.

Finally, the government has decided to provide up to 50% of the estimated insurance claim amount as an advance payment based on preliminary damage reports. Insurance companies are expected to conduct quick surveys and settle claims swiftly. Where applicable, insurers can request up to 50% of reinsurance coverage in advance to expedite payouts to policyholders.

These measures aim to revive economic activities disrupted by the Gen-Z protests and offer a lifeline to affected businesses during their recovery process.