Insignificant revenue, pressure made government roll back duty on booksWhile importers welcome the move, authorities are now worried about capital flight with overvaluation of imported books.
The government’s failure to collect significant revenue along with pressure from importers and academic institutions appears to have prompted the government to roll back the 10 percent customs duty it had imposed on books.
The government’s decision to roll back the decision, as published in Nepal Gazette on November 9, has come after the government collected revenue of merely Rs59.44 million in the fiscal year 2019-20 from customs duty imposed on the books, according to the Department of Customs.
Since the duty was imposed, the government collected a total revenue of Rs67.17 million from books till mid-November this fiscal 2020-21.
“The amount collected from the duty on books is not big enough although we had not set any specific target of revenue from duty on imported books,” said Chandi Prasad Ghimire, under secretary at the Finance Ministry. “Relatively low revenue collected from the books along with the concerns raised by the academic community also encouraged the government to roll back the duty on books.”
The concern raised by Tribhuvan University regarding duty imposed on books also became crucial to prompt the government to remove this duty, according to officials at the Finance Ministry.
“Tribhuvan University wrote a letter to us expressing its concern over the duty,” said Ghimire.
Book importers have welcomed the government’s decision but have said that it will take some time before the supply of books becomes smooth.
“As book importers, we really appreciate the government’s decision to remove the 10 percent customs duty,” said Sudesh Dotel of Bookland at Lagankhel that imports books from India. “After the government decided to levy 10 percent customs duty on imported books in 2019, it dealt a huge blow to Nepal’s book market.”
Importers said that not because of duty imposed on books but the harassment on importers during the process of the valuation of books at the customs points, prompted many of them to halt the import of books which created a shortage of internationally acclaimed books that the Nepali readers were searching for.
In the last fiscal year, they imported books worth Rs537.91 million, down from Rs1.09 billion in the previous fiscal year, according to the Department of Customs. Up to mid-November this year from the start of last fiscal year, books worth Rs611.93 million were imported.
Increased scrutiny on imported books by the authorities prompted many book importers to give up importing books that had no maximum retail price printed on the book.
In January, the Department of Revenue Investigation (DRI) office at Pathlaiya stopped a Kathmandu-bound truck carrying a cargo of books belonging to 21 importers after 10 percent customs duty on them had been paid at the border, according to authorities and importers.
The DRI had seized the books citing undervaluation of the imported books.
According to importers and government officials, although Nepali book importers import foreign books that have special prices for the Indian market from India, the government imposed customs duty on dollar and sterling pound prices.
As per the directive of the Department of Customs dated on August 30, 2019, the valuation of the imported books should have been a minimum 57 percent of the maximum retail price. But, some importers were found to have maintained less than that value in their bills.
However, book importers said they felt harassed after the authorities didn’t recognise the heavy discount, say 60 percent, while paying duty.
“During the years before 2019, Nepal had been seeing an increasing trend of book readership. This had also encouraged a lot of Nepali publishing companies to come up with Nepali books, both fiction and non-fiction,” said Dotel. “But the government’s decision to levy 10 percent customs disrupted the momentum.”
Now, with the government removing the duty, importers will be less scrutinised at customs points. Officials, however, say that non-scrutiny could invite many anomalies.
“Our scrutiny remains minimum on the goods on which no duty is imposed,” said Suman Dahal, director general at the customs department. “One risk it can invite is that the importers may overvalue the price of the goods at the customs and contribute to capital flights in the name paying the bills.”
An official of the Finance Ministry who wanted to remain anonymous, told the Post that one of the reasons why the duty in the books was imposed is the rumours that they heard about the overvaluation of books for taking out money abroad in the name of paying the bills.
“I don’t have definitive evidence of this. But, it was aimed at reducing such risk,” the official said.
Another reason why the authorities had imposed duty on the book is the demand of Nepali publishers who have to pay duty on the imported papers for publishing books which didn’t give them a level playing field against the imported books.
With the new decision, importers are excited that it will revive the book reading culture as new books can come into the Nepali market.
“Imported books are already being swiftly cleared from customs, which ensures faster delivery,” said an importer who did not want to be named. “Ever since the government decided to remove the 10 percent customs duty, we have already increased the volume of our import.”
The customs duty rule also had an adverse impact on academic institutions and they have welcomed the government decision to remove customs duty.
“After the duty was imposed, some importers didn’t import some coursebooks too which created difficulty for students to find books for their study,” said Peshal Dahal, registrar at Tribhuvan University. “In our letter to the government we had said that it [the decision to impose customs duty] may not be practical considering that Nepal is heavily dependent on foreign books in our courses. We had also pointed out that even in international practices, duty is usually not imposed on the books.”
(Tsering Ngodup Lama contributed reporting.)