Govt Implements Transaction Value-Based Customs Valuation System Nationwide

The Government of Nepal has implemented a transaction value–based customs valuation system at all customs offices across the country, abolishing the long-criticised reference price list system that had been a major source of disputes and lack of transparency in customs clearance.

According to the Department of Customs, the new system has been rolled out nationwide from Friday following a three-month pilot phase at Biratnagar Customs. Director General Shyam Prasad Bhandari said the system has now been extended to all major and minor customs points across the country.

“With this, the practice of maintaining a reference price book for customs valuation has come to an end,” Bhandari said. “By replacing the traditional system with a transaction value–based customs valuation system, we have made a significant reform in the history of customs administration. This will make the process easier for businesses and promote honest declarations.”

Read: Government Launches Automated Customs System at Birgunj

The reform process began on September 24 with the launch of the pilot project at Biratnagar Customs. Following its success, the system was implemented at the Birgunj Integrated Check Post (ICP)—the country’s largest customs point—on November 2, before being gradually expanded nationwide.

WTO-Aligned Valuation Method

The department said the system has been introduced in line with the World Trade Organization’s Customs Valuation Agreement, commonly referred to as the GATT Valuation System. Under this framework, customs duties are assessed primarily on the basis of the actual transaction value—the price actually paid or payable for imported goods.

Previously, customs officials determined the value of goods using a reference price list updated every six months. If importers submitted invoices showing prices lower than those listed, customs authorities often rejected the declared value and assessed duties based on the reference price, resulting in higher tax liabilities. That practice has now been discontinued.

Online Valuation, Risk-Based Checks

Under the new system, customs valuation will be carried out using an online valuation software and database system, which recognises the declared transaction value as the primary basis for assessment. The department said the system also incorporates artificial intelligence–supported analytics, reducing human discretion and improving transparency.

The reference price system had long been criticised for encouraging capital flight through informal channels, under-invoicing, and revenue leakage due to discrepancies between market prices and listed values. Excessive discretionary power of customs officials had also led to complaints of corruption and informal payments, while honest traders were often forced to pay duties based on inflated reference prices, increasing business costs.

Read: Government to Expand Digital Customs Valuation System Nationwide

Despite the import of more than 500,000 categories of goods, the reference price book contained values for only about 7,000 items, failing to reflect actual market conditions, the department said.

With the new digital database, all cleared consignments will be recorded electronically, enabling easier price comparison and analysis. A risk engine will flag only suspicious transactions for further scrutiny, while routine consignments will be cleared more smoothly.

As part of the reform, roadside checks and unnecessary detention of trucks are expected to end. Instead, suspicious cases will be examined through post-clearance audits, conducted at traders’ premises after goods have been released.

Positive Response from Private Sector

The department expects the new system to reduce trade costs and facilitate foreign trade. Private sector organisations had long demanded the abolition of the reference price system and full implementation of the GATT valuation method.

Nepal Chamber of Commerce President Kamalesh Agrawal welcomed the reform, saying it would significantly ease customs procedures. “We have been pressing for this reform for a long time. The nationwide implementation of a transaction value–based customs valuation system is a positive and welcome step,” he said.

Addressing a customs seminar on Friday, Finance Minister Rameshore Khanal said he was confident that businesses would adapt to the new system with honest declarations. He also said the government has begun formulating a new phase of customs reform strategies with the goal of building a production-based economy.