Government Raises Alcohol Taxes Sharply in FY 2025/26 Budget
The Government of Nepal has announced a sharp increase in taxes on alcoholic beverages through its Fiscal Year 2025/26 national budget, marking one of the strongest fiscal measures targeting alcohol consumption in recent years. Under the new budget provisions, customs duties on imported alcoholic products have been raised substantially across multiple categories.
According to budget details, customs duty on imported beer with alcohol content up to 5 percent and wine with alcohol content between 12 to 17 percent has been increased to 80 percent. Even steeper duties have been imposed on spirits such as whisky, brandy, gin, and vodka, with customs tariffs raised to 100 percent.
In addition to higher customs duties, the government has also increased excise duties on domestically produced alcohol and expanded the scope of the health risk tax applicable to both alcohol and tobacco products. Officials stated that the combined tax measures are intended to discourage harmful consumption patterns while strengthening government revenue collection.
The Ministry of Finance has justified the tax hike by citing public health concerns and rising healthcare costs associated with alcohol-related illnesses. The move aligns with previous recommendations from international health bodies that advocate higher taxation as an effective tool to reduce alcohol consumption.
However, industry stakeholders have expressed concern that the steep tax increase could impact sales volumes, encourage smuggling, and place additional pressure on licensed importers and domestic producers. Businesses operating in the hospitality and tourism sectors are also closely monitoring the impact, as imported alcoholic beverages form a significant part of hotel and restaurant offerings.
The tax increase takes effect from the start of the new fiscal year and is expected to significantly alter alcohol pricing in the Nepali market, particularly for imported premium brands.
Sources (EN): Kathmandu Post – Budget 2025/26 raises duties on alcohol, tobacco and luxury goods
https://kathmandupost.com/money/2025/05/30/budget-2025-26-introduces-sweeping-tax-incentives-for-tech-exports-startups-and-green-hydrogen-firms-while-raising-duties-on-alcohol-tobacco-and-luxury-goods