Model Project Development Agreement Page 38
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88Value added tax
12.3
12.3.1
The GON shall ensure that the value added tax payable on the Project construction
contracts by the Company shall not be levied on the value of the machinery, equipment,
any spare parts, penstock pipes, and the steel used to fabricate penstock pipes, which are
not manufactured in Nepal, to be used permanently in the Project.
12.3.2
The GON may inspect the inventory records for such goods and materials to satisfy itself
that they are being used exclusively for the Project.
Customs and Import Duties
12.4
12.4.1
The GON shall provide an exemption from import licence fees and value added tax and
impose customs duty of one percent (1%) on plant, machinery and equipment (including
spare parts worth up to ten percent (10%) of the cost of equipment not manufactured in
Nepal) imported into Nepal for the purpose of the Project, in accordance with Section
12 (7) of the Electricity Act, 2049 (1992 AD).
12.4.2
The GON shall provide a facility to the Company to import equipment and other items
(excluding consumable goods) on a re-export basis no later than three (3) Months from
COD, and no import licence fees, value added tax or customs duty shall be levied by the
GON on such items. The Company shall produce an irrevocable bank guarantee or
deposit cash for this facility for the amount of the import licence fees, value added tax
and customs duty. The GON shall promptly release the bank guarantee on receipt of
confirmation that the items have been re-exported.
12.4.3
The Company shall furnish a list of required equipment and other items (excluding
consumable goods) under this re-export scheme to GON before the commencement of
construction of the Project and it is agreed that the list may be revised every six (6)
Months. The master list of equipment that will be imported, used and re-exported upon
completion of the associated works needs to be submitted by the Company and
approved by the GON
Land tax
12.5
The Company shall pay land tax for any relevant land in the Project Area (including
Non-GON Project Land) acquired by the Company at the rates applicable from time to
time.
Registration fees
12.6
A registration fee in accordance with the prevailing laws of Nepal shall be charged for the
registration of deeds related to a foreign loan for investment on development and operation
in electricity and on the registration of deeds conveyed to pledge the movable and
immovable assets in the name of foreign lender for such loan.
13.
GON OBLIGATIONS
Non discrimination
13.1
The GON shall not take any discriminatory action which materially and adversely affects
the Project or the performance of the Company's or any Contractor's obligations or the
enjoyment of the Company's rights under this Agreement, provided that the foregoing shall
not in any way limit or restrict the ability of the GON to freely agree with or impose upon
companies and investors in other independent power projects different terms from those set
out in or imposed pursuant to this Agreement, which:
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