Pokhara, 6 June: Stakeholders have pointed to the lack of effective governance as a major barrier preventing the government from achieving its annual revenue targets. Speaking at a discussion program titled “Measures for Good Governance and Revenue Growth” organized by Terai Development and Communication Center Nepal in Kathmandu, experts argued that strengthening governance and curbing corruption would significantly improve Nepal’s revenue performance.
Dr. Prakash Kumar Shrestha, a member of the National Planning Commission, highlighted that revenue growth has been consistently weak compared to the rising expenditure needs of the country. He noted that Nepal’s average annual revenue growth over the past decade has remained at around 12 percent, which is far from sufficient. Despite Nepal imposing relatively higher tax rates compared to other countries, Dr. Shrestha emphasized the need to broaden the tax base rather than increasing rates further, warning that higher tax burdens could stifle economic activity. He also stressed the need to enhance tax administration and make the taxpaying process more efficient and user-friendly.
Joint Secretary at the Ministry of Finance, Mahesh Baral, stated that good governance within the revenue administration is crucial. He urged the government to implement recommendations from various high-level commissions and committees to reform the revenue system. Baral identified open borders as a persistent challenge in increasing customs revenue and suggested that making invoicing mandatory for Value Added Tax (VAT) and enabling tracking mechanisms could lead to higher tax collections. He also commented that the government’s revenue projection of NPR 1.48 trillion for the upcoming fiscal year, including revenue shared with subnational governments, appears realistic.
Deputy Auditor General Bamdev Sharma Adhikari highlighted that even the revenue administration acknowledges the large size of the informal economy in Nepal. He called for reducing this informal sector and reviewing the broad tax exemptions currently offered by the government. According to him, although Nepal needs substantial resources for overall economic development, excessive tax concessions have undermined revenue potential. He also pointed out that fake and fraudulent invoicing practices used to evade taxes remain inadequately controlled.
Krishna Kumari Shrestha, Deputy Director General of the Department of Revenue Investigation, revealed that the department filed 43 cases related to tax evasion during the current fiscal year, demanding around NPR 1 billion in penalties. She added that auctioning of goods seized in such cases generated over NPR 60 million in revenue this year. Responding to growing scrutiny of the department’s relevance, she asserted that it plays a critical role in regulatory, promotional, and remedial measures to curb revenue leakage.
Deputy Attorney General of the Commission for the Investigation of Abuse of Authority (CIAA), Shambhu Karki, reported an increase in complaints related to revenue leakage. He stated that along with the rise in complaints, the number of investigations and prosecutions being carried out by the commission has also grown.
