Submitting the report, TRC Chairman Rup Bahadur Khadka said there was no need to change the basic direction of the tax system. He, however, policy, institutional and procedural reforms are required as part of second-tier tax reforms.
The commission has also made policy direction for taxation systems reforms under the federal set up. It has suggested making Value Added Tax (VAT) a major contributor to the country's revenue and bringing informal economy into income tax net as well as improving evaluation system of goods at the customs points. Similarly, it has suggested the government to implement social security tax concept and initiate reforms in revenue administration.The Khadka-led commission has also suggested that the government introduce punishment measures for those who do not come into tax net. Similarly, it has pointed out under-invoicing in VAT and low evaluation in customs points as the key problems in tax systems.
The commission has also suggested to the government for ensuring wider tax compliance to collect financial resources for reconstruction of houses, public buildings and historical monuments damaged by the earthquake of April 25.
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