KATHMANDU, May 23: As the government drafts the budget for the next fiscal year, stakeholders have urged it to focus on several measures, including reforming the tax structure, allocating more funds for development projects, and ensuring policy stability to promote an investment-friendly environment.
Shyam Prasad Bhandari, spokesperson for the Ministry of Finance (MoF), said the ministry is currently working on the final draft of the annual budget, taking into account issues raised by people from various sectors. According to him, employment generation, transformation into a digital economy, development of physical infrastructure, and social security will be among the main priorities of the upcoming budget.
The MoF is set to unveil the Economic Survey 2025 on May 28, followed by the announcement of the budget for the fiscal year 2025/26 the next day. The National Planning Commission has provided a budget ceiling of Rs 1.9 trillion for the upcoming fiscal year, compared to the current year’s budget of Rs 1.86 trillion.
VAT has not been imposed on locally produced potatoes, onions a...
The Revenue Advisory Committee has advised the government to implement multiple rates of Value Added Tax (VAT) to make tax revenue collection more effective. If the breakdown of the single VAT rate into multiple rates aligns with the system in India, it could help minimize cross-border illegal trade, according to the committee formed under Revenue Secretary Dinesh Kumar Ghimire.
The private sector has long demanded the implementation of multiple VAT rates. According to entrepreneurs, such a system would allow the government to mobilize more revenue by addressing issues like under-invoicing. However, the government has so far been reluctant to implement the measure, citing concerns that the existing tax mechanism may not be equipped to track multiple VAT rates effectively.
The committee has also recommended that the government expand the tax base by including goods such as diamonds, semi-precious stones, and selected fruits under the VAT regime. It also advised incorporating service businesses—such as skincare, hair transplants, discos, and massage parlors—within the framework of excise duty. Additionally, the committee suggested levying education service fees on privately-run academic institutions and a health service tax on medical services provided by the private sector.
Meanwhile, entrepreneurs have called on the government to declare the next 10 years as the “Investment Decade” to encourage private sector investment. Speaking at a meeting of the parliamentary Finance Committee on Thursday, Anjan Shrestha, Senior Vice-President of the Federation of Nepalese Chambers of Commerce and Industry, urged the government to reduce recurrent expenditure and increase budget allocation for capital spending, while ensuring policy stability.
The private sector has also demanded a reduction in income tax rates for production-related and high-employment-generating businesses, along with the acceleration of second-phase economic reform programs.
