CNI president Pandey urges govt to reform tax system, end policy instability

KATHMANDU: Confederation of Nepalese Industries (CNI) President Birendra Raj Pandey has issued a strong call for sweeping tax reforms and urgent correction of policy instability, warning that Nepal’s existing tax regime and regulatory environment are undermining business confidence and weakening economic growth.

Speaking at a tax-focused programme organized by CNI in Kathmandu, Pandey said the private sector is increasingly frustrated by unpredictable taxation, overlapping regulations, and slow government response to mounting structural economic challenges. His remarks were delivered through a detailed welcome address presented during the event.

Private Sector Warns Against Policy Volatility

Pandey said the private sector—despite being the backbone of Nepal’s economy—is struggling with a climate of uncertainty created by abrupt tax changes, unclear directives, and inconsistent enforcement.

He argued that instead of becoming simpler and business-friendly, Nepal’s tax administration has become “more complicated and less predictable.” Such instability, he cautioned, is eroding investor trust and damaging Nepal’s competitiveness.

Businesses have repeatedly appealed for policy clarity, stability, and continuity, but the government has yet to address the issues meaningfully, he added.

Overlapping Regulations Creating Confusion

Pandey sharply criticized the growing compliance burden on industries, stating that companies face:

These inefficiencies, he said, are choking productivity and discouraging innovation. He noted that overlapping jurisdictions among government bodies have created unnecessary confusion for taxpayers and stalled expansion plans across sectors.

Calls for an Independent Economic Think Tank

Urging the government to adopt a more systematic approach to policy-making, Pandey highlighted the need for a genuine national economic think tank capable of offering strategic guidance instead of short-term fixes.

He said the private sector is willing to collaborate, but insisted that meaningful reform requires government seriousness and continuity.

Long-Term Industrial Policy and Investor-Friendly Tax Regime Needed

Pandey stressed that Nepal’s economy cannot move forward without policies that encourage production, competitiveness, and job creation.

He warned that ad-hoc decisions—such as sudden tax hikes or uncoordinated enforcement—have created fear among investors. Nepal, he said, cannot expect industrial growth “amid confusion and frequent policy shifts.”

A long-term, transparent tax roadmap is critical for attracting investment and enabling export-oriented growth, he emphasized.

Liquidity Stress and Weak Market Demand Harming Industries

Highlighting the ongoing economic slowdown, Pandey said many industries face:

These challenges, exacerbated by compliance hurdles, have weakened the private sector’s resilience and limited its ability to expand operations.

CNI Pushes for Expert-Led Tax Overhaul

Pandey concluded by urging the government to initiate an expert-driven, evidence-based review of Nepal’s tax system.

He said tax administration must become modern, digital, transparent, and aligned with international best practices if Nepal wants to attract foreign investment and maintain regional competitiveness.

CNI, he added, stands ready to assist the government in designing practical reforms that address long-standing systemic gaps and create a stable, investment-friendly economic environment.