MoF initiates revenue policy formulation for FY 2083/84, Seeks suggestions on tax rates and structural reforms

KATHMANDU: The government has formally initiated the process of drafting the revenue policy to be incorporated in the upcoming fiscal year 2083/84 (2026/27) budget, inviting comprehensive suggestions on tax rates, fiscal reforms, and revenue administration restructuring.

The Revenue Advisory Committee, formed under the coordination of Revenue Secretary Bhupal Baral, has called for policy recommendations covering a broad spectrum of revenue instruments, including customs duties, Value Added Tax (VAT), income tax, excise duties, non-tax revenue, and revenue leakage control mechanisms. Stakeholders have been given a deadline until Chaitra 30 to submit their recommendations.

Finance Minister Rameshwar Khanal had constituted the committee on Magh 28, mandating it to provide structured policy and legal reform proposals concerning internal taxation and revenue mobilization frameworks.

Mandate Covers Digital Tax, E-Commerce and Structural Reform

The committee has been tasked with recommending policy reforms related to income tax, VAT, excise, education service fees, digital service tax, taxation on e-commerce platforms, and other internal taxes governed by the Economic Act. It is also authorized to review tax rate rationalization, procedural simplification, tax system modernization, and restructuring of revenue administration and institutional frameworks.

In addition, the mandate extends to industrial promotion and protection, import-export policy alignment, service trade facilitation, investment promotion, domestic production protection, trade facilitation measures, anti-smuggling initiatives, foreign exchange regulation, economic crime control, anti-money laundering (AML) investigations, and regulatory issues in banking, financial institutions, insurance, remittance, capital markets, cooperatives, and real estate transactions.

The government has structured the reform process through nine sub-committees under the main advisory body.

Nine Thematic Sub-Committees Formed

The Internal Revenue Sub-Committee will focus on income tax, VAT, excise, digital taxation, and domestic tax structure reforms. The Customs Sub-Committee will examine tariff rates, customs valuation systems, border management, and trade facilitation reforms.

The Revenue Leakage Control and Investigation Sub-Committee will analyze emerging leakage patterns, enforcement gaps, foreign exchange violations, and economic crime trends.

The Industry, Commerce, Investment and Export Promotion Sub-Committee will review industrial protection mechanisms, trade policy incentives, and export competitiveness strategies. Meanwhile, the Agriculture, Energy and Tourism Sub-Committee will study commercialization of agriculture, electricity production policy, tourism promotion, and natural resource management reforms.

The Banking, Financial Institutions, Insurance, Cooperatives and Capital Market Sub-Committee will assess structural issues in the financial sector and their linkage to revenue mobilization. The Non-Tax Revenue and Intergovernmental Fiscal Management Sub-Committee will review non-tax revenue sources and address duplication and jurisdictional conflicts within Nepal’s federal fiscal structure.

Separate sub-committees have also been formed for Macroeconomic Analysis and Anti-Money Laundering and Asset Laundering Investigation.

Broader Fiscal and Economic Context

The move comes at a time when Nepal is facing revenue shortfalls, widening fiscal pressure, and structural imbalances between recurrent expenditure and capital spending. Revenue mobilization has remained below target in recent fiscal cycles, prompting calls from the private sector for tax rationalization rather than aggressive rate hikes.

Economic analysts note that tax rate revisions in the upcoming budget could directly influence investment climate, industrial competitiveness, import dependency, foreign direct investment inflows, and overall ease of doing business in Nepal.

Stakeholders from government agencies, private sector organizations, academia, policy think tanks, and the general public are being consulted. Sub-committees will collect and synthesize feedback before submitting detailed reports to the main advisory committee.

The final consolidated report is scheduled to be submitted to Finance Minister Rameshwar Khanal by the end of Baisakh, setting the stage for formal incorporation of revenue policy changes into the national budget for FY 2083/84.