‘Full audit will happen only ‘when necessary’, Financa Minister Khanal

KATHMANDU: Finance Minister Rameshwor Khanal has said that the government will conduct a full audit only when it is deemed necessary, stressing that accountability must be upheld by both the private sector and government institutions alike. Speaking at a ceremony organized in Kathmandu on Monday to mark National Tax Day, Minister Khanal praised the resilience shown by Nepal’s private sector even amid ongoing economic and security challenges.

“The courage and continuity demonstrated by the private sector during a crisis is commendable,” he said. “The government is ready to support them from every angle. The Home Minister and I are both deeply serious regarding security concerns.”

Over Rs 78 Billion in Damage Across 55 Districts

Presenting preliminary assessments of recent incidents, Minister Khanal said that 55 districts recorded destruction of around 2,900 buildings and structures, resulting in losses amounting to nearly Rs 78 billion. Out of this, private sector losses alone account for an estimated Rs 36 billion.

“Whoever suffers the loss, ultimately it affects all of us. Investments, no matter who makes them, contribute to the nation,” he said, highlighting the need for united efforts in reconstruction and stability.

Policy Reforms Take Priority; Double Tax Avoidance Agreement in Progress

Minister Khanal reaffirmed his commitment to policy reforms aimed at strengthening administrative systems. “I am focused on policy reforms to create the right environment. Our goal is to make the system stronger,” he said.

He revealed that work is underway on drafting Nepal’s Double Tax Avoidance Agreement (DTAA) framework, which he believes will clarify tax exemptions and cross-border agreements. The government, he said, wants to create a predictable tax environment that both domestic and foreign investors can rely on.

Full Audit ‘Only If Required’: Public–Private Accountability Essential

Addressing growing concerns about a possible wave of full audits, Minister Khanal clarified that the government will adopt a “need-based” approach rather than conducting blanket audits.

“Full audit will certainly take place—but only if necessary. In all such matters, the administration and the private sector must move forward together. Everyone must remain accountable,” he said.

He acknowledged structural limitations within the government system, saying some reforms are difficult because of the government’s current mandate. “There are things we simply cannot do under this mandate,” he stated.

Economic Growth Through Expanding Activity, Not Higher Tax Rates

Highlighting the government’s fiscal strategy, Minister Khanal emphasized that increasing tax revenue is possible only through expanding economic activity—not by raising tax rates.

“Increasing taxes means increasing economic activity. For that, competitive business and a strong private sector are necessary,” he added.

Business Leaders Call for Stability, Investment Security

Confederation of Nepalese Industries (CNI) President Birendra Pandey said the country is facing both economic and political turbulence, urging the government to steer Nepal out of the current transition.

“The government must make decisions centered on economic agendas,” Pandey said. He stressed the need for a fear-free environment for investment, noting that a large volume of idle funds in banks could boost the economy if utilized properly.

Meanwhile, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Chandra Prasad Dhakal said that recent protests had severely dented investor confidence.

“The objective of the protests was valid—we have always demanded good governance. But infiltrations during the protests led to arson, looting, and activities that harmed the investment climate,” Dhakal said.
He urged the government to bring perpetrators under legal action and guarantee security for businesses. He also criticized bureaucratic delays, highlighting the one-year vacancy at SEBON and the recent unnecessary hurdles in IPO approvals.

“Delays in regulatory processes weaken the investment environment,” he added.

Need for Stronger Tax Administration

Revenue Secretary Bhupal Baral highlighted the importance of tightening tax administration and prioritizing system modernization. “We must promote the habit of taking bills during purchases,” he said.

Baral emphasized that the tax system must become more technology-friendly and that controlling tax leakage requires cooperation between the private sector and the government. Stabilizing staff transfers and strengthening internal efficiency remain key goals of the ministry, he noted.