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Started 5 days ago · Updated 5 days ago

Economists Urge Tax Reforms, VAT Restructuring, and Fiscal Overhaul in Nepal

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Economists have called for significant restructuring of Nepal's tax administration, improvements in public finance management, and a more effective Value Added Tax (VAT) system. During discussions at the Finance Committee of the House of Representatives, experts emphasized aligning economic policy with the national budget and prioritizing structural economic reforms alongside good governance. They also suggested reducing the VAT rate and increasing income tax exemption thresholds to stimulate the economy.

• Experts proposed reducing the current 13 percent VAT rate to 10-12 percent and increasing personal income tax exemption limits to boost market demand and ease the cost of living for middle and lower-middle-income groups.
• Economists highlighted the need for a long-term restructuring strategy for the economy, identifying primary sectors and implementing reforms simultaneously with good governance.
• Concerns were raised about structural problems in the tax administration system, with suggestions for extensive reforms to enhance professionalism and effectiveness.
• The effectiveness of the VAT system was linked to its structure and implementation, with a recommendation for a broad-based, single-rate system similar to New Zealand's GST model.
• The upcoming budget discussions also included proposals for reforms in tax structure and fiscal federalism to address declining market demand and a weakened business environment.