Experts have emphasized the need for reforms in the existing tax system, online payment arrangements, and a single point system.
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Experts have pointed out that reforms in the existing tax system are essential to reduce the cost of doing business in Nepal and make production competitive. In an interaction on the topic of ‘Roadmap for Economic Transformation Focused on Tax System Reform’ organized by the Confederation of Nepalese Industries on Wednesday, experts emphasized the need for reforms in the tax system, online payments, and a single point of entry system.
Finance Minister Rameshwor Khanal says that the tax system needs to be improved a lot. He said that many laws cannot be changed because of the current interim government. He said that Nepal has consistently become a country with a high revenue to GDP ratio among South Asian countries due to the contribution made by the private sector to revenue. ‘In the past, such a ratio had reached 24.5 percent of GDP. After Covid, it has come down to 18 percent. There are signs that such a ratio will increase this year,’ he said.
Finance Minister Khanal claims that he feels that work has been done a little too quickly in the last 60 days. ‘It is also being said that people are raising their voices about it because some work was done before the society understood it,’ he said. ‘The provisions that harm Nepal in the double taxation agreements with various countries had to be amended, and that work has been done.’
In the meantime, he said that since some points of the agreements with various 7 countries differ from the provisions of the Income Tax Act, 2058 BS, information has been sent that now tax will be levied as per the Income Tax Act. The country's economy is in a challenging situation, so the government needs to make more efforts for reforms, says Birendra Raj Pandey, president of the Confederation of Nepalese Industries.
'Banks have investable funds, interest rates are at a single point, and overall market demand has not increased. Even though demand has not increased, industries are operating at low capacity,' Pandey said, 'Price growth is at a low point. Money sitting idle is not a good sign for the economy.' He said that this is also affecting the government's revenue.
