The government of Nepal has intensified its efforts to curb tax evasion and improve revenue collection by focusing on Value Added Tax (VAT) non-filers and taxpayers with arrears. A joint meeting of key tax authorities—namely, the Inland Revenue Department (IRD), the Department of Customs (DoC), and the Department of Revenue Investigation (DRI)—was held on Sunday to address this issue. During the meeting, several measures were discussed to prevent revenue leakages and tax evasions.
One of the main objectives is to target VAT non-filers, especially in the context of sluggish revenue collection. In the first four months of the fiscal year, the government collected only 22.58% of its annual tax revenue target of Rs 1.284 trillion. This is a significant shortfall compared to the revenue target, with only 80% of the target met between mid-July and mid-November. As of the past five fiscal years, the government’s revenue collection has been consistently below the target, with figures ranging from 68.23% to 74.44% in recent years.
The number of VAT non-filers has also increased. In fiscal year 2022/23, 21.63% of taxpayers failed to submit their details, which is nearly three times the figure from the previous year. The government is now taking stricter measures to address this, including enhancing the monitoring of cross-border transactions, particularly at the Nepal-India border, to prevent tax evasion.
The three authorities—IRD, DoC, and DRI—have agreed to share information, closely monitor suspicious transactions, and identify emerging trends of tax evasion. They will also focus on preventing transactions without tax invoices and conduct joint market inspections to track the movement of goods post-customs clearance. These efforts aim to increase compliance and tackle the growing issue of tax defaulters in the country.
