Nepal Begins Budget Work, Sets Up Revenue Advisory Committee to Shape Tax and Economic Reforms

Nepal’s Ministry of Finance has formally kicked off the process of preparing the national budget for the upcoming fiscal year by constituting a Revenue Advisory Committee, signaling the start of the government’s annual fiscal planning cycle. Officials say the move is aimed at collecting structured policy input before the budget ceiling, priorities, and tax proposals are finalized.

According to the ministry, the committee has been formed under a decision of Finance Minister Rameshwar Prasad Khanal dated Magh 28 (Nepali calendar), with the Ministry’s Revenue Secretary serving as coordinator. The ministry’s spokesperson, Tank Prasad Pandey, said the committee has already started work, indicating that early-stage consultations and technical reviews are now underway.

At its core, the committee’s mandate is broader than routine “tax suggestions.” It has been asked to advise on the economic context and on what the budget should prioritize—meaning it can influence both the revenue strategy (how the state raises money) and the policy direction (where the state plans to intervene, reform, or incentivize). In practice, such committees often become the route through which competing interests—business groups, sector associations, experts, and government agencies—try to shape the budget narrative.

A major focus area is internal taxation. The committee is expected to propose policy and legal reforms related to income tax, VAT, excise duty, education service fees, digital service taxes, and taxes linked to e-commerce and other activities covered under the Financial Act framework. The inclusion of digital and e-commerce taxation signals the state’s interest in capturing revenue from fast-growing, less-visible parts of the economy where enforcement and definitions are still evolving.

The ministry has also tasked the committee with reviewing tax and non-tax rates, simplifying procedures, improving the tax system, and recommending reforms in revenue administration and organizational structure. This is significant because Nepal’s revenue debate is not only about “raising rates,” but also about leakage control, compliance costs, and administrative efficiency. A budget that increases rates without improving administration often ends up burdening compliant taxpayers while leaving gaps for evasion.

Beyond taxation, the committee’s scope extends into trade and investment policy. It will advise on industrial promotion and protection, import–export and foreign trade policy, service trade, supply management, and investment promotion—along with possible tax and non-tax incentives. This suggests the budget may attempt to use fiscal tools to support production and formal business activity, not merely to collect revenue.

Customs reform has been identified as another priority. The committee is expected to review customs duty rates, assess whether domestic production needs protection through tariff adjustments, and recommend improvements in valuation, procedural simplification, trade facilitation, customs laws, and border management. Because customs is a major revenue pillar for Nepal, even small changes in valuation systems and enforcement can materially affect both revenue collection and the cost of imports.

The committee has also been assigned sensitive governance areas: revenue leakage control and investigations, anti–money laundering research and enforcement, foreign exchange regulation, and broader economic crime control. The inclusion of these themes indicates the budget discussion may link fiscal policy with enforcement capacity—especially important when the government faces public pressure to widen the tax base and reduce illicit outflows rather than repeatedly taxing the same formal sector.

Sectoral policy is also on the table. The committee will advise on reforms related to agriculture and commercialization, electricity and energy, tourism promotion and civil aviation, and natural resource conservation and management. This matters because these sectors shape the medium-term economy: agriculture impacts livelihoods and inflation, energy affects productivity and imports, tourism affects foreign currency earnings, and natural resources relate to long-term sustainability and revenue models.

The mandate further includes Nepal’s financial system—banks and financial institutions, insurance, capital markets, cooperatives, and real estate transactions—along with broader economic policy. This is a strong indicator that the government is looking at systemic issues such as financial stability, credit flow, market confidence, and the regulatory gaps that repeatedly surface in cooperatives and property transactions.

Another politically important part of the committee’s scope concerns Nepal’s intergovernmental fiscal system. It will identify potential areas for non-tax revenue collected by government agencies, recommend rate-setting and review mechanisms, and address problems such as overlapping taxes across federal, provincial, and local levels. It will also advise on revenue-sharing arrangements and how to manage duplication and disputes—issues that directly affect local governments and businesses that complain about multiple layers of taxation.

Following its first meeting, the committee has invited suggestions from relevant agencies, private-sector representative bodies, academia, stakeholders, and the general public. This consultation step is often where policy proposals gain legitimacy—yet it also becomes the stage where lobbying intensifies, making transparency and balance crucial if the final budget is to be seen as credible.

The ministry has set deadlines to keep the process aligned with the national budget calendar. Subcommittees are expected to submit their recommendations by the end of Chaitra, and the main committee is to deliver a final report with recommendations to the Finance Minister by the end of Baisakh 2083. The timeline suggests the government wants inputs early enough to shape not only tax proposals but also the budget’s broader reform agenda.