The Office of the Auditor General has underscored the lack of policy stability within Nepal’s tax system. It has recommended the development of a long-term tax policy structure to make the tax system more predictable. The office has also urged the transformation of tax administration into a digital and data-driven system to facilitate faster and fairer dispute resolution. 3 Jestha, Kathmandu.
The Office of the Auditor General pointed out the absence of policy stability in Nepal’s tax system. In its 63rd annual report, it offered the government nearly a dozen recommendations, including ending the recurring practice of frequently changing tax rates through economic legislation. The audit office emphasized the need to develop a long-term or medium-term tax policy framework to maintain predictability and policy stability within the tax system.
Additionally, the Auditor General suggested establishing a tax policy framework that is investment-friendly, promotes entrepreneurship and production growth, and encourages investment in research, development, and technology. It also recommended reviewing the multi-tiered and complex exempted tax structure to establish a simpler, broader, and proportionate tax system. To strengthen the value-added tax system, the office advised promoting electronic billing and automating and enhancing transparency in the tax refund process.
