Nepal’s New Tax Reforms for 2024/25: Higher Duties, Stricter Compliance
As Nepal enters the fiscal year 2024/25, the government has introduced new tax measures to increase revenue collection and reduce the country’s fiscal deficit. The Ministry of Finance recently unveiled several key changes, including:
• Higher customs duties on imported luxury goods such as alcohol, high-end electronics, and vehicles to control excessive foreign currency outflows.
• New “green tax” on polluting industries, aimed at encouraging environmentally friendly business practices.
• Stricter VAT compliance requirements, with businesses now required to provide electronic invoices to prevent tax evasion.
One of the most debated changes is the removal of VAT exemptions on certain essential goods, which has raised concerns about its impact on low-income households. Critics argue that making basic food items, medicine, and agricultural products taxable could increase the cost of living for ordinary citizens.
“The government should focus on widening the tax base rather than squeezing the existing taxpayers,” said economist Dr. Rajan Sharma. “We need policies that encourage investment and production, not just higher taxes on consumers.”
The private sector has urged the government to simplify tax procedures and reduce the burden on small businesses, which are already struggling due to rising inflation and a sluggish economy.
The government defends the new tax policies, arguing that they are necessary for long-term economic stability and will help Nepal move toward self-sufficiency.
