Government Forms Revenue Consultation Committee Ahead of FY 2083/84 Budget Formulation

Kathmandu. The government has formed a Revenue Consultation Committee targeting the budget for the fiscal year 2083/84. This committee was established under the chairmanship of the Revenue Secretary, following a decision by Finance Minister Rameshwar Prasad Khanal on May 28.

The committee includes representation from the private sector, subject matter experts, and relevant stakeholders. Government agencies, regulatory bodies, academia, and representative organizations from the private sector are members of the committee.

Committee members include the Head or a Senior Professor from the Central Department of Economics at Tribhuvan University, a Joint Secretary from the Ministry of Industry, Commerce and Supplies, and an Executive Director from Nepal Rastra Bank. Furthermore, two experts nominated by the Ministry of Finance (one economist and one tax expert) have been included to utilize subject-specific expertise.

To incorporate the voice of the private sector in policy-making, the Presidents or their designated senior officials from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI), Nepal Chamber of Commerce, Nepal Industry and Trade Federation, and Federation of Nepal Cottage and Small Industries have been included as members. Additionally, the President or a representative from the Nepal Economic Association will also be on the committee. The responsibility of Member-Secretary has been assigned to the Joint Secretary of the Revenue Management Division of the Ministry of Finance.

Scope of the Committee's Work

The committee is tasked with conducting detailed studies and analysis to bring improvements to the country's overall revenue system and recommend tax rate determinations. According to its mandate, the committee will provide policy suggestions on traditional taxes such as Income Tax, Value Added Tax (VAT), and Excise Duty, as well as on new areas created by the modern economy, such as Digital Service Tax and taxes on E-commerce.

The committee will review tax rates, suggest improvements to the organizational structure of revenue administration, and propose measures to simplify the tax system and make it investment-friendly by removing procedural hassles.

Moreover, the committee will guide the government on strategies to be adopted for the protection and promotion of domestic industries while reviewing customs duty schedules.

Key priorities for the committee include necessary legal and policy reforms to promote industry, facilitate foreign trade, and create an investment environment. In addition, a major responsibility of the committee is to find solutions to problems observed in controlling revenue leakage, preventing money laundering, and regulating foreign exchange.

The Ministry has stated that the committee will also provide special recommendations to remove duplication in the tax system between the federal, provincial, and local levels in the context of federalism implementation and to systematize inter-governmental revenue sharing.

Formation of 9 Sub-Committees for Specialized Study

To make its work effective, scientific, and specialized, the committee has formed nine different sub-committees. These sub-committees will conduct detailed studies in their respective areas and submit reports to the main committee.

1. Domestic Revenue Sub-Committee: This will work on policy reforms and process simplification for domestic taxes including Income Tax, VAT, and Excise Duty.

2. Customs Sub-Committee: This will focus on customs rates, valuation systems, and border management issues.

3. Revenue Leakage Control and Investigation Sub-Committee: This will focus on controlling smuggling and illicit trade and investigating economic crimes.

4. Industry, Commerce, Investment, and Export Promotion Sub-Committee: This will work for industrial protection, trade facilitation, and investment promotion.

5. Agriculture, Energy, and Tourism Sector Sub-Committee: This will provide suggestions on necessary tax and non-tax incentives for agricultural commercialization, hydropower development, and tourism promotion.

6. Bank, Financial Institution, Insurance, Cooperative, and Capital Market Sub-Committee: This will study issues related to financial sector stability and real estate transactions.

7. Non-Tax and Inter-Governmental Revenue Management Sub-Committee: This will study tax jurisdiction between the three tiers of government and the potential of non-tax revenue.

8. Macroeconomic Sub-Committee: This will project revenue by analyzing the country's overall economic indicators.

9. Anti-Money Laundering and Investigation Sub-Committee: This will provide suggestions on steps to be taken to prevent money laundering and financing of terrorist activities, and on compliance with FATF standards.

Seeking Suggestions from Stakeholders

After holding its first meeting, the committee decided to solicit suggestions from relevant government agencies, the private sector, academia, and the general public to make budget formulation realistic and people-oriented.

According to the committee's schedule, all nine sub-committees formed must complete their respective area studies, discussions, and analysis and submit their reports to the main committee by the end of Chaitra 2082 BS. The Revenue Consultation Committee will integrate and refine the suggestions received from the sub-committees to prepare the final report.

The deadline for the committee to submit its suggestions and report to the Finance Minister has been set for the end of Baisakh, informed Tank Prasad Pandey, Joint Secretary and Spokesperson for the Ministry of Finance.