Chamber of Commerce President Calls for Two-Tier VAT to Boost Nepal's Economy

Kathmandu. The President of the Nepal Chamber of Commerce, Kamlesh Kumar Agrawal, stated that a two-tier Value Added Tax (VAT) system should be implemented to make Nepal's economy competitive. He also emphasized the need to reduce the existing high customs duty rates.

President Agrawal noted that while the ratio of revenue to Gross Domestic Product (GDP) in other South Asian countries is only 13 to 14 percent, it has reached 19.9 percent in Nepal, indicating that a competitive environment for investment and trade has not been established. He mentioned that economic policy has been unstable due to prolonged political instability in the past, and stressed that the strong government to be formed now must bring stability to economic policy.

It is his view that the economy has been extremely sluggish for the past four years due to the restrictive monetary policy of regulatory bodies. However, he expressed satisfaction with some recent policy reforms made by the central bank in collaboration with the Finance Minister. He clarified that since the private sector accounts for over 80 percent of the investment in the country's economy, policy changes directly affect the private sector.

Keeping this in mind, he demanded that the practice of conducting a 'Regulatory Impact Assessment' should be initiated before implementing any new policy or regulation henceforth. President Agrawal stressed the need to bring investment-friendly policies to promote 'weightless and borderless' trades such as tourism and information technology (IT) in the coming days.

He stated that retrospective tax policies of the past have caused great difficulty for the private sector, the new audit system has not been effectively implemented, and there are still weaknesses in the online customs valuation system, urging that all these problems must be resolved immediately to make the economy dynamic.