Nepal’s high tax, low returns regime

The government needs to move toward an integrated tax system that eventually allows for lower rates.

The three tiers of government in Nepal currently extract around 50 different taxes. This massive web of taxation includes income tax, value-added tax, customs duties and even specialised charges like pollution control and digital service taxes. Despite this aggressive extraction of capital from the public, the national treasury remains in a precarious position with a deficit of Rs179.48 billion as of late May. Citizens find themselves trapped in a paradox whereby the state demands a significant portion of their income while providing crumbling roads, inadequate healthcare and unreliable public utilities.