Government Unveils Inland Revenue Mobilization Strategy 2024: Aiming for Fiscal Reform and Economic Growth
The Government of Nepal has introduced the Inland Revenue Mobilization Strategy 2024, laying out a comprehensive medium-term revenue mobilization plan spanning from Fiscal Year 2024/25 to 2028/29. This initiative, developed in alignment with the 16th periodic plan, seeks to modernize the country's tax system and administration while fostering economic development and supporting the private sector.
According to the Ministry of Finance, the strategy is designed to balance the need for sustainable revenue mobilization to drive national economic and social development with the interests of taxpayers and the private sector. It provides a structural framework aimed at reforming tax policy and administration, enhancing efficiency, and promoting greater equity within the system.
The primary objectives of the strategy include increasing revenue mobilization from domestic sources, encouraging voluntary compliance among taxpayers, and strengthening the risk management capacity of tax and customs administrations. The government also plans to automate tax and customs systems to streamline processes and improve efficiency. Furthermore, the strategy emphasizes the need for improved coordination between government bodies and organizations to ensure effective tax policy formulation and implementation.
One of the core targets is to elevate the tax revenue-to-GDP ratio from 16.2 percent in Fiscal Year 2022/23 to 20.9 percent by the end of Fiscal Year 2028/29. The overall revenue-to-GDP ratio is projected to rise from 18.9 percent to 23.5 percent during the same period, driven by the implementation of an action plan focused on revenue enhancement.
Additionally, the reform of tax and customs administration is expected to yield a modest 0.1 percent increase in tax revenue, while the strategy aims to reduce the budget deficit-to-GDP ratio from 7.2 percent in Fiscal Year 2022/23 to 6.5 percent by the conclusion of the strategy period.
The Inland Revenue Mobilization Strategy 2024 is seen as a significant step toward creating a more progressive tax system, encompassing all income sources. It aims to bolster economic efficiency, encourage private sector investment, and stabilize both tax and non-tax revenue streams. The strategy also underscores the government's commitment to maintaining fiscal stability and managing the budget deficit responsibly.
By the end of the strategy's implementation period, the government envisions a more modernized, equitable, and efficient tax system that aligns with the broader economic goals set out in the 16th five-year plan. This initiative marks a key move toward enhancing Nepal’s overall fiscal health, contributing to long-term sustainable growth.
