Nepal sees surge in taxpayers & revenue amid recent challenges

KATHMANDU: As of Ashad 2082, a total of 6.99 million taxpayers have obtained Permanent Account Numbers (PAN) in Nepal, marking a significant increase from 6.26 million in Ashad 2081, according to the Ministry of Finance.

The number of taxpayers registered for Value Added Tax (VAT) has reached 351,000, while excise duty registrants now total 125,000.

Growth has been observed across business PANs, individual PANs, and PANs issued by tax collection agencies.

During the fiscal year 2081/82, the government collected a total tax revenue of Rs 12.84 trillion, including Rs 3.07 trillion from customs, Rs 3.86 trillion from VAT, Rs 1.94 trillion from excise, and Rs 4 billion from education service fees.

Total government revenue last year stood at Rs 14.10 trillion, with Rs 1.35 trillion coming from non-tax sources.

The Ministry of Finance stated that the growth in both taxpayer numbers and revenue reflects a strengthening of Nepal’s tax system.

However, recent Gen Z protests have disrupted revenue collection, making it challenging for the government to meet its targets.

The government has announced tax relief and incentives for industries, businesses, and commercial establishments affected by the protests on Bhadra 23-24.

The Inland Revenue Department (IRD) has clarified that businesses impacted by production or trade disruptions due to the protests can report their losses to the relevant IRD office to avail tax exemptions or deductions.

For the fiscal year 2082/83, arrangements have been made to reduce expenses on production and services and provide tax relief for unusually affected commercial inventories.

The IRD also highlighted that contributions to the National Reconstruction Fund can be deducted from taxable income, and businesses without insurance coverage for protest-related losses can claim deductions based on a certified inventory assessment.

The notice urges all taxpayers and stakeholders to utilize these provisions.