Need for Policy Stability Highlighted by Office of the Auditor General

The Office of the Auditor General has underscored the lack of policy stability within Nepal’s tax system. It has recommended the development of a long-term tax policy structure to make the tax system more predictable. The office has also urged the transformation of tax administration into a digital and data-driven system to facilitate faster and fairer dispute resolution. 3 Jestha, Kathmandu.

The Office of the Auditor General pointed out the absence of policy stability in Nepal’s tax system. In its 63rd annual report, it offered the government nearly a dozen recommendations, including ending the recurring practice of frequently changing tax rates through economic legislation. The audit office emphasized the need to develop a long-term or medium-term tax policy framework to maintain predictability and policy stability within the tax system.

Additionally, the Auditor General suggested establishing a tax policy framework that is investment-friendly, promotes entrepreneurship and production growth, and encourages investment in research, development, and technology. It also recommended reviewing the multi-tiered and complex exempted tax structure to establish a simpler, broader, and proportionate tax system. To strengthen the value-added tax system, the office advised promoting electronic billing and automating and enhancing transparency in the tax refund process.