Government Puts Pressure on Revenue Administration as Rs. 1.6 Trillion Collection Target Looms

Kathmandu — With the government setting an ambitious target of collecting around Rs. 1.6 trillion in revenue during the current fiscal year, the Ministry of Finance has begun efforts to strengthen tax administration and improve revenue mobilization. Finance Minister Dr. Swarnim Wagle has directed the newly appointed heads of the Department of Customs and the Inland Revenue Department to work toward achieving the target through transparency, efficiency, and stronger enforcement mechanisms.

During a meeting held at the Ministry of Finance on Tuesday with senior officials from the customs and revenue administration, Minister Wagle emphasized that increasing revenue should not be viewed merely as meeting a numerical target but as a foundation for strengthening the country’s financial capacity. He instructed officials to focus on controlling revenue leakage, increasing voluntary tax compliance, and creating a taxpayer-friendly environment.

Revenue collection has remained a major challenge for the government in recent years. Slower economic activity, fluctuations in imports, weak private sector demand, and uncertainty in the business environment have affected government income. In such a situation, experts argue that improving tax administration, expanding the taxpayer base, and reducing leakages are more sustainable approaches than increasing tax rates.

Improving Tax Administration Seen as Key to Meeting Target

The Department of Customs and the Inland Revenue Department are the two major pillars of Nepal’s revenue system. While customs revenue is closely linked with import and export activities, the Inland Revenue Department manages domestic sources such as income tax and value-added tax (VAT).

Minister Wagle has emphasized the need to transform both institutions into technology-driven, transparent, and efficient public service agencies. Expanding digital systems is expected to reduce compliance costs for taxpayers, simplify procedures, and minimize opportunities for irregularities.

In particular, technology-based monitoring in customs operations could help address issues related to valuation, under-invoicing, and revenue leakage. Similarly, improving taxpayer services and building trust will be essential for increasing voluntary compliance under the domestic tax system.

Balancing Revenue Growth and Business Confidence

Although increasing government revenue is essential, maintaining a supportive business environment remains another major challenge for the government.

Minister Wagle has stressed the importance of achieving revenue targets while maintaining the confidence of businesses and taxpayers. This approach requires not only stronger action against tax evasion but also easier services, predictable regulations, and a transparent tax system for compliant businesses.

A trustworthy tax system can create long-term growth in government revenue. However, excessive enforcement without adequate facilitation could negatively affect business confidence. Therefore, the revenue administration will need to maintain a balance between regulation and taxpayer support.

Strict Action Against Irregularities, Incentives for Honest Employees

The finance minister has also instructed authorities to take strong action against employees involved in irregular activities within revenue offices. At the same time, he called for recognition and incentives for officials who perform their duties honestly and effectively.

The role of government employees is crucial in improving revenue collection. Strengthening accountability, performance evaluation, and institutional integrity will be necessary to improve efficiency across customs and tax offices.

Ensuring transparency in high-volume revenue-generating offices, particularly customs points and major tax offices, could significantly reduce leakages and improve public confidence in the system.

New Leadership Expected to Deliver Results Within 6–8 Months

The Ministry of Finance has stated that the new leadership team was selected based on administrative capability and professional experience. Yam Lal Bhusal has been appointed Director General of the Department of Customs, Dr. Bhishma Kumar Bhusal as Director General of the Inland Revenue Department, and Prem Prasad Acharya as Deputy Director General of the Department of Customs.

Minister Wagle has expressed confidence that visible improvements will emerge within six to eight months under the new leadership.

However, reforming revenue administration cannot depend solely on changes in leadership. Long-term improvement requires stable policies, effective use of technology, employee accountability, and stronger cooperation between the government and the private sector.

Building Domestic Revenue Capacity as a Long-Term Goal

Strengthening domestic revenue collection remains a major priority for the government. Higher internal revenue generation can reduce dependence on external borrowing and provide more resources for infrastructure development, public services, and social programs.

Nepal’s fiscal management has increasingly depended on improving domestic revenue performance. However, sustainable revenue growth must go hand in hand with economic expansion, investment growth, and increased business activity.

The biggest challenge for the new revenue leadership will not only be achieving the Rs. 1.6 trillion collection target but also transforming Nepal’s tax administration into a system that is transparent, technology-oriented, efficient, and trusted by citizens and businesses.

The performance of revenue collection in the coming months and the visible improvements in administration will determine whether the government’s strategy delivers meaningful results.