NEPSE trading

#NepalEconomy #RevenueCollecti
·

By Sandeep Chaudhary

VAT and Customs Drive 52% of Nepal’s Tax Revenue Despite Overall Slowdown

VAT and Customs Drive 52% of Nepal’s Tax Revenue Despite Overall Slowdown

Nepal’s government revenue structure in the first month of 2025/26 highlights a familiar trend: Value Added Tax (VAT) and Customs duties together contribute over 52% of total tax revenue, making them the backbone of fiscal resources despite an overall slowdown in collections.

According to the latest fiscal data, VAT accounted for Rs. 27.6 billion (32.4% of total revenue) while Customs duties stood at Rs. 16.6 billion (19.6%), together forming more than half of the government’s tax income. This reliance underscores Nepal’s dependence on consumption and imports as primary revenue drivers.

However, the overall revenue picture is not encouraging. Total collections fell 10.5% year-on-year to Rs. 84.7 billion, driven by a collapse in non-tax revenue (−78%) and a small decline in income tax (−1.8%). While excise revenue rose 14.8% and educational service tax grew nearly 70%, these remain minor contributors compared to VAT and Customs.

Economists warn that excessive reliance on VAT and Customs makes Nepal vulnerable to trade shocks, border disruptions, or downturns in consumption. Without strengthening domestic income tax compliance and diversifying non-tax sources, fiscal stability may remain fragile.

Related Blogs

Nepal’s Economic Growth Stuck Around 4% as Industry Shrinks and Service Sector Dominance Expands
Top

4 min read

Nepal’s Economic Growth Stuck Around 4% as Industry Shrinks and Service Sector Dominance Expands

Nepal’s Economic Growth Stuck Around 4% as Industry Shrinks and Service Sector Dominance Expands Nepal’s economic growth has historically remained around an average of 4 percent, reflecting a relatively modest pace of expansion over the long term. According to the latest Macroeconomic Report released by the Nepal Rastra Bank on Tuesday, the country’s potential growth rate has been estimated at around 4.3 percent. The report identifies the period between 1986 and 1995 as a significant phase of economic expansion, during which the growth rate surpassed the estimated potential level. In the years that followed, however, economic growth largely stabilized around the potential rate, while structural changes within the economy gradually began to emerge.

Dipesh Ghimire

·

5 Mar, 2026

Middle East Conflict Raises Concerns Over India’s Energy Security and Regional Economic Stability
Top

2 min read

Middle East Conflict Raises Concerns Over India’s Energy Security and Regional Economic Stability

Middle East Conflict Raises Concerns Over India’s Energy Security and Regional Economic Stability The intensifying conflict in the Middle East has begun to raise concerns about the stability of global energy supply, with early indications suggesting that India could face disruptions in its natural gas imports. As tensions in the region escalate, uncertainties surrounding key maritime routes and production facilities are drawing attention from governments and energy companies across South Asia. India’s largest liquefied natural gas (LNG) importer, Petronet LNG, has warned that the ongoing geopolitical tensions may affect its operations. According to a notice issued to the stock exchange, vessels carrying LNG may encounter difficulties reaching QatarEnergy’s major loading port at Ras Laffan via the Strait of Hormuz. This narrow waterway is one of the most critical energy transit routes in the world, through which a significant portion of global oil and gas shipments passes. Any disruption along this corridor could therefore have wide-ranging implications for international energy markets.

Dipesh Ghimire

·

4 Mar, 2026

Understanding Margin Loans: Nepal’s New Trading Facility Expands Buying Power but Demands Investor Awareness
Top

3 min read

Understanding Margin Loans: Nepal’s New Trading Facility Expands Buying Power but Demands Investor Awareness

Understanding Margin Loans: Nepal’s New Trading Facility Expands Buying Power but Demands Investor Awareness Kathmandu — The introduction of margin lending under Nepal’s updated securities regulations has brought renewed attention to leveraged investing, a system that allows investors to purchase shares using borrowed funds through brokerage firms. As the concept gains visibility in the domestic capital market, financial experts emphasize that understanding how margin loans function is essential before investors begin using the facility.

Dipesh Ghimire

·

1 Mar, 2026

Nepal Introduces New Margin Trading Framework, Expanding Investment Access While Raising Risk Awareness
Top

4 min read

Nepal Introduces New Margin Trading Framework, Expanding Investment Access While Raising Risk Awareness

Nepal Introduces New Margin Trading Framework, Expanding Investment Access While Raising Risk Awareness Nepal’s Securities Board (SEBON) has implemented a new Margin Trading Directive 2082, replacing the earlier 2017 framework, in a move aimed at modernizing the country’s capital market and expanding investment participation. The revised regulation, effective from Falgun 1, introduces clearer operational structures and risk controls, signaling the regulator’s attempt to balance market expansion with investor protection.

Dipesh Ghimire

·

1 Mar, 2026

Green Economy Emerges as Central Election Agenda as Parties Compete Over Forest-Based Prosperity Plans
Top

3 min read

Green Economy Emerges as Central Election Agenda as Parties Compete Over Forest-Based Prosperity Plans

Green Economy Emerges as Central Election Agenda as Parties Compete Over Forest-Based Prosperity Plans Kathmandu — With the upcoming House of Representatives elections approaching, Nepal’s major political parties have increasingly placed the green economy at the center of their campaign narratives, presenting forest conservation and sustainable resource use as pathways to economic growth, employment generation, and climate resilience. The shift signals a growing recognition among political actors that environmental policy is no longer limited to conservation debates but has become closely tied to economic strategy and voter appeal. Across party manifestos, forests are being framed not merely as ecological assets but as economic engines capable of driving rural development and reducing import dependency. Campaign messaging highlights job creation, carbon trading opportunities, climate adaptation programs, and sustainable natural resource management as tools to attract voters amid economic uncertainty and rising unemployment concerns.

Dipesh Ghimire

·

1 Mar, 2026

Banking Federation Welcomes Mid-Term Monetary Policy Review, Sees Stability Focus but Flags Structural Risks
Top

3 min read

Banking Federation Welcomes Mid-Term Monetary Policy Review, Sees Stability Focus but Flags Structural Risks

Banking Federation Welcomes Mid-Term Monetary Policy Review, Sees Stability Focus but Flags Structural Risks Kathmandu — The Confederation of Banks and Financial Institutions Nepal (CBFIN) has welcomed the Nepal Rastra Bank’s mid-term review of the Monetary Policy for fiscal year 2082/83, describing the policy direction as cautious, measurable, and stability-oriented at a time when the domestic financial system continues to navigate post-slowdown recovery pressures. The federation believes the central bank has attempted to balance economic support with financial discipline rather than pursuing aggressive policy shifts.

Dipesh Ghimire

·

1 Mar, 2026

Nepal Begins Budget Work, Sets Up Revenue Advisory Committee to Shape Tax and Economic Reforms
Top

4 min read

Nepal Begins Budget Work, Sets Up Revenue Advisory Committee to Shape Tax and Economic Reforms

Nepal Begins Budget Work, Sets Up Revenue Advisory Committee to Shape Tax and Economic Reforms Kathmandu — Nepal’s Ministry of Finance has formally kicked off the process of preparing the national budget for the upcoming fiscal year by constituting a Revenue Advisory Committee, signaling the start of the government’s annual fiscal planning cycle. Officials say the move is aimed at collecting structured policy input before the budget ceiling, priorities, and tax proposals are finalized. According to the ministry, the committee has been formed under a decision of Finance Minister Rameshwar Prasad Khanal dated Magh 28 (Nepali calendar), with the Ministry’s Revenue Secretary serving as coordinator. The ministry’s spokesperson, Tank Prasad Pandey, said the committee has already started work, indicating that early-stage consultations and technical reviews are now underway. At its core, the committee’s mandate is broader than routine “tax suggestions.” It has been asked to advise on the economic context and on what the budget should prioritize—meaning it can influence both the revenue strategy (how the state raises money) and the policy direction (where the state plans to intervene, reform, or incentivize). In practice, such committees often become the route through which competing interests—business groups, sector associations, experts, and government agencies—try to shape the budget narrative.

Dipesh Ghimire

·

1 Mar, 2026

Rising US–Iran Tensions Push Middle East Toward a Dangerous Turning Point
Top

4 min read

Rising US–Iran Tensions Push Middle East Toward a Dangerous Turning Point

Rising US–Iran Tensions Push Middle East Toward a Dangerous Turning Point Kathmandu — The long-standing hostility between the United States and Iran appears to be entering one of its most volatile phases in decades as geopolitical tensions escalate sharply at the beginning of 2026. What began as ideological rivalry rooted in historical mistrust has now evolved into a complex confrontation with global economic, military, and diplomatic consequences. Analysts warn that the situation is approaching a critical threshold where miscalculation by either side could trigger a wider regional conflict. The roots of the confrontation stretch back more than seventy years. The 1953 coup in Iran, widely associated with Western intervention, and the 1979 Islamic Revolution that reshaped Iran into an Islamic Republic laid the foundation for enduring hostility between Tehran and Washington. Since then, mutual suspicion has shaped foreign policy decisions on both sides, turning the relationship into one of the most persistent geopolitical rivalries of the modern era.

Dipesh Ghimire

·

1 Mar, 2026

Nepal Must Reduce Production Costs to Compete in the International Market
Top

3 min read

Nepal Must Reduce Production Costs to Compete in the International Market

Nepal Must Reduce Production Costs to Compete in the International Market Nepal’s industrial journey formally began in B.S. 1992 with the establishment of the Industrial Council, followed by the founding of Biratnagar Jute Mill in B.S. 1993. The introduction of the Company Act in the same year paved the way for the establishment of rice, cotton, and sugar mills. Historical records show that nearly two dozen industries were set up during the Rana regime, marking the early foundation of institutional industrial development in the country.

Dipesh Ghimire

·

26 Feb, 2026

Future Strategy: Nepal’s Tourism Must Shift Toward a Generation-Centered and Integrated Model
Top

2 min read

Future Strategy: Nepal’s Tourism Must Shift Toward a Generation-Centered and Integrated Model

Future Strategy: Nepal’s Tourism Must Shift Toward a Generation-Centered and Integrated Model Nepal’s tourism industry is entering a phase where traditional approaches may no longer be sufficient. While mountaineering and trekking remain strong pillars of the sector, experts argue that the future of tourism must be “generation-centered”—designed to meet the preferences of younger travelers who seek diverse, flexible, and experience-driven destinations.

Dipesh Ghimire

·

26 Feb, 2026