Supporting Tax Authorities in Nepal

Project description

Title: Revenue Administration Support Project III (RAS)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Nepal
Partner: Inland Revenue Department (IRD)
Lead executing agency: Ministry of Finance, Nepal
Overall term: 2021 to 2023

Context

For sustainable social and economic development, it is essential to generate adequate domestic resources. This is particularly true for a state like Nepal, which has endured a serious economic fall-out from the covid pandemic. Nepal has therefore developed a roadmap to improve domestic resource mobilisation capacity, focusing on both tax and non-tax revenue sources. Through this, Nepal aims to increase its revenue ratio to 30 percent of gross domestic product (GDP) by 2030.

At the same time, Nepal is preparing to graduate from its current status of Least Developed Country to a Middle-Income country.  

Objective

Voluntary tax compliance in Nepal is enhanced.

Approach

To contribute to Nepal’s objectives, the RAS project is designed to strengthen the tax administration in Nepal.

RAS capacitates the Inland Revenue Department (IRD) through digital tools and enhanced audit skills. Thereby the project improves the efficiency as well as equitability of the tax system, and contributes to enhancing voluntary tax compliance by facilitating and raising awareness among taxpayers.   

The project cooperates with actors at central and subnational level and provides advisory services to the revenue authorities in three areas:

• Strengthening of IT systems at the federal tax authority to improve compliance with taxpayer’s obligations
• Enhancing the audit capacity of the tax authority
• Improving taxpayer services to reduce compliance costs

The Projects cooperation with the IRD of Nepal is key, as it collects close to half of government tax revenues in Nepal.

Last update: Dezember 2021