Kathmandu, Nepal, March 8, 2010—IFC,
a member of the World Bank Group, is working with Nepal’s Ministry of
Finance and the Inland Revenue Department to assess requirements and identify
areas of support on tax reforms that will help reduce administrative burden,
broaden the tax base, and improve operations for Nepalese companies.
An IFC team visited Nepal earlier this month on a tax-scoping mission as
part of the Global Tax Simplification Program. The project, focusing specifically
on the needs of small and medium enterprises, will work to improve public
awareness on tax reforms and expand outreach to taxpayers.
“We welcome IFC’s partnership to work on reforms that will reduce the
cost of complying with tax policies and procedures and improve the efficiency
of our tax system, said Krishna Hari Baskota, Secretary of Revenue, Ministry
of Finance. “This will benefit local businesses, generate higher
investment, and help make Nepal’s tax administration more competitive
globally.” The ministry has an ambitious target of raising revenues
from the current 15.1 percent to 20 percent of Gross Domestic Product in
the next few years.
The Global Tax Simplification Program has two parallel work streams—technical
solutions to simplify systems of taxation and a knowledge management program
designed to enable governments to approach key issues facing tax simplification
related to tax for small and medium enterprises, sector-specific tax, value-added
tax, tax administration, and tax incentives. The program introduces
a new approach to tax reforms by focusing on how businesses are affected
by the tax system. By streamlining business taxation, the program
sets out to broaden the tax base, reduce informality, and spur growth and
“The Nepalese government is committed to tax reforms and we are happy
to offer advisory support and expertise to further improve the country’s
business environment for small and medium enterprises,” said Albena Melin,
Programme Coordinator for Nepal Investment Climate Program, IFC Advisory
Services in South Asia.
Nepal, which ranks 124th out of 183 economies on paying taxes
in the World Bank Group’s Doing Business 2011 report, has significant
scope to improve the ranking on paying taxes.
IFC, a member of the World Bank Group, creates opportunity for people to
escape poverty and improve their lives. We foster sustainable economic
growth in developing countries by supporting private sector development,
mobilizing capital for private enterprise, and providing advisory and risk
mitigation services to businesses and governments. Our new investments
totalled $18 billion in fiscal 2010, helping channel capital into developing
countries during the financial crisis. For more information, visit www.ifc.org.