E-VAT Implementation in Nepal: Progress, Challenges, and Fiscal Implications

Abstract

This goes especially in the case of developing countries, like Nepal which has over time become reliant on VAT as a central part of its domestic resource mobilization by ushering it in 1997. It aimed at making reforms in the existing tax administration and IRD; slowly started going for electronic systems (not compulsorily entered but e-VAT-movement for filing online returns, e-payments and establishment of a Central Billing Monitoring System (CBMS)). This descriptive and analytical work uses qualitative document analysis of official IRD reports, legislative frameworks, and peer-reviewed literature to establish the current state-of-play on administrative efficiencies and systemic roadblocks regarding e-VAT. The results indicate that digitalization has impacted input accuracy in all areas by decreasing input mistakes and expanding electronic submitting to more than ninety% of registrants in Fiscal 12 months 2080/81 but there is nonetheless a room for improvement. The structural issues also include recurrent systemic collapse of servers at high traffic hours, extremely high compliance costs for Small and Medium Enterprises (SMEs), low digital literacy and poor data integration across departments. Finally, the note concludes with limited but targeted policy suggestions on investing in modernizing IT systems, subsidizing compliance software to small businesses (especially those which are more vulnerable of being washed-out of business), and a plea for a common Framework for data sharing aimed at revenue growth across multiple environmentally-friendly modalities.