KATHMANDU, May 16: The cross-border smuggling of goods has been on rise mainly due to the collusion between customs officials and Nepal Police, causing a heavy leakage of revenues.
The Revenue Advisory Committee in its study report has pointed out the need for implementing extensive reform measures in the customs system operating in the country. The committee submitted its report to Finance Minister Bishnu Prasad Paudel on Thursday.
The government formed committee has come up with the misconducts being done at the customs points at a time when the government is struggling to generate revenue sufficient to cover even its recurrent expenditure. With only two months left for the completion of the ongoing fiscal year, the budget deficit stood at Rs 208 billion.
Birgunj customs mobilizes Rs 161 billion in revenue
While the government collected revenue of Rs 922.43 billion, it spent Rs 1.157 trillion by the end of the first 11 months. The Private Sector has also been demanding that the government bring in effective mechanisms to check surging illegal trading via border points.
The committee has advised the government to revise the rate of customs duty on imported goods to protect domestic products. Implementation of the global standard pricing system and extensive use of digital-based payment systems can make the customs procedures more transparent and simple while addressing issues of cross-border smuggling.
The committee has also stressed the need for better coordination between customs administration and security agencies, using advanced technology for border management and inter-country collaboration. It has recommended maintaining special facilities for the import-substitution industries and enforcement of production-friendly policies.
According to a press statement released by the finance minister’s secretariat, the committee emphasizes reforms in policy, law, structure, and procedures across sectors such as internal revenue, customs, trade and investment. It has also prioritised broadening the tax base, revising tax rates and strengthening tax administration to make the government's revenue collection effective.
The report has also urged for the integration of taxpayer data and simplification of income tax slabs. It also proposes implementing e-assessment and faceless audit systems and aligning retirement fund management with institutions like the Social Security Fund. In addition, it has recommended tax incentives for foreign investment, private equity, and venture capital, and updating tax laws to align with the federal system.
The panel further advises to remove duplications seen in revenue rights distribution at all three layers of governments. It has recommended implementing only those working guidelines which are allied to the policy and programs of the budget for the new fiscal year 2025/26 starting mid-July.
