KATHMANDU, Jun 1: For the first time, the government is considering implementing multiple value-added tax (VAT) rates—one of the long-standing demands of the private sector.
Through the announcement of the FY 2025/26 budget, the government has pledged to study the feasibility of introducing multiple VAT rates in the country. “A study on the rationale and practical aspects of multiple VAT rates will be conducted,” the budget statement reads.
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The Revenue Advisory Committee has also recommended the adoption of multiple VAT rates to enhance tax collection efficiency. According to the committee, chaired by Revenue Secretary Dinesh Kumar Ghimire, aligning the VAT system with India’s could help reduce cross-border illegal trade.
Entrepreneurs argue that multiple VAT rates would enable the government to mobilize more revenue while addressing issues such as under-invoicing. However, the government has been reluctant to implement the system, citing concerns over the administrative capacity to effectively manage and monitor a multi-rate VAT structure.