Nepal’s Tax Base Expands Sharply in First Half of Fiscal Year 2082/83

Kathmandu — Nepal has recorded a significant expansion in its tax base during the first six months of the current fiscal year 2082/83, reflecting growing formalization of economic activities and improved tax administration. According to the Inland Revenue Department, a total of 361,003 new active taxpayers were added during the review period, taking the overall number to 7,360,353.

By the end of the previous fiscal year 2081/82, the number of active taxpayers stood at 6,999,350. The addition of more than 360,000 new taxpayers in just six months represents one of the fastest expansions in recent years. Officials say this trend indicates increasing compliance, wider use of digital services, and a gradual shift of businesses and individuals into the formal tax system.

Business Permanent Account Numbers (PANs) also saw steady growth. The number of business taxpayers increased from 2,060,758 to 2,116,000 during the period. In total, 55,242 new business PANs were registered in six months, suggesting rising entrepreneurial activity and stronger enforcement of registration requirements.

The largest increase, however, was recorded in individual PAN registrations. The number of individual taxpayers rose from 4,902,722 to 5,207,612, with 304,890 new registrations added during the period. Revenue officials say this reflects growing awareness about tax obligations, especially among salaried employees, freelancers, and small service providers.

The number of W-PANs, issued mainly to Nepali workers employed abroad, also increased modestly. From 35,870 at the end of last fiscal year, W-PAN registrations rose to 36,741, adding 871 new taxpayers. Although the growth is relatively small, officials believe it shows gradual improvement in bringing migrant workers into the tax network.

Value Added Tax (VAT) registration has also expanded. The number of VAT-registered taxpayers rose from 351,735 to 364,992, with 13,257 new registrations during the review period. This suggests improved monitoring of medium and large businesses and greater emphasis on indirect tax compliance. Similarly, excise taxpayers increased from 124,997 to 129,949, with 4,952 new registrations.

Officials at the Ministry of Finance Nepal attribute the growth in taxpayer numbers to several factors, including wider access to digital registration systems, improved online services, better data integration, and government campaigns to bring more citizens into the tax system. They also point to gradual recovery in economic activities following recent slowdowns.

Economic analysts say the expanding tax base is a positive signal for fiscal sustainability. A broader taxpayer network reduces dependence on a limited group of large taxpayers and helps stabilize revenue collection. It also creates room for the government to finance public services and development projects without excessive borrowing.

However, experts caution that increasing registrations alone is not sufficient. Many newly registered taxpayers remain inactive or irregular in filing returns and paying dues. Without effective monitoring, enforcement, and taxpayer support, the gap between registration and actual revenue collection could persist.

They also emphasize the need to improve service delivery, simplify tax procedures, and strengthen trust between taxpayers and authorities. Encouraging voluntary compliance, especially among small businesses and self-employed individuals, will be crucial for maintaining long-term growth in revenue.

Overall, the latest figures indicate that Nepal is making steady progress in expanding its tax base through digitalization and administrative reforms. If supported by stronger enforcement and better taxpayer services, this trend could play a key role in strengthening public finances and supporting sustainable economic growth in the coming years.