tailieunhanh - Value added tax in Nepal: An empirical assessment

In developing economies, resource gap is critical and widening resulting to huge fiscal and budgetary deficits. Therefore, revenue mobilization is challenging proposition in an economy like Nepal where majority of the people live in abject poverty. Tax administration lacks innovative mechanism to identify new taxpayers and bring them into tax-net. Tax reform agenda was the reform package and program of the government after the restoration of multiparty democracy system. In Nepal, VAT was introduced in 1997 to improve revenue mobilization through broadening the tax base and modernizing the tax system. In this process, the government had to face new problems that came along with the adoption of VAT. Thus, the purpose of this study is to analyze the structure and responsiveness of VAT in Nepal empirically and compare it with that of old system of sales taxes. The old system of sales taxes refers to the combined sales, entertainment, contracts, hotels, and air flight taxes received by the government before 1997/98. | VALUE ADDED TAX IN NEPAL AN EMPIRICAL ASSESSMENT . Shah ABSTRACT In developing economies resource gap is critical and widening resulting to huge fiscal and budgetary deficits. Therefore revenue mobilization is challenging proposition in an economy like Nepal where majority of the people live in abject poverty. Tax administration lacks innovative mechanism to identify new taxpayers and bring them into tax-net. Tax reform agenda was the reform package and program of the government after the restoration of multiparty democracy system. In Nepal VAT was introduced in 1997 to improve revenue mobilization through broadening the tax base and modernizing the tax system. In this process the government had to face new problems that came along with the adoption of VAT. Thus the purpose of this study is to analyze the structure and responsiveness of VAT in Nepal empirically and compare it with that of old system of sales taxes. The old system of sales taxes refers to the combined sales entertainment contracts hotels and air flight taxes received by the government before 1997 98. INTRODUCTION During the last two decades Nepal had undergone various economic social and political changes. In this process the government introduced a number of reform packages and programs. Tax reform agenda was one of such reform packages and programs of the government after the restoration of multi-party democracy system in 1990. The initial tax reform included two main components first the introduction of value added tax VAT and second the enhancement of the capacity of the income tax administration Nepal Law Society 2005 . In Nepal VAT was introduced in 1997 to improve revenue mobilization through broadening the tax base and modernizing the tax system. In this process the government had to face new problems that came along with the adoption of VAT. First the benefits associated with switching from customs duty to VAT were yet to be realized in the presence of large informal and agricultural .