Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Birendra Raj Pandey has stressed the urgent need for reforms in Nepal’s tax system. Speaking at the “Public-Private Dialogue on Revenue System Reform” organized by the federation in Kathmandu on Wednesday, he stated that immediate improvements in the tax structure are essential.

Pandey highlighted that Nepal’s economy is currently facing significant challenges and emphasized the importance of stability in tax policy. He noted that although the banking sector currently holds ample investable funds, industries are operating at low capacity due to declining market demand.

He further explained that despite single-digit interest rates and low inflation, demand remains weak, causing money to sit idle in banks—an unhealthy sign for the economy. This situation, he said, has also adversely affected the government’s revenue collection.

Pandey emphasized that economic indicators cannot improve without increasing investment, and tax policies play a decisive role in influencing investment decisions. Both domestic and foreign investors assess tax policy stability before committing capital. He therefore called for stronger policy stability to attract investment and promote industrial growth.

He stated:
"The country’s economy is in a challenging situation. Banks have investable funds, interest rates are in single digits, yet market demand has not increased. Industries are operating at low capacity. Idle money is not a good sign for the economy, and it has impacted government revenue as well. Without increasing investment, improving these indicators is difficult. Tax system reform is essential to encourage investment, as highlighted by the commission and the action plan. Therefore, tax reform should be implemented as soon as possible. Policy stability is crucial for industrial development, and both domestic and foreign investors assess tax policies before investing. Since tax policy influences investor decisions, this requires serious attention from the government.”

He also pointed out that the High-Level Economic Reform Recommendation Commission, formed by the government, has prioritized tax reform. Although multiple commissions have been established in the past for economic reforms, Pandey noted that the government has shown strong commitment toward implementing the recommendations of this particular commission. The Economic Reform Implementation Action Plan 2082 has also emphasized the importance of tax system improvement.