Revenue Leakage Control Strategy Urged by Finance Minister
24th February 2026, Kathmandu
The Government of Nepal has officially signaled a more aggressive stance against fiscal indiscipline as Finance Minister Rameshore Prasad Khanal called for a robust Revenue Leakage Control Strategy. During a high level meeting of the Central Revenue Leakage Control Committee held at the Police Headquarters on February 24, 2026 (Falgun 12, 2082), the Minister emphasized that the current economic climate demands an uncompromising approach to tax evasion and smuggling. With the national economy facing structural pressures and a widening budget deficit, the protection of existing revenue streams has become a matter of national priority. The Minister directive focuses on moving away from isolated departmental actions toward a synchronized, technology driven enforcement model that involves the Ministry of Finance, the Nepal Police, and the Department of Customs in a unified front.
Revenue Leakage Control Strategy
A central pillar of the proposed strategy is the necessity for seamless inter agency coordination. Minister Khanal pointed out that the complexity of modern financial crimes, such as under invoicing in international trade and the use of informal hundi channels for cross border payments, cannot be tackled by any single agency in isolation. He argued that the siloed approach of the past has allowed tax evaders to exploit gaps in communication between the tax administration and law enforcement. To address this, the new strategy envisions a real time data sharing environment where the Nepal Police can act on immediate intelligence provided by customs and inland revenue officials. By performing their duties within their respective jurisdictions but with a shared intelligence pool, these agencies can ensure that smuggling routes are closed and that large scale tax fraud is detected before it drains the state treasury.
During the deliberations, Dan Bahadur Karki provided a strategic perspective by linking revenue leakage directly to national security and governance. He noted that illegal trade and revenue evasion do not just deprive the state of funds for schools and hospitals; they also fund criminal networks and undermine the rule of law. The Nepal Police has been directed to enhance its presence along the border areas and in major commercial centers where the informal economy is most prevalent. The strategy also includes the strengthening of the Revenue Investigation Department, giving it more technical resources to conduct forensic audits of firms suspected of maintaining dual accounting systems to hide their true turnover. This elevates revenue control from a simple administrative task to a critical component of the national security apparatus.
The role of technology is highlighted as the most effective long term solution for leakage control. The Finance Minister and other high ranking officials stressed the need for a fully digital tracking system for goods in transit. By implementing GPS based vehicle tracking and automated customs clearance systems, the government aims to reduce human intervention, which is often a source of corruption and manual error. Furthermore, the integration of data analytics will allow the tax office to flag discrepancies between a company import volume and its reported sales. This intelligence based enforcement ensures that resources are deployed toward high risk targets, making the revenue administration more efficient and less intrusive for compliant taxpayers.
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Nepal current revenue administration faces several structural hurdles that this strategy aims to mitigate. The dominance of the informal economy remains a major challenge, as a significant portion of domestic trade still occurs without formal billing or tax registration. Under invoicing at the customs point is another persistent issue where the declared value of imported goods is significantly lower than the actual market price. To combat this, the Revenue Leakage Control Strategy proposes a stricter valuation database at customs and the mandatory issuance of electronic invoices (e-billing) for all wholesalers and major retailers. Joint Secretary Uttarkumar Khati noted that improving the compliance of these large scale traders alone could significantly boost the domestic resource mobilization effort.
Furthermore, the strategy emphasizes the importance of skilled human resource management and legal reforms. The existing anti smuggling laws are being reviewed to ensure they provide a sufficient deterrent, including higher penalties and faster prosecution of revenue related offenses. Deputy Inspector General Bishwo Adhikari presented a plan for specialized training for police officers in financial crime investigation, ensuring they are equipped to handle the complexities of digital tax evasion. This professionalization of the enforcement staff is seen as essential for the credibility of the revenue system. If the public perceives that the law is being applied fairly and that high level evaders are being caught, it will naturally lead to higher voluntary tax compliance.
The long term benefits of a successful Revenue Leakage Control Strategy extend beyond the immediate fiscal gains. By reducing the state dependency on foreign aid and high interest domestic borrowing, a stronger revenue base provides the government with the fiscal space needed to invest in national pride projects and social security programs. It also improves the business climate by creating a level playing field where honest entrepreneurs are not disadvantaged by competitors who evade taxes. The Finance Minister concluded the meeting by urging all stakeholders to view revenue collection as a collective responsibility, where every rupee saved from leakage is a rupee invested in the future of Nepal.
In conclusion, the directive from Finance Minister Rameshore Prasad Khanal represents a comprehensive roadmap for fiscal reform in 2082. The Revenue Leakage Control Strategy is more than just a set of new rules; it is a call for a fundamental shift in how the state manages its resources. Through inter agency coordination, the adoption of cutting edge technology, and a commitment to transparency, Nepal aims to build a resilient and accountable revenue system. As the Central Revenue Leakage Control Committee moves toward the implementation phase, the focus will remain on achieving tangible results that support the nation goals of economic prosperity and social justice. The success of this strategy will be the primary benchmark for the government fiscal performance in the coming years.
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