Budget keeps tax burden high, says FNCCI president; calls for customs relief, swift implementation

KATHMANDU: Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has welcomed the government’s budget for the upcoming fiscal year 2026/27 and urged swift, effective implementation.

Speaking at the programme 'Budget for Fiscal Year 2026/27: Policy Dialogue' in Kathmandu on Monday, FNCCI President Anjan Shrestha said the private sector will judge the budget by its impact on investment, production and jobs. He added, “A budget is not just an accounting of one year's income and expenditure; it is a mirror of the state's intent and priority.”

Shrestha praised the budget’s focus on structural and legal reform, noting plans to repeal outdated laws and introduce new legislation on debt recovery and intellectual property. He also mentioned proposals to reduce and reorganise government agencies.

The umbrella organisation of the private sector welcomed measures to ease foreign investment, including automatic approvals for some investments and limiting central bank involvement in repatriation to notification. It supported steps to encourage angel investment, venture capital and private equity through a Limited Liability Partnership framework.

In particular, practical measures for industry and MSMEs were highlighted. The budget allows simple notifications for capacity and capital increases, permits leased structures in special economic zones to be used as collateral, and proposes insolvency amendments and credit guarantees for first-loss recovery.

On energy and markets, Shrestha pointed to plans to restructure the Nepal Electricity Authority (NEA), adopt take-or-pay power purchase arrangements, fast-track small power purchase agreements and allow private sector cross-border electricity trade. He said these moves could make the sector more investable and export-oriented.

He also noted capital market reforms and tax changes aimed at boosting liquidity and restoring purchasing power to the middle class. He welcomed incentives for IT exports and the planned sovereign AI compute centre in Syuchatar.

However, FNCCI raised concerns that the real tax burden has not fallen because many abolished excise items were replaced by new fees. It also said customs relief on raw materials favours auxiliary inputs rather than core materials, limiting cost reductions for producers.

The federation objected to an increase in customs on agricultural tools for small farmers and asked that the previous 1% rate be restored. It also urged an extension of the tax dispute settlement window beyond Poush 2083 and clearer terms for the collateral-free startup loan programme.

During the policy dialogue, FNCCI made three immediate requests: ensure the timely implementation of announced policies and bring legislative amendments to parliament quickly; correct ambiguities in tax rates; and add a Business icon to the Nagarik App to integrate business registration through exit.

FNCCI President Shrestha offered cooperation with the government. “We are ready to walk shoulder to shoulder with the government in the journey of investing capital, expanding industries, creating jobs, and making Nepal an economy oriented toward high income,” he said.

The FNCCI said it is cautiously optimistic but remains anxious, stressing that the budget’s success will depend on how announcements are turned into action on the ground.