VALUE ADDED TAX AND ITS CONTRIBUTION IN NEPALESE GROSS DOMESTIC PRODUCT

Abstract

This study offers a comprehensive synthesis of findings regarding Nepal's tax structure, focusing on the short and long-term implications. It proposes a policy framework for optimizing the structural organization of taxation, particularly VAT, to enhance productivity and equity. Additionally, it evaluates recommendations from the IMF and the Economics Commission of the Government of Nepal. The research investigates the contribution of Value Added Tax (VAT) to Nepal's Gross Domestic Product (GDP) from fiscal year 2070/71 to 2079/80, analyzing the interplay between VAT revenue, GDP growth, inflation rate, and exchange rate fluctuations. VAT, a significant revenue source, significantly influences economic performance through its impact on consumption, investment, and government spending. The study also examines how variations in inflation and exchange rates affect VAT collection and, consequently, GDP growth. Keywords: Gross Domestic Product, Value Added Tax, Inflation Rate and Exchange Rate,