Kathmandu: The government is preparing to develop its own electronic billing software system, with Finance Minister Swarnim Wagle expected to formally announce the plan in the upcoming national budget.
At present, businesses issuing invoices are required to use billing software developed by private vendors approved by the Inland Revenue Department. Under the new policy, however, the government itself will either build or acquire a centralized software platform and provide it free of cost to businesses responsible for collecting taxes such as VAT and excise duties.
The move is part of Nepal’s broader push to digitize VAT billing and strengthen tax administration. Over the past decade, the government’s electronic billing efforts have gradually evolved into the current Central Billing Monitoring System (CBMS), which allows tax authorities to monitor invoices in real time.
Despite progress, the existing system has created significant burdens for taxpayers. Businesses must often spend heavily to purchase billing software, while different vendors provide different interfaces and technical standards, requiring additional expertise and maintenance costs.
There are also structural weaknesses in the current arrangement. Since only businesses above certain turnover thresholds are required to connect to the government’s CBMS platform, many smaller businesses continue issuing invoices outside the system, limiting tax transparency.
Officials are also concerned about possible revenue leakage linked to vendor-controlled software. The government fears some systems may contain backdoor vulnerabilities that allow businesses to delete invoices or alter transaction values, potentially reducing tax liabilities. Authorities are equally worried about data misuse because sensitive commercial information is currently stored on private systems rather than government-controlled infrastructure.
To address these issues, the government is now preparing to launch a unified state-run e-billing platform.
According to Finance Ministry sources, the main focus will be on VAT invoices issued directly to consumers. By operating its own software, the government believes it can sharply reduce compliance costs for businesses while improving tax oversight.
The plan involves developing a basic standardized software system that would be distributed free of charge to small taxpayers, eliminating the need for them to purchase expensive commercial software packages.
Officials say the centralized model would allow all invoice data to flow directly into government servers, minimizing the risk of data manipulation. A single nationwide billing format would also make audits and tax monitoring much easier.
Until now, the government had avoided building its own billing software because of concerns over technical capacity and the difficulty of providing uninterrupted support services in the event of system failures.
That position has now changed. Authorities are considering either developing an entirely new platform or purchasing one of the existing vendor systems and converting it into a government-operated service integrated with the CBMS network.
To make the system functional nationwide, the government is also preparing to upgrade its hardware capacity and technical infrastructure so that smaller businesses can access the service free of charge.
Finance Ministry officials believe the initiative could simultaneously lower business costs and reduce tax leakage.
Tax and technology experts have long argued that the government should provide small businesses with free billing software or even a mobile application because many entrepreneurs cannot afford expensive commercial systems. In line with those recommendations, the Finance Ministry is preparing a platform that would allow VAT invoices to be issued directly from mobile phones.
Sources say the Inland Revenue Department has already begun groundwork for the project.
Currently, small businesses often spend between Rs 20,000 and Rs 50,000 to purchase billing software, in addition to recurring annual renewal fees. Officials say a government-run platform would remove that financial burden entirely.
Under the present arrangement, business data is often stored on local computers or private cloud servers controlled by vendors. With a state-operated system, invoice data would instead be stored securely in government data centres, significantly reducing the risk of data loss or manipulation.
The centralized platform would also make it easier to instantly implement tax-rate changes or policy updates introduced through annual budgets or amendments to financial laws.
Tax administration would become more standardized as businesses across the country would issue invoices in a uniform format, making monitoring and auditing far more efficient for revenue officials.
The government also hopes the new mobile-based system will bring technologically underserved small businesses into Nepal’s formal digital tax network.
Nepal first established the legal foundation for computerized billing after introducing the Electronic Invoice Procedure 2017. Later that year, on National Tax Day, the Inland Revenue Department launched the pilot phase of the Central Billing Monitoring System to allow large taxpayers’ invoice data to be transmitted directly to government servers in real time.
In fiscal year 2018/19, the government made electronic billing mandatory for major department stores, the alcohol and tobacco industries, and automobile dealers.
Between fiscal years 2020/21 and 2022/23, the mandatory electronic billing requirement was gradually expanded. All VAT-registered businesses with annual turnover exceeding Rs 100 million were required to adopt electronic invoicing, while hotels, restaurants, and cafeterias with turnover above Rs 50 million were also brought into the system.
From fiscal year 2023/24 onward, all taxpayers with annual turnover above Rs 250 million were required to connect directly to the CBMS platform. Software vendors were also required to register their billing systems with the Inland Revenue Department and comply with government technical standards.
Most recently, on April 16, businesses with annual turnover exceeding Rs 200 million were made subject to mandatory real-time billing requirements.
Officials say the shift from handwritten invoices to computerized billing has already helped reduce fake VAT bill fraud. The next phase, they say, is for the government itself to operate the system, reducing costs for small businesses while allowing invoices to be issued directly from mobile devices through a state-controlled platform.
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