Kathmandu: The government is preparing to strengthen the digital backbone of the economy by integrating artificial intelligence into key areas such as budget formulation and tax administration.
The Ministry of Finance aims to fully digitize Nepal’s public financial management system, making it more transparent, efficient, and secure through major structural reforms in information technology.
A recommendation report submitted by a committee led by Joint Secretary Than Prasad Panjiyani outlines a five-year vision to incorporate AI and big data into economic administration. It suggests that future budget planning and revenue collection can be driven by advanced data analytics and automated systems.
The report highlights the need to integrate currently fragmented systems, such as budget information platforms, tax systems, customs operations, and treasury management, into a unified digital framework. Through a national data exchange platform, the government would be able to monitor real-time revenue and expenditure, enabling more informed and responsive fiscal management.
To modernize tax administration, the plan proposes linking taxpayers’ Permanent Account Numbers (PAN) with national ID cards. With over 5.4 million individual PAN holders and more than 2 million business registrations, the system will eventually enable “faceless” tax audits, allowing compliance checks without requiring physical presence.
Artificial intelligence will be used to identify high-risk taxpayers, while electronic billing systems will be directly integrated with tax authorities to automate withholding and reporting processes. These measures are expected to reduce revenue leakage and simplify compliance for taxpayers.
In customs administration, advanced technologies will be deployed to tackle smuggling and under-invoicing. Major border points will be equipped with X-ray scanners, radiation detection monitors, and non-intrusive inspection systems. The report also envisions the introduction of smart gate systems that automatically verify scan reports, along with direct integration with India’s customs clearance system to facilitate smoother and more transparent cross-border trade.
The traditional approach to budgeting will be replaced with data-driven decision-making. A centralized data warehouse will be established to support evidence-based budget allocation, ensuring that resources are directed toward priority projects more effectively.
The report also warns of serious cybersecurity risks, noting that many existing government systems are outdated and nearing end-of-life. To address this, it recommends setting up dedicated and secure financial data centres and disaster recovery facilities for the Ministry of Finance and its agencies.
To overcome the shortage of skilled IT professionals, the report suggests creating specialized technical positions within the civil service and introducing performance-based incentives for employees.
If implemented, these reforms are expected to eliminate delays and improve transparency in public financial management, while also creating a secure and modern digital environment that could boost investor confidence and attract foreign investment.
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