IMAGE: ESSENCE TRAVEL
NEPAL’S GOVERNMENT has endorsed the Taxpayer Incentive Gift Programme Operation Procedure 2026, bringing into effect a measure announced in this year’s national budget. The Inland Revenue Department will implement the scheme. Under the programme, one consumer will win Rs 133,034 every day while two monthly winners will each receive Rs 1 million. Anyone who has bought a cup of tea or a kilo of tomatoes in Kathmandu and watched the shopkeeper pocket the cash without issuing a receipt will understand what problem this is meant to fix.
The idea is simpler than the name suggests. Anyone making a personal purchase of goods or services worth more than Rs 100 in a single transaction is eligible to participate. Consumers paying digitally will be entered into the lottery automatically, with each qualifying transaction generating one entry. Those paying in cash or through other non-digital means must register their tax invoice through the IRD’s official website or mobile application. Draws happen twice a month, conducted by the IRD in the presence of senior officials and the media. Unclaimed prizes go to the Prime Minister’s Disaster Relief Fund. Winners pay a 25% tax on their winnings under the Income Tax Act, then collect what remains within fifteen days.
The precedent for this kind of scheme is encouraging. Taiwan has operated an almost identical invoice lottery since 1951. The Uniform Invoice system requires every registered business to issue a government-formatted receipt for every transaction, and those receipts double as lottery tickets. The programme is broadly credited with dramatically reducing VAT evasion in Taiwan’s retail sector and building a culture in which consumers ask for invoices as a matter of course rather than as a favour. Nepal, which introduced VAT in 1997 and has struggled to enforce it ever since, has been studying variants of the Taiwan model for years. The Taxpayer Incentive Gift Programme is the first time it has actually tried one.
The context in which it arrives matters. The government collected Rs 1.22 trillion in revenue in fiscal year 2025-26, achieving only 83% of its annual target despite a seven percent increase from the previous year’s collection of Rs 1.14 trillion, which itself met only 80.35% of its target. Missing the revenue target by 17% two years running is the reality against which Finance Minister Swarnim Wagle has set a 2026/27 collection target of Rs 1.4 trillion — a requirement for 14.75% revenue growth in an economy that grew at 3.85% last year. The gift programme is one of the tools Wagle is deploying to close that discrepancy.
It is a small tool for a big gap and the design has limitations. The daily prize of Rs 133,034 is roughly a quarter of the annual minimum wage and not large enough to change behaviour among people who are making serious money from cash transactions off the books. A small retailer who evades VAT on, say, Rs 5 million in annual sales is saving around Rs 650,000 in tax a year. The expected value of the lottery entries their customers might generate does not come close to that sum. The scheme is better understood as a culture-building exercise — nudging ordinary consumers to ask for invoices rather than accept the shopkeeper’s preference for cash — than as a financial deterrent to tax evasion.
There is also an asymmetry in the scheme’s design. Consumers who pay digitally are enrolled automatically, with zero additional effort. Consumers who pay cash must manually enter their invoice details — bill number, seller’s PAN, date, amount, payment method — through the IRD’s website or app. The digital-cash divide in Nepal tracks closely with the urban-rural divide, which means the scheme’s automatic pathway functions best in the urban areas where tax compliance is already relatively higher, while the most friction-laden pathway applies to the rural areas and informal urban markets where compliance is lowest and the revenue gap is widest.
Keshav Raghuvanshi of the Inland Revenue Department said the programme is meant to encourage consumers to ask for tax invoices; improve the recording of business transactions; and strengthen tax compliance. These are the right objectives. A lottery ticket is an incentive. A reformed invoice culture requires enforcement. Nepal’s VAT gap persists not because consumers don’t want to win prizes but because the businesses they buy from don’t issue invoices and face minimal consequences for the omission. The gift scheme changes what happens when a consumer wants a bill. It does not yet change what happens when a seller declines to provide one.
Nepal needs to collect Rs 180 billion more this year than it collected last year. A daily prize of Rs 133,034 is a start. ■
