Revenue Allocation in Federated Nepal
The constitution of Nepal 2015 provided the fiscal federalism model where the responsibilities are shared among three tiers of government including: central, province and local level. The allocation of the revenue as defined in the constitution are as follows:

Source: Nepal’s Fiscal Federalism Model in the New Constitution: Agenda for Amendments. Nepal Rastra Bank
The country’s major source of tax revenue which includes- custom duty, Value Added Tax (VAT), excise duty, corporate income tax and personal income tax comprises more than 80% of total tax revenue. (Refer Figure 1). In the federal structure, all these major tax sources are assigned under central government. The collection of local taxes such as property tax, house rent tax, land revenue tax, business tax and vehicle tax are assigned to the local level. Whereas, the state and local level governments are assigned to collect entertainment tax, advertisement tax, registration charge of land and house concurrently. Similarly, all three levels can collect certain service charge, royalty, tourism charge and fines and penalty.
To operationalize the fiscal federalism, three sets of acts have been introduced as mentioned in the table below: