Nepal: Implementation of revised procedure for taxation of digital service transactions
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The recent publication by the Nepali Inland Revenue Department unveils a revised procedure concerning the taxation of digital service transactions provided by nonresident taxpayers to consumers in Nepal. The updated guidelines shed light on various aspects, including:
Precise definitions and classifications of digital services.
Application of a 2 percent tax rate on the value of digital service transactions.
Establishment of an exemption threshold for transactions up to 2 million Nepalese rupees per annum, with taxes being applicable on the exceeding portion of the transaction value.
Requirements and procedures for taxpayer registration.
Introduction of a penalty of 0.1 percent per annum for failure to submit tax returns within three months following the income year.
Imposition of a 5 percent interest charge for late payment of taxes beyond three months following the income year.
Guidelines pertaining to audits, tax assessments, and the cancellation of registration.
This revised procedure was implemented on July 17, 2022.