Nepal: Digital Service Tax Procedures

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The Nepali Inland Revenue Department issued the procedures for digital service tax. The IRD has established separate procedures on the Digital Service Tax and VAT on Digital Services to give clarity by:


  • defining digital services and outlining the registration process,
  • application of the tax,
  • basis for tax calculation,
  • filing of tax reports, and
  • deregistration.


Highlights on the procedures related to DST:


  • Specific definitions (including Digital Service)
  • 2% DST rate for transactions on digital services
  • Exemption threshold for transactions of up to NPR 2 million annually, with taxes applicable on the total transaction value exceeding the exemption limit;
  • Registration requirements;
  • Penalty of 0.1% each year for failure to file a return within three months after the end of the income year;
  • Penalty interest of 15% for failing to pay income tax within three months after the end of the tax year; and
  • Regulations pertaining to audits, transaction tax assessments, and cancellation of registration.



The policy was put into effect on July 17.


Source: ird.gov.np

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