Nepal: Implementation of revised procedure for taxation of digital service transactions
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.
Source: ird.gov.np
