Financial Year – 17th July to 16th July Currency – NPR
Corporate Tax Summary
Residence – A company in respect of an income year is resident in Nepal if any of the following criteria fulfills:
it is incorporated under the law of Nepal or,
the management of which is effective in Nepal in an income year or
Government of Nepal or Provincial government
Basis of Taxation – Resident Company are taxed on the income generated by them regardless of the source of the income and non-resident Company are taxed on the income generated by them within the extend that the sources of income is in Nepal.
Corporate Income Tax Rate (%)
25% flat rate for normal entities
However in following cases the rates are as-
Bank and Financial Institution- 30%
General Insurance Companies- 30%
Telecommunication and Internet Service, Money transfer, capital market business, entity dealing in cigarette, beedi, cigar, tobacco, khaini, guthka, betel paan, masala, liquor, beer or entity engaged in the business of petroleum products-30%
Branch Tax Rate (%)
Withholding Tax Rate:
Dividends – Franked
Payment of dividend, payment of gain in respect of investment insurance or payment of gain from unapproved retirement fund paid by resident person is all deemed Final Withholding Tax
Dividends – Unfranked
Dividends – Conduit Foreign Income
On reparation of the income by foreign permanent establishment
Source in Nepal paid by resident person. However In case of Interest paid to Natural person 5% final tax is applicable
Royalties from Intellectual Property
Source in Nepal paid by resident person
Fund Payments from Managed Investment Trusts
However Payment of gain from unapproved retirement fund paid by resident person- 5%
Branch Remittance Tax
Net Operating Losses (Years)
Its allowed only in case of Global Contract as per Section 25 of Income Tax Act of Nepal
7 years and in case of BOOT(Built Own Operate Transfer) it is 12 years
Individual Tax Summary
Residence – A natural person in respect of an income year is resident in Nepal if any of the following criteria fulfills:
Normal Place of abode is in Nepal or
who is present in Nepal for 183 days or more in a period of 365 days, or
Employee of government of Nepal deputed in any foreign country.
Basis of Taxation – Resident Individual are taxed on the income generated by them regardless of the source of the income and non-resident Company are taxed on the income generated by them within the extend that the sources of income is in Nepal.
Filing Status – Each taxpayer shall file a return of income for an income year within 3 months after the end of the such income year. Application for extension for up to 3 months can be given.
Personal Income Tax Rates
Tax Payable – Residents
Tax Payable – Non Residents
upto 400,000(individual)/ 450,000(couple)
25% flat rate
Balance exceeding 2,000,000
Goods and Services Tax (GST)
13% VAT Rate
In case of goods- NPR. 5 ,000,000
In case of services- NPR. 2 ,000,000
The general conditions for mandatory registration as per Nepal’s VAT Act 2052 are as follows:
People obtaining business loans exceeding NPR 1,000,000.
The threshold for registration in the case of a goods business is annual turnover exceeding NPR 5,000,000, while in the case of services or mixed goods and services it is NPR 2,000,000 annually.
VAT registration must take place within 30 days of the above conditions coming into effect.
The above conditions apply to all types of transactions that are not listed in Schedule 1 (reference: VAT Act 2052) which have been exempted from VAT registration.
Under the VAT Act 2052, each person and business registered for Value Added Tax is mandatorily required to submit either monthly, bimonthly or quarterly VAT returns. The VAT return must be filed within a period of 25 days following the end of the of Nepali calendar month to which the VAT belongs. In case of tourism service providers, the returns must be submitted bimonthly, provided that an application for such bimonthly VAT returns has been approved. Some businesses, such as publication, broadcasting media, electronic or other media, brick producers etc. can submit VAT returns every 4 months.
The amount of VAT payable must be paid within the same 25-day filing period for it to be approved by the tax authorities. Amounts above NPR 1 million should be paid by cheque, draft or through banking channels.
Other Taxes Payable
Given as above payroll taxes are levied on an individual’s salaries, wages and benefits given by the employer according to the various slab rates as prescribed subject to deductions and rebates as allowed as per the Income Tax Act of Nepal.
Similarly Stamp duty taxes in Nepal is governed by the Stamp Duty Act as is levied on various documents and deeds of transfer, deeds of loans, or deeds of sale of goods etc. as prescribed in the section 4 of the said Act and as recognized by the Government of Nepal.
Land tax in Nepal is levied as per the province and local government body’s rates as determined from time to time and published notice.