Nepal 13% VAT on foreign digital services July 2022

VAT on foreign providers of digital services to consumers

The Nepalese Ministry of Finance has confirmed that non-resident providers of digital or electronic, broadcast and telephony services must register for VAT and charge local consumers at the standard rate of 13%. There is an annual VAT registration threshold of 2 million (approx. $15,800).

This applies from July 2022.

In addition, Nepal has imposed a 2% Digital Services Tax on the revenues of such foreign providers and facilitating marketplaces.

Check our global VAT on digital services tracker to follow all countries’ obligations around the world.

Determining if VAT due

To determine if Nepalese VAT is due, the provider must confirm consumption took place there and may rely of the following pieces of evidence to reason this:

1. Consumer’s billing address
2. Debit or credit card address
3. IP address
4. SIM or dialling code

What services are liable to VAT?

Income from the following services are subject to Nepalese VAT according to the Inland Revenue Department

• Advertisements
• Streaming, download or broadcast TV, films and music
• Data storage
• Cloud-based services
• Online gaming
• Mobile telephony
• Online marketplace services
• Software
• Online data, images and similar

VAT compliance issues

• There is a VAT registration threshold of 2 million (approx. $15,800).  Although voluntary registration is also available.
• Tax invoices are optional
• VAT returns are monthly, and are due by the 25^th of the following month.

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