NEPAL: Digital Services Tax Starts; Import Ban on Toys Extended

Effective 17 July 2022, a 2% digital service tax will apply to services provided online to consumers in Nepal by non-resident businesses, according to a notice from the country’s Inland Revenue Department (IRD). Total yearly transactions up to NPR2 million (US$15,676) will not be taxed.

Digital services include movies, television, music, and other subscriptions; advertising; cloud; data collection; mobile apps; gaming; online marketplaces; and software, as well as data and image downloads; sales of Nepal residents’ data; e-books, e-libraries and e-newspapers; education and consultancy, among others.

The VAT Act is also amended, requiring non-resident digital services providers to register, issue VAT invoices, and collect VAT. Those with annual transactions over NPR2 million must pay 13% VAT within three months of the fiscal year end. Digital services covered match those subject to DST, except education; data sales; and e-books, e-libraries and e-newspapers, which are VAT exempt.

Another 17 July 2022 notice extends import bans on 10 items until the end of August, covering toys, snacks, cards, diamonds, liquor and tobacco, cars, vans, jeeps and 32-inch televisions, as well as mobile phones over US$300 and motorcycles over 150cc.