Himal Press 
KATHMANDU: The Nepal Association for Software and IT Services Companies (NAS-IT) has urged the government to reduce corporate income tax for registered IT companies to just 1% on net profits for a period of 10 years.
Organizing a press meet in Kathmandu on Sunday to make public its recommendations to the government for the upcoming fiscal year 2026/27, the association said such a measure would enable companies to reinvest in innovation, infrastructure and talent development. “This will also enhance Nepal’s competitiveness in the global technology market,” NAS-IT Vice President Deepen Chapagain said.
NAS-IT has also called for an 8% export rebate for export-oriented IT companies, stating that the incentive would help Nepali firms compete with regional rivals such as Bangladesh and Vietnam, boost foreign currency earnings, and create high-value jobs.
Nepal’s IT exports topped $1 billion in 2025, according to conservative estimates by the NAS-IT. The government has set an ambitious target of achieving $22 billion in cumulative IT exports over the next 10 years and creating 500,000 new jobs in the sector.
The association has also recommended clearer VAT provisions for IT exports, faster VAT refunds, and a more competitive personal income tax structure for IT professionals. “The provisions should be implemented in such a way that the maximum applicable tax rate for the highest slab for personal tax shall not exceed 25%,” Chapagain said. “This will support talent attraction and retention, thereby strengthening the sector’s growth and employment generation potential.”
It has also sought reforms in the taxation of sweat equity. “Taxing at receipt creates a financial burden due to a lack of liquidity. Deferring tax until realization aligns liability with actual gains, supports startup growth, and makes equity-based compensation more practical and attractive,” the association said.
To attract greater foreign investment, NAS-IT has urged the government to expand Double Taxation Avoidance Agreements with key markets, including the United States, the United Kingdom and Australia. It also called for the removal of tax provisions that levy corporate income tax on bonus shares issued from share premium accounts. “Since share premium represents capital contributed by investors rather than operating profit, taxing its capitalization as income increases the cost of doing business, discourages reinvestment, and weakens Nepal’s, particularly in high-growth sectors such as IT, digital services, startups, and innovation-led enterprises that rely on premium valuations to attract investment,” Chapagain said.
The association has also recommended reserving government IT contracts worth up to Rs 100 million exclusively for domestic companies and ensuring that Nepali companies retain at least 30% of the value of larger contracts.
NAS-IT also called for the establishment of a National IT Promotion Board to coordinate policy, attract investment, and oversee Nepal’s broader digital transformation agenda.
