Himal Press 
KATHMANDU: Foreign technology companies such as Apple, Google, Microsoft, Meta, TikTok and Netflix have started paying the Digital Service Tax (DST) to the government for providing digital services to Nepali consumers.
According to Dhruba Prasad Pandey, the chief tax officer and information officer at the Large Taxpayers Office (LTO), 20 companies registered so far have started paying 2% DST on their turnover in Nepal.
The Economic Act of Fiscal Year 2022/23 introduced the DST in Nepal. Even though this provision has been in effect for past two fiscal years, the government has not been able to bring all companies providing digital services in Nepal under the tax net.
The companies registered at the LTO for paying DST include Google Asia Pacific Private Limited, Google Ireland Limited, Google Digital Inc, LinkedIn Singapore Private Limited, NCS Pearson Incorporation Limited, Amazon.com Services LLC and Amazon Web Services Incorporation Limited.
Similarly, EBSCO International Incorporation, Meta Platforms Ireland Limited, Microsoft Regional Sales Private Limited, Adobe Systems Software Ireland Limited, Netflix Private Limited, Zoho Corporation Private Limited, Prometric Japan Company Limited, Association of Chartered Certified Accountants (ACCA), Pearson Education Limited, Apple Distribution International Limited and Apple Service Private Limited have also registered with the LTO.
Although the Economic Act has the DST provision, most companies providing electronic services in Nepal are still outside the tax system. The existing Act does not have a clear provision on how to bring all the companies providing electronic services in Nepal under the DST system.
The current Economic Act has increased the turnover threshold for DST from Rs 2 million to Rs 3 million per year. This means transactions below Rs 3 million per year are now exempted from DST.
The Act also has provisions for penalties and interest if the DST returns are not filed on time. However, there is no provision in the Act that makes it mandatory for foreign companies providing services in Nepal to register for DST.
Government studies have shown that a significant amount of revenue is being lost due to the inability to bring companies providing digital services, including social media, under the tax net. A report prepared by the Revenue Advisory Committee states that the trend of advertising on unregistered social media platforms in Nepal has increased significantly in recent years. “Unregistered social media platforms are taking billions of rupees out of Nepal annually,” the report said.
(Translated from RSS)
