Kathmandu: About nine international companies engaged in the electronic service business in Nepal have paid around nine crore rupees in taxes. These international electronic companies, which are registered in the Internal Revenue Office, have made tax payments for the fiscal year’s appreciation. The Nepali government had established provisions for increasing the value in electronic services provided by non-resident individuals last year.

Similarly, companies such as Google Asia Pacific Private Company, LinkedIn, Google Ireland, NS Pearson Inc., Amazon Data Services, and Amazon Web Services have been registered in the tax office located in Nepal. Google Asia Pacific and LinkedIn have offices in Singapore. Similarly, Google Ireland’s office is in Dublin, Ireland. The office details of Amazon Data Services and Amazon Web Services are mentioned to be in the United States office.

Similarly, IBS Group International Incorporate located in Wilmington, County of New Castle, Meta Platforms Ireland Limited, and Microsoft Regional Sales Private Company, with an office address in Dublin, Ireland, and an office in Singapore, have also been registered.

Many non-resident individuals are involved in the electronic service business in Nepal. However, the offices that have not been registered in Nepal are mentioned. Because the government did not enforce a mandatory provision, revenue that would be collected from such companies conducting business in Nepal was being lost. However, last year’s ongoing procedures led to tax payments even from such companies that had not registered offices in Nepal, according to the director of the tax office, Pyakurel.

According to the office, companies have paid tax on the appreciation of value since June of the previous year until May of this year. If a company engages in business, it is required to pay 2% tax on earnings. The director of the tax office, Pyakurel, stated that companies that have not paid the tax would have until the coming November month to make payments. He also mentioned that companies could declare their earnings to be taxed at a rate of 2% until Kartik.

Companies like these need to pay taxes in Nepal

According to the law, individuals subject to taxation need to register and obtain a permanent account number to conduct business in Nepal. However, non-residents engaging in electronic service business in Nepal will be required to pay taxes. If the business operations fall under the purview of the law, a request for obtaining a permanent account number should be submitted within 30 days from the date of crossing the business threshold.

Non-residents should submit an application in person before the office through an electronic medium. Non-residents who have registered for the value-added tax should not obtain a separate permanent account number. The office can determine the tax after examining the business of non-residents. When conducting business examinations at the office, if a non-resident individual declares a business less than the actual business and declares lower revenue than the business announcement, a 50% fine on the tax amount withheld will be levied.

In the absence of an office or physical presence in Nepal, non-residents engaged in economic activities will have to pay a 13% VAT and a 2% tax on the total earnings earned in Nepal on an annual basis, said Director Pyakurel. “There is a misconception that these companies are registered in Nepal. In reality, these companies are not registered in Nepal,” he said. “Even though the Economic Ordinance issued by the government last year has not established an office, these companies engaged in service sales in Nepal have adopted a system of listed payment of taxes.”

These companies are conducting business in Nepal through virtual means. Tax payment has been made by these foreigners.