Foreign tech firms Google, TikTok, Facebook, LinkedIn, etc. have paid tax in Nepal for the first time. Having escaped any accountability so far to share the revenue with the Nepal government, the companies paid in the region of Rs 9 crore to the government which sets a major precedent as the government aims to bring foreign digital service providers into its regulation and tax scheme.
Most of these tech companies don’t have their office in Nepal however, they paid taxes for providing digital service to Nepalese. In total, 9 such companies including social media paid their taxes to the government.
As per the existing law, foreign service providers have to pay a total of 15% tax in Nepal. Of which, 13% is the Value-Added Tax (VAT), and 2% is the Digital Service Tax (DST) as provisioned by the Nepali government.
“First, we made a legal arrangement and fixed the procedure,” Director at Inland Revenue Department (IRD) General Mainali said, “We are still in talks with foreign companies operating in Nepal. Besides, we have opened a separate dollar account. We corresponded with them by mail. They agreed to pay taxes after we told them that they will have to pay a fine if they didn’t pay the tax on time.”
Also read: Nepal Government to Tax Social Media and Regulate Them
For the first time, Facebook, Google, and TikTok have paid their tax in Nepal
Nepal Government formulated the Economic Act FY 2079/80 which included a provision that non-resident individuals and companies operating a digital business in Nepal must pay tax. Thanks to this regulation, till Ashar 25, 2080, the government collected over Rs 9 crore from 9 foreign tech companies.
Earlier, foreign tech companies couldn’t pay taxes due to the lack of their physical office and proper arrangements. To address this, the IRD created a portal for tax payment which paved the way for the companies in concern to make their dues clear.
Mainali adds that the depart hopes to collect more revenues in the future because of the dedicated online portal for electronic tax payment.
Check out: Meta and Httpool by Aleph hold a joint event for digital advertisers
A good start for revenue collection from foreign digital companies
Drawing tax from foreign tech companies is a good sign. Nepal’s government has long wished to bring social media under its regulation to keep the revenue and also have access to user data. It’s the first time the government successfully collected a share of earnings from major social media platforms.
Every year, Facebook, Google, TikTok, and other platforms earn billions of rupees from Nepali users and have so far evaded tax liability for many reasons. Thankfully, the recent tax payment should set an example and also mandate a clear path for the government and other companies regarding their registration and tax bearing in the country.