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Revised ICT tax comes into force, YouTube and TikTok creators to pay 5% to the Nepal Government

The government of Nepal has implemented tax in the internet, communication, and technology (ICT) sector from Shrawan 01, 2080, the beginning of the fiscal year FY 2080/81. As per the Financial Bill 2080 presented by Finance Minister Dr. Ram Sharan Mahat, software companies, digital service providers as well as YouTubers must pay a share of their earnings to the government.

The government has long attempted to bring digital space into tax scope and regulation. Gradually, the government has been able to do so. The number of foreign tech forms registering in Nepal has also increased while recently, Google, TikTok, YouTube, etc. paid around Rs 9 crore in tax to the government. So, terms bringing the ICT sector closer to the government’s tax and regulation have become more possible in recent times. Let’s find out how much the ICT sector is paying to the tax in Nepal.

Tax on software import

Foreign currency earned through software programming; outsourcing has also seen an increase from FY 2080/81. While such business activities were taxed at 1%, now has been increased to 10% as per the latest Financial Act 2080.

eCommerce companies to pay 1%

 The government has also imposed a 1% tax on eCommerce operators from FY 2080/81. Now, online shopping platforms such as Daraz and Sastodeal will need to pay 1% in tax for selling products or services online.  The regulation holds that while wiring transactions to their sellers, a 1% tax has to be deducted.   

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Tax increases for off-YouTube and TikTok content creators

Similarly, the tax amount has been increased by 1 percent for YouTube, TikTok, and other social media content creators from Shrawan 01. Now, creators must pay a total of 5% tax to the government of Nepal.  

Until the last financial year, only one percent tax was payable on receiving such money. Now, when there is a payment of this nature, the bank will deduct 5 percent of the amount and pay.

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Now, A Nepali citizen not operating a commercial venture providing software or any digital service, or consultation is now subject to a 5% ICT tax to the government. Likewise, foreign currency transactions upon uploading audio-visual material will also bear the same amount of tax from Shrawan 01 onwards. As per the new provision, the bank will itself cut a 5% tax off the concerned user account.  

The financial bill has levied a 2% Digital Service Tax (DST) in Nepal from FY 2080/81.

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