YouTube and Netflix have to pay a ‘digital service tax’ in Nepal

The government has made an arrangement to start levying electronic service tax (digital service tax) by levying a 2 percent tax on the transaction price of such electronic services through the Fiscal Bill 2079.

Accordingly, digital platforms like Netflix will have to pay a 2 percent tax when doing business with Nepali citizens. Such fees may also be attracted to payments made by Nepali advertisers on YouTube and Facebook. Other foreign digital service providers from e-commerce sites from abroad have to pay a kicker based on the transactions in such services when providing services in Nepal.

The government has implemented new tax collection provisions through Fiscal Bill 2079. However, such tax will not be levied up to Rs 2 million per annum for such electronic services.

The person providing the electronic service in Nepal will have to file the details of his business and tax according to the income year.

Failure to submit such details in time will result in an annual fee of zero point one percent of the annual transaction amount. The bill has made provision to collect interest at the rate of 15 percent per annum without paying tax till the due date.

The bill stipulates a 50 percent penalty for hiding the details of such transactions. Arrangements in this regard will be made by the Inland Revenue Department.

What foreign companies have to pay taxes in Nepal?

1 (t2) “electronic service” means the following services that require information technology to provide services to the consumer and are automatically provided through the Internet with minimal human intervention:

 (A) Advertising services,

(B) Movies, Television, Music, Over the Top (OTT), and other similar services based on Artha Nepal in the membership, Ministry

(C) data collection services,

(D) cloud services,

(E) gaming services,

(F) Mobile Application Services,

(G) Internet Marketplace Services and the services provided through it,

(H) supply and updating of software,

(I) Download services including statistics, pictures,

(J) Counseling, Skill Development, and Training Services,

(K) Services of similar nature other than clauses (a) to (j).

(D) After clause (d) the following clause (d1) is added: “

(D1) “Non-resident person” means a person outside Nepal who does not have a permanent business address, business representative or legally recognized representative in Nepal. “