As of 20 August 2026, Nepal’s Inland Revenue Department (IRD) issued a clarification notice concerning the application of value‑added tax (VAT) on digital services supplied by non‑resident persons. The notice interprets the provisions of the VAT Act 2079 and Directive 2079, which bring cross‑border digital supplies into the VAT net. It outlines the registration, invoicing, filing and payment obligations that foreign digital service providers must meet when serving Nepalese consumers.
Key Takeaways
- VAT registration threshold: Non‑resident suppliers of digital services must register for VAT in Nepal if their annual turnover from Nepalese customers exceeds NPR 2 million (or the equivalent in foreign currency). Registration is completed through the IRD’s online portal and a VAT identification number is issued.
- Invoicing and return filing: Registered suppliers are required to issue electronic invoices that comply with Nepal’s e‑invoicing standards, retain them for at least five years, and file monthly VAT returns by the 25th day of the following month. The returns must detail the value of supplies, applicable VAT rate (currently 13 %), and the tax due.
- Reverse charge and penalties: Where the supplier is not registered, the Nepalese recipient bears the reverse‑charge obligation to self‑assess and remit VAT. Non‑compliance attracts penalties, interest and possible prosecution under the general VAT penalty provisions of the Tax Administration Act.
Disclaimer:This article is compiled and summarized based on publicly available information and is for general information and academic exchange purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. For tax planning, please consult a qualified professional tax advisor or legal counsel.
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