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Digital Services Tax (DST) related provisions, 2079 (First Amendment, 2080)

The Inland Revenue Department has made this provision to simplify and make the administration of Digital Services Tax (DST) more effective, as authorized by Section 20 of the Finance Act, 2079.

1. Short title and commencement:
This provision is named "Digital Services Tax (DST) related provisions, 2079" and came into effect on September 17, 2022.

2. Definitions:
Unless the context otherwise requires, in this provision:
(a) "Assessment year" means the period from September 17 to August 16 of the next year.
(b) "Consumer" means a general consumer whose place of consumption is Nepal.
(c) "Act" means the Finance Act, 2079.
(d) "Tax" means the Digital Services Tax (DST) levied under Section 20 of the Act.
(e) "Tax officer" means the tax officer appointed by the Government of Nepal or the chief tax officer.
(f) "Office" means the Large Taxpayers' Office.
(g) "Business turnover" means the value of goods and services provided under this provision.
(h) "Non-resident" means a non-resident as defined in the Income Tax Act, 2058.
(i) "Digital services" means services provided through the internet, including advertising services, audio-visual services, data storage services, cloud services, and more.
(j) "Return" means the return filed under this provision.
(k) "Department" means the Inland Revenue Department.
(l) "Permanent Account Number" (PAN) means the unique identification number assigned to a non-resident taxpayer.

3. Taxation basis and rate:
(a) A non-resident taxpayer providing digital services to consumers in Nepal shall pay tax at the rate of 2% of the business turnover.
(b) No tax shall be levied on the first NPR 2.5 million of business turnover. However, if the turnover exceeds NPR 2.5 million, tax shall be levied on the entire turnover.
(c) This tax is a final tax, and no further tax shall be levied under the Income Tax Act, 2058.
(d) If a consumer incorrectly claims to be a non-resident taxpayer, the consumer shall be responsible.

4. Tax administration:
The Large Taxpayers' Office shall administer this tax.

5. Registration:
(a) A non-resident taxpayer shall register with the tax office and obtain a Permanent Account Number (PAN) before commencing business.
(b) The taxpayer shall file an application for registration within 30 days of exceeding the threshold limit.
(c) The application shall be filed online, and the taxpayer shall provide required documents, including a notarized copy of the company registration certificate, tax identification number, and power of attorney.
(d) The tax office shall issue a registration certificate within 7 days of receiving the application.

6. Accounting and return filing:
(a) A non-resident taxpayer shall maintain accounts in Nepalese currency.
(b) The taxpayer shall file returns on an accrual basis.
(c) The taxpayer shall file returns annually, within 3 months of the end of the assessment year.
(d) The return shall be filed online, and the taxpayer shall provide required information, including business turnover and tax payable.

7. Tax payment:
(a) A non-resident taxpayer shall pay tax based on the return filed.
(b) The taxpayer shall pay tax online, and the payment shall be made within the time limit specified.
(c) If the taxpayer fails to file a return or pay tax, a penalty of 0.1% per day shall be levied on the tax payable.