KATHMANDU 

International companies working in the field of information technology and rendering digital services such as Google, Facebook and Microsoft have been registered in Nepal’s tax system.

The government of Nepal put in place the provision related to the digital service tax under the Financial Act to bring foreign companies dealing in electronic services under the ambit of the country’s taxation system. Accordingly, the six international companies were registered in Nepal, said Sadhuram Pudasaini, Tax Officer at the Large Taxpayers’ Office.

According to Office, three companies having offices in Singapore – Google Asia Pacific Private Limited, Microsoft Regional Sales -Private Limited and LinkedIn Singapore Private Limited- have been registered in Nepal.

Likewise, three other international companies registered in Nepal are NCS Pearson Inc, EBSCO and Meta.

With this, social networking sites such as Instagram and WhatsApp and LinkedIn have been registered in Nepal.

While the companies paying digital service tax were being registered in the Large Taxpayer Office, a majority of companies were still outside of the scope of the taxation system predominantly due to flaws or weakness in the provision.

While there are provisions in place to take action against foreign companies that do not pay taxes and are registered with the tax offices in Nepal, there is a lack of clarity regarding the specific actions to be taken against unregistered foreign companies.

Moreover, due to the non-binding nature of the taxation system for companies operating in the information technology sector in Nepal, it is apparent that a significant number of companies are currently operating outside the purview of the taxation system.

A government study has shown that a huge amount of revenue is being lost due to the failure to bring the company involving digital transactions and social networking sites being operated in Nepal under the scope of the taxation system.