April 23: Tech giant Google has been registered with the tax office of Nepal after the implementation of the procedure related to Digital Service Tax. Google has been registered in Nepal under the name of its regional office in Singapore.
According to the Internal Revenue Department, EBSCO Inc has also been registered along with Google.
According to the director general of the department, Dirgharaj Mainali, other companies are also showing interest for registration. Mainali informed New Business Age that they are going to bring other such international companies under the ambit of tax by making the payment system systematic.
The Ministry of Finance has adopted a policy of collecting digital service tax on the transaction related to electronic services provided by non-resident (foreign) companies or individuals to consumers in Nepal.
To implement this policy, a procedure related to Digital Services Tax was introduced in July 2022. Director General Mainali says that with the implementation of the procedure, two international organizations have been registered in Nepal and this has opened the way for other service providers to come under the scope of taxation.
Google and EBSCO Inc will have to pay 2 percent of the total amount earned by providing services to Nepali consumers in Nepal. The government does not have official data about how much annual income Google earns from Nepal.
Facebook, Twitter, TikTok, Instagram and other social networks are yet to come under the scope of tax. Not only that, advertisements, movies, television, music, over the top cloud service, gaming, mobile app, online market, software are also being brought under the scope of tax under the Digital Service Tax.
There is a provision in the procedure that those who provide such services should come under the scope of electronic tax and that such taxes should be collected from them.
Electronic service fee will not be charged to those who provide such services and whose business is up to Rs 2 million per year.
In recent years, the government has been under pressure to regulate social networks, from the parliamentary committees, Revenue Advisory Committee, and even the auditor general’s report.
In its ‘Revenue Policy and Tax Reforms Report 2079/80‘, the Revenue Advisory Committee suggested to the government to bring companies including social networking sites that provide digital services to Nepalis under the ambit of taxation and to implement a system of doing business only by deducting tax in advance.
The report of the Auditor General’s Office also asked the government to strictly regulate social media and bring it under the scope of revenue.
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