Tax rate by region Nepal

Check if you need to:

Your sales are over a certain amount each year.
You sell digital things to people in Nepal from another country.
Apply online:

Fill out a form on the tax website.
Give them basic info about your business.
Give them papers:

Show them proof that your business exists.
Give them your tax ID and ID of the owner.
Wait for OK:

They will check your stuff.
If it’s all good, they will give you a VAT number in about a week.
Follow the rules:

Add VAT to the price of what you sell.
Send them reports about your sales and pay the VAT you collected.
Keep good records of everything.

Digital Goods:

Software: Downloadable software, applications, and updates.
Digital content: E-books, music, movies, games, online courses, and other digital media.
Digital images and graphics: Stock photos, illustrations, and design elements.
Digital Services:

Cloud-based services: SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), IaaS (Infrastructure-as-a-Service).
Streaming services: Video and music streaming platforms (e.g., Netflix, Spotify).
Online advertising: Ads displayed on websites, social media platforms, or search engines.
Online gaming: Online multiplayer games and virtual goods within those games.
Web hosting and domain name registration: Services for creating and maintaining websites.
E-learning platforms: Online courses and educational resources.

Penalties for non-compliance with VAT in Nepal can be severe and vary depending on the specific violation. Here are some common penalties:  

Late Filing or Non-Filing of VAT Returns:

Late Filing: A penalty of 0.1% of the gross assessable income or NPR 100 per month, whichever is higher, is levied for each month of delay in filing the VAT return.
Non-Filing: If a VAT return is not filed within the prescribed timeframe, the tax authorities may estimate the taxpayer’s turnover and assess VAT accordingly, along with applicable penalties and interest.
Late Payment or Non-Payment of VAT:

Late Payment: Interest at the rate of 15% per annum is charged on the unpaid VAT amount for the period of delay.
Non-Payment: If VAT remains unpaid, the tax authorities may take enforcement actions, including seizing assets or initiating legal proceedings.
Other Violations:

Failure to Maintain Proper Records: A penalty of 0.1% of the gross assessable income or NPR 1,000 per month, whichever is higher, is imposed for each month of non-compliance.
Filing False or Misleading Returns: A penalty ranging from 50% to 100% of the tax loss is imposed.
Other Offenses: Additional penalties, including fines and imprisonment, may be applicable for offenses like tax evasion, obstructing tax officers, and providing false information.

The following documents must be kept for 6 years:

Invoices (including tax invoices, credit notes, and debit notes)
Bills of supply
Delivery challans
Purchase orders
Contracts
Agreements
General ledger
Cash book
Bank statements
Journal entries related to VAT transactions
Copies of filed VAT returns
Proof of payment of VAT
Customs declarations
Import/export permits
Other relevant documents related to cross-border transactions