Understanding Tax & VAT Compliance for Startups in Nepal
An essential primer on Income Tax, PAN/VAT filing, and legal compliance requirements set by the Inland Revenue Department (IRD) of Nepal.
Taxation Basics for Nepalese Businesses
Ensuring complete tax compliance prevents heavy fines and legal hurdles for startups in Nepal. The primary authority is the Inland Revenue Department (IRD).
1. PAN vs. VAT Registration
Every business must obtain a Permanent Account Number (PAN) before operations. If your taxable annual turnover exceeds NPR 5 million (for goods) or NPR 2 million (for services), registering under Value Added Tax (VAT) is legally mandatory.
2. Income Tax Rates
In general, corporate tax is levied at a flat rate of 25% on taxable net profit. Special industries like manufacturing, tourism, and agriculture may enjoy lower concessionary rates.
3. Monthly & Quarterly Filings
Startups registered in VAT must file their VAT returns and pay tax within 25 days of the next month. Estimated income tax returns must be filed in three installments (Poush, Chaitra, and Ashad).