Nepal requires non-residents selling electronic services or offline air transport to register for VAT above NPR 3 million

What changed in detail

The Finance Act 2081 (Act No. 5 of 2081) was published in the Nepal Gazette (Rajpatra, Khanda 74, Atiriktanka 16, Part 2) on Shrawan 1, 2081, which is 16 July 2024. Section 1(2) brings section 34 into force immediately.

Section 34(1) substitutes section 10Kha1 of the Value Added Tax Act 2052, headed “registration of non-resident persons”:

• notwithstanding anything elsewhere in the Act, a non-resident person whose taxable transactions in electronic services or offline air transport services in Nepal exceeded NPR 3 million (30 lakh) in the past twelve months must register for VAT;
• the registration procedure is set by the Inland Revenue Department;
• if a registered non-resident closes or stops the business, its registration must be cancelled through the procedure the Department sets.

The section is replaced as a whole. The Act’s text does not state the previous threshold.

What it means

The NPR 3 million test has applied since 16 July 2024. The weekly feed records no later amendment to section 10Kha1; Nepal’s later Finance Acts dealt with other VAT points, such as collection by ride-sharing platforms. Because each year’s Finance Act can amend the VAT Act, a non-resident relying on this figure should check the current consolidated Act.

For foreign digital-service providers and airlines selling offline in Nepal, the trigger is turnover in the previous twelve months, so it needs a rolling count rather than a fiscal-year check.