Government Revises Tax Rates Under New Finance Act for FY 2082/83

In a significant policy update through the newly introduced Finance Act for the fiscal year 2082/83, the Government of Nepal has revised and introduced several tax rates and service charges aimed at improving revenue collection and regulating key sectors such as communication, employment, entertainment, energy, and digital services.

Under the new structure, Telecommunication Service Fee has been fixed at 10% of the service amount. This applies to all entities providing telecommunication services, including telephone, mobile, and internet operators. The government aims to ensure broader compliance and transparent billing practices across telecom providers.

A Digital Service Tax of 2% has been introduced on transactions where a non-resident provides digital services to residents in Nepal. However, exemptions are in place: annual transactions up to NPR 3 million and digital services sold to Nepal-based business users through digital interfaces will not be taxed.

In the employment sector, individuals or companies providing foreign employment services must deposit 1% of the service fee received from clients going abroad. This move is aimed at regulating recruitment agencies and increasing government oversight.

The Film Development Tax has seen a targeted increase, especially for foreign films. Movie theatres must now collect 15% tax on all class tickets for foreign movies. Additionally, if cabins are installed for special screenings, an increased tax rate of 20% applies.

To promote road infrastructure, the Road Repair and Improvement Tax imposes NPR 4 per liter on petrol and NPR 2 per liter on diesel at the point of import. Similarly, to curb environmental degradation, a Pollution Control Tax of Rs. 1.5 per liter will be collected on both petrol and diesel at the retail level.

The government has also restructured Telephone Ownership Fees, requiring telecom operators to collect Rs. 500 per user. For mobile phones, a 2% charge will be levied on every SIM card and recharge card.

These revised rates and structures reflect the government's commitment to enhancing domestic revenue, promoting fair taxation, and ensuring the sustainable development of key sectors. The new provisions are expected to contribute to better fiscal management, digital compliance, and equitable distribution of the tax burden.