Kathmandu: Major international tech companies, including Apple, Google, Microsoft, Meta, X (formerly Twitter), and Netflix, have officially registered under Nepal’s Digital Service Tax (DST) system, marking a significant step in revenue collection from digital services.

According to Dhruba Prasad Pande, Chief Tax Officer at the Big Taxpayers Office, 20 foreign tech firms have begun paying a 2% DST on their digital transactions conducted in Nepal. The tax system was introduced under the Financial Act 2079/80 but faced a two-year delay in implementation for all service providers.

Some of the registered entities include:

-Google: Google Asia Pacific Pvt Ltd, Google Ireland Ltd, and Google Digital Ink
-Meta: Meta Platforms Ireland Ltd (Facebook, Instagram, WhatsApp)
-Microsoft: Microsoft Regional Sales Pvt Ltd
-Apple: Apple Distribution International Ltd and Apple Services Pvt Ltd
-Netflix
-Amazon: Amazon.com Services LLC and Amazon Wave Service Incorporation Ltd
-Others: LinkedIn Singapore Pvt Ltd, TikTok, Adobe Systems, and Pearson Education Ltd
Notably, TikTok resumed operations and began paying DST after a nine-month ban was lifted recently.

Revenue Potential and Gaps
The registration of these tech giants is expected to significantly boost Nepal’s revenue generation from digital services. However, many other companies operating in the digital space remain outside the tax system.

Challenges in Tax Enforcement
While the Financial Act mandates a 2% tax on the total transaction value for digital services, it lacks clarity on how to enforce compliance among companies not registered as big taxpayers. This loophole poses a challenge for comprehensive tax collection from smaller or unregistered digital service providers.

Nepal’s government aims to bring more companies under the DST system, ensuring fair taxation and maximizing revenue from the rapidly growing digital economy.