Kathmandu: Six renowned international companies operating in the field of information technology and digital services, including Google, Facebook, and Microsoft, have officially registered in Nepal's taxation system.

The Nepalese government introduced the Digital Service Tax provision under the Financial Act to ensure that foreign companies engaged in electronic services are included in the tax system. Consequently, these six international companies have successfully registered with the tax authorities in Nepal, as confirmed by Sadhuram Pudasaini, a Tax Officer at the Large Taxpayers' Office.

Among the registered companies, three have offices in Singapore: Google Asia Pacific Private Limited, Microsoft Regional Sales - Private Limited, and LinkedIn Singapore Private Limited. The other three international companies registered in Nepal are NCS Pearson Inc, headquartered in Bloomington, USA; EBSCO, with its address in Wilmington County of New Castle; and Meta Platforms Ireland Ltd, located in Dublin, Ireland. This registration process has brought social networking sites like Instagram, WhatsApp, and LinkedIn under the tax jurisdiction in Nepal.

While these companies that comply with the Digital Service Tax are now registered with the Large Taxpayer Office, a significant number of companies remain outside the purview of the taxation system, primarily due to flaws or weaknesses in the existing provisions.

Although there is a provision to take action against foreign companies that do not pay taxes but are registered with tax offices in Nepal, there is no clear indication of the actions to be taken against unregistered companies.

Furthermore, since the current taxation system does not encompass all companies operating in the information technology sector in Nepal, it is evident that many companies are still operating outside the taxation system.

A government study reveals that a substantial amount of revenue is lost due to the failure to bring digital transaction companies and social networking sites operating in Nepal under the tax regime.

According to a report by the Revenue Consultation Committee, referencing data from www.datareportal.com, there were over 13.3 million Facebook users in Nepal as of 2022. The statistics further indicate that Facebook alone generates more than Rs 60 billion in annual revenue through advertisements viewed by Nepali users.