Microsoft, Google, Meta, Tik Tok, Adobe, Netflix, Amazon, and Apple, the world's largest social network and information technology companies, provide electronic services in Nepal and generate a turnover of Rs. 3 billion in one year. Those companies have paid 41.5 million tax for the business done in the last financial year 2080/81. Among the taxpayers, one US company alone has a maximum turnover of Rs 1.31 billion.

In the last fiscal year, 18 companies registered with the Internal Revenue Department and having PAN numbers had a turnover of Rs. For this, the company has paid 358.5 million 44 thousand rupees as value added tax (VAT) and 58.1 million 75 thousand rupees as electronic service tax to the government. The government has received a total revenue of 416.7 million 19 thousand rupees from the global tech company through VAT and electronic service tax. 

Among them, a company with the highest turnover paid a maximum of 171 million rupees in VAT and 29 lakh 36 thousand rupees in electronic service tax. According to the Economic Act 2080, non-resident individuals (companies) with an annual turnover of more than 20 million rupees have paid 2 percent of the annual turnover value of the electronic service tax and 13 percent of the VAT in Nepal.

In the current financial year 2081/82, after amending the Economic Act, instead of 20 lakh rupees, it has been mentioned that the tax will be levied only on transactions of more than 30 lakh rupees per annum. With the registration of one more company this year, 19 foreign technology companies have filed 640,950,000 rupees with the big tax payer's office for the monthly VAT payment of 493,341,000 rupees from July to mid-November of the current year.

 'All registered international companies are complying with the tax laws, they have submitted the revenue amount within the specified time,' said information officer Pandey, 'we also discussed with the contact persons of these companies in Nepal. They have assured that there is no need to doubt about paying taxes, they are the biggest corporate organizations in the world, they pay.' 

So far in Nepal Google Asia Pacific, NCS Pearson, LinkedIn Singapore, Meta Platform Ireland Limited, Microsoft Regional Sales, Amazon Web Services, Amazon.com Services, Google Ireland Limited, TikTok Pvt Ltd, Adobe Systems Software Ireland Limited, Netflix Pvt Ltd, Zoho Corporation Pvt. Ltd., Google Digital Inc., Prometric Japan Company Limited, Absco International Inc., Association of Chartered Certified Accounts Association (ECCA), Pearson Education Limited, Apple Distribution International Limited and Apple Services Pvt Ltd have joined the tax system of the Revenue Department.

The government announced the inclusion of electronic social networks in the tax system for the first time through the 2079/80 budget. In the year 2079, the 59th report of the Auditor General also pointed out that a large amount of money was diverted from the state through payments for the use of applications such as YouTube, Tiktok, Google Meet, Zoom, and Microsoft Teams.

Since that application provides services in Nepal, based on the principle of source of tax, it was mentioned in the report that even if the transaction is conducted from abroad, tax should be paid in Nepal. As pointed out by the General Accountant, the Internal Revenue Department issued the Procedures for Electronic Service Tax (Digital Service Tax), 2079 and the Procedures for Value Added Tax on Electronic Services Provided by Non-Resident Persons on 22 June 2079.

Since February 2079/80, 8 companies like Google, Meta, Microsoft were registered in Nepal. It is mentioned in the details submitted to the big tax payers office that they have transacted Rs. At that time, they had paid Rs 917 lakh 8000 VAT and Rs 177 lakh 20000 electrical service tax. Even at that time, an American company alone paid a maximum of 57.2 million rupees in VAT and 3.592 thousand rupees in electronic service tax in Nepal by doing business of about 71 million rupees, according to the Taxpayer's Office. The name of the taxpayer company has not been disclosed by the office for confidentiality.

Non-resident individuals (companies) who are not physically present in Nepal but provide electronic services to Nepali consumers must pay 13 percent VAT monthly. Similarly, the electronic service tax must be paid within three months of the end of the income year. In the procedures related to value added tax on electronic services provided by non-residents, electronic services include advertising, movies, television, music, over the top, cloud services, data collection services, gaming, mobile app services, software supply, consulting, training services, etc.

Pandey, the Information Officer of the Big Taxpayers Office, said that a detailed analysis and comparative study of the taxes paid by international companies through social networks and the Internet is pending in Nepal. "In other South Asian countries, there is no data and study on how much tax such companies pay, what is the volume of their business and how much business is there in Nepal," he said. Pandey mentioned that the revenue consultation committee is in the process of being formed to make suggestions for the next year's budget, while the committee is identifying new areas of revenue collection. Said that it is expected to analyze the side. 

The Internal Revenue Department discussed the matter of honoring the non-residents who pay the highest amount of electronic service tax on the occasion of Tax Day last November 1. However, since it has only been three years since foreign companies dealing in electronic services in Nepal have been brought under the tax regime, it has been decided that it would be too early to honor it now, said Gopikrishna Koirala, Deputy Director General of the Department.

 'We also studied the non-resident sector that provides electronic services while legally respecting the taxpayers of different sectors who contribute highly to the revenue,' Koirala said. '