Guide to Nepal VAT Taxability and Rates
Updated 2 months ago
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Understanding how Nepal taxes your sales depends on two key factors: where your business is based (resident vs. non-resident), and who your customer is (B2B vs. B2C). This article explains how each scenario works.
Standard VAT Rate
Nepal applies a 13% VAT rate on all standard taxable supplies.
Taxability by Business Type and Customer
If Your Business Is Based in Nepal (Resident)
Sale Type | Tax Treatment | Rate |
|---|---|---|
B2B domestic sale | Taxable; buyer claims input credit | 13% |
B2C domestic sale | Taxable | 13% |
Exports (B2B or B2C) | Zero-rated | 0% |
If Your Business Is Based Outside Nepal (Non-Resident)
Sale Type | Tax Treatment | Rate |
|---|---|---|
B2B cross-border (to a registered Nepalese buyer) | Reverse charge applies; buyer self-assesses VAT | 0% on your invoice |
B2C cross-border (to an unregistered Nepalese consumer) | You are responsible for collecting and remitting | 13% |
Exports from Nepal | N/A for non-residents | N/A |
How to determine B2B vs. B2C: If your customer provides a valid Nepalese VAT/PAN registration number, treat the sale as B2B. If they do not provide one, treat it as B2C.
Digital Services Tax (DST) — Non-Residents Only
In addition to VAT, Nepal imposes a Digital Services Tax (DST) of 2% on gross revenue from digital services supplied by non-resident businesses to Nepalese consumers (B2C only). This is a separate tax from VAT and is applied on top of your B2C sales to Nepal.
DST does not apply to:
B2B sales (where the Nepalese buyer is a registered business)
Resident businesses operating within Nepal
What Counts as "Digital Services"?
Nepal defines digital services broadly. The following categories are included:
Online advertising
Streaming services (movies, TV, music, OTT platforms) and subscription-based services
Data storage services
Cloud services
Gaming
Mobile application services
Online marketplaces and goods/services sold through them
Software supply and updates
Data downloads, image downloads, and similar services
Online consultancy, training, and skill development services
Other similar services delivered via the internet
Reverse Charge: What It Means for You
When you sell SaaS to a registered Nepalese business (B2B) and you are a non-resident, the reverse charge mechanism applies. This means:
You do not charge VAT on your invoice.
Your Nepalese customer self-assesses and pays 13% VAT directly to the IRD.
Your invoice should include the notation: "Reverse charge applies."
If you are registered in Nepal and sell to a B2B customer, you charge 13% VAT normally and the buyer claims an input credit.
Time of Supply
For reverse-charged SaaS purchases, the tax point is the earlier of the date of invoice or the date of payment. For subscription services, the tax point is triggered at each billing date.
Quick Summary: Non-resident SaaS sellers pay attention. You only need to charge and remit VAT (13%) and DST (2%) on your B2C sales to Nepal. Your B2B sales are handled by the buyer under the reverse charge mechanism. No Nepal VAT registration is required until you cross the NPR 3,000,000 threshold.
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