We are excited to announce that Google has officially registered in the Nepal tax system, marking a major milestone in the company’s commitment to operating in compliance with local laws and regulations. This move is part of Google’s continued efforts to expand its presence in the South Asian developing region, like Nepal, Pakistan, Sri Lanka, etc., and to deepen its partnerships with local communities and businesses.
In recent years, Google has been working closely with the Nepalese government and other stakeholders to ensure that its operations are fully compliant with local laws and regulations. This includes a range of activities such as regular consultations with government officials, participation in industry associations, and engagement with local communities and businesses.
As part of IRDN spokesperson Raju Prasad Pyakurel, Google has registered with the Inland Revenue Department of Nepal and obtained a Permanent Account Number (PAN), which will allow the company to pay taxes and comply with other regulatory requirements. This move will also enable Google to deepen its relationships with local businesses and communities (YouTube) and better support them with a range of products and services.
Google’s registration in Nepal is a clear demonstration of the company’s commitment to operating in compliance with local laws and regulations and building long-term partnerships with local stakeholders. It also reflects Google’s wider mission to make the world’s information universally accessible and useful and to support the growth and development of local economies around the world.
Advantages of Google’s Registration in Nepal
Google’s registration in the Nepalese tax system provides several benefits to the company as well as to local businesses and communities. Some of these advantages include:
Compliance with Local Laws and Regulations
Google’s registration with the Inland Revenue Department of Nepal ensures that the company is fully compliant with local laws and regulations. This move demonstrates Google’s commitment to operating ethically and responsibly and to building trust and credibility with local stakeholders.
Deepening Partnerships with Local Businesses and Communities
By registering in Nepal, Google is able to deepen its partnerships with local businesses and communities. This move will enable Google to better understand the needs and challenges of local stakeholders and develop products and services that meet their specific requirements.
Supporting the Growth and Development of Nepal’s Digital Economy
Google’s registration in Nepal is a clear demonstration of the company’s commitment to supporting the growth and development of the country’s digital economy. By operating in compliance with local laws and regulations and by deepening partnerships with local stakeholders, Google is well-positioned to help drive innovation, create jobs, and promote economic growth in Nepal.
Google’s Taxation in Nepal: Legal and Political Framework
According to the Income Tax Act of Nepal, any company that operates in Nepal and earns income from Nepal is subject to taxation in Nepal, regardless of its place of incorporation or registration. This means that Google, as a multinational corporation that provides digital services to Nepalese users and earns advertising revenues from Nepalese businesses, should pay taxes to the Nepalese government.
However, the actual amount and method of taxation are not straightforward, as the tax laws and regulations in Nepal are often vague, inconsistent, and subject to interpretation and discretion by tax authorities. In addition, the cross-border nature of Google’s business and the absence of a bilateral tax treaty between Nepal and the United States (where Google is headquartered) further complicate the tax issues.
Google has maintained that it complies with all applicable laws and regulations in Nepal and pays all taxes required by Nepalese authorities. However, some Nepalese officials and experts have challenged Google’s claims and argued that Google may be using various tax avoidance strategies, such as transfer pricing, to minimise its tax liability in Nepal.
Controversies and Debates Over Google’s Taxation in Nepal
The debates and controversies over Google’s tax system in Nepal have intensified in recent years as the Nepalese government has stepped up its efforts to collect more taxes from internet-based companies and digital services. In 2020, the Nepalese government introduced a new Digital Service Tax (DST) that imposes a 2% tax on the advertising revenues earned by foreign digital platforms, including Google, in Nepal.
While the DST has been hailed by some as a progressive and fair way to tax the digital economy, others have criticized it as a unilateral and arbitrary tax that may discourage foreign investment and innovation in Nepal. Moreover, some experts have argued that the DST may not be effective in increasing tax revenues, as it may be passed on to Nepalese advertisers and consumers or result in lower revenues for Google and other platforms.
Google has expressed its concerns about the DST and its implications for its operations and users in Nepal and has called for more dialogue and collaboration with the Nepalese government to address the tax issues. However, Google has also stated that it will comply with the DST and pay the required taxes, as it does in other countries that have introduced similar taxes.