25% standard rate (30% for banks and financial institutions; 20% for special industries, exporters, and Special Economic Zone companies).
Progressive, 1% to 36%, with a 20% surcharge on income exceeding NPR 5 million.
13% standard VAT.
Under Section 2(ka) of the Income Tax Act 2058, an individual is a Nepal tax resident if present in Nepal for 183 days or more within any 365-day window ending during the income year (mid-July to mid-July), or if their habitual place of abode is in Nepal. A company is resident if incorporated in Nepal or if effectively controlled and managed from Nepal during the year. Residents are taxed on worldwide income; non-residents only on Nepal-source income, generally at a flat 25% rate.
Nepal has no dedicated Controlled Foreign Company attribution regime with the sort of ownership-threshold and passive-income mechanics found in many countries; sources describe Nepal as relying instead on its general anti-avoidance rule (GAAR) and transfer pricing provisions to address offshore profit shifting, though "controlled foreign entities" are referenced in general terms in some domestic anti-avoidance guidance. Confirm the current position with a Nepal-qualified advisor before assuming no CFC exposure exists.
Under Section 14 (also referenced as Section 18 in some summaries) of the Income Tax Act, interest deductions on business borrowings are allowed but restricted by thin-capitalization-type rules specifically targeting interest paid to controlling or related persons; the exact ratio or cap was not consistently specified across sources and should be confirmed against current Inland Revenue Department guidance before relying on a specific figure.
Nepal has double tax avoidance treaties with 11 countries: Austria, Bangladesh, China, India, South Korea, Mauritius, Norway, Pakistan, Qatar, Sri Lanka, and Thailand. Treaty benefits are denied to dual-resident entities where 50% or more of vested ownership is held by persons resident in both Nepal and the treaty partner country, as an anti-abuse measure. A Tax Residency Certificate (format prescribed under Schedule 11 of the Income Tax Act) is required to claim treaty benefits.