International e-commerce in Nepal including Zoom, Google Meet and pay tax
Stating that services of international e-commerce sites including applications like Zoom, Googlemit, Microsoft Team are being operated in Nepal, the Auditor General has directed the government to make arrangements to bring them under the tax net by registering them in Nepal.
After the global outbreak of corona infection, applications such as Zoom, Googlemit, Microsoft Team are being used in Nepal for conducting various meetings, schools and college classes with offices and organizations.
You have to pay a fee to use the time other than the free facility provided by these applications.
Payment gateways are not even legally available from Nepal to pay those site operators. In order to pay for these applications from Nepal, payments are being made to the operators of the respective sites using credit cards including Paytm, PayPal and other international payment methods.
As these applications provide services in Nepal, the Auditor General is of the view that even if the business is conducted from abroad on the basis of the principle of tax source, the tax should be paid in Nepal.
The state has not been able to collect tax from the transaction as it has not been identified and not registered in Nepal.
The Auditor General has directed the government to make legal arrangements for the registration of entrepreneurs operating e-commerce nationally or internationally in Nepal after studying international best practices.
Similarly, the service of international ecommerce site is also being used in Nepal. Services are being operated in Nepal from e-commerce sites like Amazon, Alibaba, Rakuten and Flipkart. They have not paid service tax in Nepal.
The Auditor General has mentioned that it is difficult to monitor the transactions from home as there is no separate business code for such transactions and such transactions are not covered under the tax due to non-registration of those organizations when doing business from home or abroad using foreign sites.
E-commerce, electronic payments and digitization have changed the old trend of running a business. E-commerce business is growing day by day in every country of the world. Goods and services can be obtained in Nepal through various domestic and foreign, international e-commerce sites.
There seems to be a study from the OECD, the European Union, on taxing digital businesses. The European Union has made arrangements to levy value added tax on telecommunication suppliers, non-residents providing information and electronic services from 2015.
Serbia, Taiwan and China have expanded the scope of value added tax to digital suppliers.
China, Malaysia and Thailand have enacted laws to tax even digital profits. The Auditor General has directed the government to register the entrepreneurs operating e-commerce in Nepal nationally or internationally after studying the international practice.