There should be a system of social network registration
The Office of the Auditor General has stated that the social media and virtual meeting applications that are providing services in Nepal also need to be registered in Nepal.
In the 58th annual report made public by the office on Friday, it is mentioned that payment is being made from Nepal for the use of such application and since it falls within the taxable area of Nepal, registration should be arranged.
Apps like Viber, Messenger, Skype, WhatsApp, WeChat, Emo and meeting apps like Zoom, Wavex, Cisco, which provide telephone service through internet, are running smoothly, the report said. The report states that the payment for the use of these services was not registered even though it was from Nepal.
According to Article 67 of the Income Tax Act, the office has made the provision of registration mandatory as it falls within the taxable area of Nepal. The office has suggested that the revenue should be collected by registering such service providers even after making legal and policy reforms.
Earlier, a bill prepared by the government to provide information technology had a provision to register in Nepal on social media including Facebook and Twitter, but the provision was widely criticized as restricting freedom of expression.
The Office of the Auditor General, on the other hand, has mentioned that the Income Tax Act itself provides for registration in order to collect revenue as the source of payment made in respect of operating activities in Nepal is in Nepal.
The report states that Article 67 (6) of the Income Tax Act, 2058 provides that a person conducting a business transmitting information through media such as wire, radio optical fibers or satellite shall be considered as a source of payment in Nepal.
The office has argued that registration is mandatory as payments are being made from US dollar accounts for some of these services.
The report also mentioned that e-commerce and online advertisements on social media including Viber, Messenger, Skype, WeChat and Facebook should be taxed to widen the revenue base by bringing all kinds of economic activities under the tax net. Gorkhapatra