Tax law in Nepal is governed by a layered statutory framework administered by the Inland Revenue Department (IRD), the Department of Customs, and reviewed on appeal by the Revenue Tribunal. Alpine Law Associates advises individuals, businesses, NRN clients and foreign investors on income tax, VAT, customs duty, TDS compliance, capital gains tax and tax disputes — across the Income Tax Act 2058, the VAT Act 2052, the Customs Act 2064, the Excise Duty Act 2058, the Revenue Tribunal Act 2031, and successive Finance Acts. Whether you need ongoing compliance support or representation in a contested IRD assessment, our tax lawyers in Kathmandu provide end-to-end counsel from registration through tribunal appeals.
Income Tax (Income Tax Act 2058)
The Income Tax Act 2058 governs how individuals, firms, partnerships, and companies are taxed in Nepal. For natural persons, tax is imposed on a progressive slab basis. The first NPR 500,000 (single) or NPR 600,000 (couple) is taxed at 1% Social Security Tax (SST) — exempt for sole proprietors, pensioners, and contributors to the Social Security Fund. Higher slabs progress through 10%, 20%, and 30%, with a 36% effective top rate (33% + 3% surcharge) on income above NPR 2,000,000. Corporate income tax is generally 25%, with 30% applied to banks, insurance companies, telecoms, capital-market intermediaries, and businesses in petroleum, tobacco and alcohol. We advise on residency status, source of income, deductions, depreciation, transfer pricing, and end-of-year filing — including handling of foreign income for NRN clients under double-taxation avoidance frameworks.
Value Added Tax (VAT Act 2052)
VAT in Nepal is imposed at a standard rate of 13% on supplies of goods and services within the country, governed by the VAT Act 2052 and its Regulations. Businesses are required to register with the IRD when annual turnover exceeds NPR 5 million for goods or NPR 3 million for services and mixed supplies. Registered businesses must file monthly returns by the 25th of the following Nepali month, maintain compliant invoicing, and reconcile input tax credits accurately. We advise on VAT registration, exemption claims, input tax credit disputes, deemed-supply assessments, refund claims (including for exporters), and representation in VAT audit and reassessment proceedings — areas where compliance errors trigger significant penalty exposure under the Act.
Customs Duty (Customs Act 2064)
Customs duty in Nepal is administered under the Customs Act 2064 and the annual Customs Tariff issued by the Department of Customs (Tripureshwor, Kathmandu). Rates vary by HS-code classification (Harmonized System 2022), spanning 0% to 80% — from zero on medicines and educational materials to 80% on luxury vehicles and non-essential goods. Most basic-needs and agricultural items attract preferential rates of around 5%. Nepal grants preferential treatment under SAARC and selected bilateral arrangements. We advise importers and exporters on tariff classification disputes, customs valuation challenges, transit declarations, anti-dumping and countervailing duty proceedings, customs bonded warehouse compliance, and seizure or release applications. Where customs valuation is contested, the Act provides for departmental review and appeal to the Revenue Tribunal.
Tax Deduction at Source (TDS)
TDS in Nepal is the withholding-tax mechanism that requires payers to deduct income tax at the time of payment to the recipient and remit to the IRD within 25 days of the month-end. Common rates under Sections 87-92 of the Income Tax Act 2058 include 5% on bank interest paid to resident individuals (rising to 15% on interest paid to companies and non-residents); 10% on land and building rent paid to companies and entities; 1.5% on standard contract payments to resident contractors; 15% on royalties (resident and non-resident); and 5% on dividends from companies. Vehicle rental withholding is 1.5% if the recipient is VAT-registered, otherwise 10%. We help businesses set up correct TDS deduction processes, file monthly TDS returns, and respond to IRD notices on under-withholding — including handling of foreign payment scenarios and double-taxation treaty applications for cross-border remittances.
Capital Gains Tax & Property Transfer
Capital gains in Nepal are taxed on disposals of land, buildings, shares, and listed securities at rates separate from ordinary income. For real estate, the holding period determines the rate: gains on land or buildings held for less than 5 years are taxed at 7.5%, while gains on assets held for 5 years or more are taxed at 5%. For shares, gains on holdings of less than 1 year are taxed at 7.5%, while longer holdings attract 5%. Foreign investors face structure-dependent rates ranging from 5% to 25%, with elevated rates applying to non-residents holding unlisted shares. Individual taxpayers benefit from an annual exemption of NPR 300,000, and a 10-year-plus holding with sale value up to NPR 10 lakh is exempt from capital gains tax. We advise property sellers (including NRN clients), corporate restructuring clients, and share-transfer parties on capital gains computation, fair-market-value disputes with the IRD, and exemption claims under reorganisation provisions.
Tax Disputes & Appeals
When the IRD issues an assessment order, the taxpayer has 30 days to file an administrative review under Section 115 of the Income Tax Act 2058 — an internal correction mechanism through which the Department reviews its own assessments. If unsatisfied with the review outcome, the taxpayer may appeal to the Revenue Tribunal under Section 116 of the Income Tax Act 2058, read with the Revenue Tribunal Act 2031 — a specialist forum hearing tax disputes on questions of fact and law. The appeal must be filed at the Tribunal, with a copy registered at the Department within 15 days of filing. The taxpayer must also deposit the undisputed tax amount and either 50% of the disputed tax (with applicable charges and penalties) or a bank guarantee for that amount. Further appeal lies to the Supreme Court of Nepal. Our tax dispute team handles the full lifecycle: pre-assessment representation during audit, administrative review submissions, Revenue Tribunal advocacy, and Supreme Court tax appeals. Strategic decisions made at the audit stage often determine outcomes — we recommend involving counsel before issuing the formal response to a notice of intended assessment.
Who We Serve
Our tax law practice serves a broad range of clients in Nepal and abroad: domestic businesses (LLPs, private and public companies) needing ongoing compliance, multinational groups handling FDI tax structuring through Nepal subsidiaries, NRN clients with property income or capital gains, importers and exporters facing customs disputes, individual professionals navigating personal income tax assessments, and foreign nationals with Nepal-source income. We coordinate with audit firms, accountants, and in-house finance teams to deliver integrated tax-and-legal counsel. For new engagements, we offer a free initial consultation to scope the matter and outline strategy.
Last reviewed: April 2026 (FY 2082/83 BS). Tax rates and thresholds in Nepal are revised annually through the Finance Act. We update this page after each year's Finance Act — but for binding advice on a specific transaction, contact our team for current rates and analysis tailored to your facts.