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Netflix, Google, Apple, and TikTok all earn money from users in Nepal — and since 2022, Nepal taxes that revenue even though none of these companies has an office in the country. The mechanism is the Digital Service Tax.
Digital Service Tax (DST) is a 2% tax that non-resident digital companies pay on the services they sell to consumers in Nepal, collected by the Inland Revenue Department. It was introduced by the Finance Act 2079/80 and now applies to any non-resident provider crossing the transaction threshold.
This guide explains Digital Service Tax in Nepal in 2026 — the rate and threshold, what counts as a digital service, who has to register, and how non-resident providers file and pay. For Nepal's broader tax picture, see our overview of tax rates in Nepal.
Digital Service Tax (DST) in Nepal is a 2% tax charged on digital services supplied to Nepali consumers by non-resident providers, administered by the Inland Revenue Department under the Finance Act 2079/80. It applies where a non-resident's annual transactions in Nepal exceed NPR 3 million, and once that threshold is crossed the 2% is levied on the entire transaction value. Providers must obtain a PAN within 30 days of crossing the threshold and file and pay within three months of the income year's end (mid-July).
Notary Kathmandu provides document notarization, certified true copies, and multilingual translation for individuals and businesses across Nepal.
We do not handle tax registration — but if your business needs corporate documents notarised or translated for any Nepal filing, our translation and verification service can help. Talk to our team in Kathmandu →
What Is Digital Service Tax (DST) in Nepal?
Digital Service Tax is a tax on the digital economy. It targets the situation that traditional tax rules struggled with: a foreign company earning substantial revenue from users in Nepal without any physical presence there. DST lets Nepal tax that value at the point of consumption.
The tax is charged on the non-resident provider, not the Nepali user, at a flat rate on the provider's qualifying transactions. It is a relatively new instrument — part of a global wave of digital-economy taxes — and Nepal adopted it to capture revenue from streaming, advertising, cloud, and platform services consumed locally.
Key takeaway: DST lets Nepal tax foreign digital companies on the revenue they earn from Nepali users, even when they have no office or branch in the country.
Legal Basis: Finance Act 2079/80
DST was introduced through the Finance Act 2079/80 (2022) and is administered by the Inland Revenue Department (IRD). A dedicated procedure — the Procedure Relating to Digital Service Tax 2079 — sets out how the tax is registered, returned, and paid by non-resident providers.
Because it is administered by the IRD, DST sits within Nepal's wider tax framework alongside income tax and VAT, but it is a distinct levy with its own rate, threshold, and filing cycle.
Key takeaway: DST was created by the Finance Act 2079/80 and is run by the Inland Revenue Department under a dedicated 2079 procedure — a standalone tax, separate from income tax and VAT.
Who Must Pay Digital Service Tax?
DST applies to non-resident persons — companies or individuals outside Nepal — who supply digital services to consumers in Nepal and cross the transaction threshold. A resident Nepali business is taxed under the regular income tax and VAT rules instead.
The obligation is triggered by volume, not by having an office. Once a non-resident provider's annual transactions with Nepali consumers exceed the threshold, the provider falls within DST and must register, file, and pay. Major global platforms — including names like Apple, Google, Microsoft, Netflix, and TikTok — have registered and begun paying DST in Nepal.
Key takeaway: DST is owed by non-resident digital providers selling to Nepali consumers once their annual transactions cross the threshold — physical presence in Nepal is not required to be liable.
What Counts as a Digital Service?
The definition is deliberately broad, covering services delivered over the internet with little or no human intervention. Common examples include:
- Streaming and OTT services — movies, shows, and music
- Online advertising
- Cloud services and data storage
- Online gaming
- E-commerce platforms and marketplaces
- Software, apps, and software updates
- Online educational content and downloadable digital products
If a service reaches a Nepali consumer over the internet and is automated in delivery, it is likely within the scope of DST.
Key takeaway: DST covers internet-delivered, largely automated services — streaming, advertising, cloud, gaming, e-commerce, software, and digital content sold to Nepali consumers.
DST Rate and Threshold
Two numbers define DST, and both matter.
| Item | Current Position (2026) |
|---|---|
| Rate | 2% of the transaction value |
| Threshold | Annual transactions in Nepal exceeding NPR 3 million |
| How it applies | Once the threshold is crossed, the 2% is levied on the entire transaction value |
The threshold was raised to NPR 3 million by a later amendment, up from the NPR 2 million figure at introduction. The important nuance is the "entire transaction" rule: crossing the threshold brings the whole turnover into charge, not just the amount above the threshold.
Key takeaway: DST is 2% on annual Nepal transactions above NPR 3 million — and once you cross that line, the 2% applies to the full transaction value, not only the excess.
Registration, Filing, and Payment
The compliance cycle for a non-resident provider runs through the IRD.
Registration
A taxable non-resident must apply to the Nepali tax authorities for a Permanent Account Number (PAN) within thirty days of crossing the transaction threshold. A non-resident may also register voluntarily at any time. For context on Nepal's PAN system generally, see our guide to PAN registration in Nepal.
Filing the Return
The non-resident files a DST return online to the IRD within three months of the end of the income year (the Nepali income year ends in mid-July).
Paying the Tax
The 2% tax is paid within the same three-month window after the income year closes. Filing and payment are handled online, recognising that the taxpayers are based outside Nepal.
Key takeaway: Register for a PAN within 30 days of crossing the threshold, then file the DST return and pay the 2% online within three months of the income year's mid-July close.
DST vs VAT on Digital Services
These two are easy to confuse because both touch digital services, but they are separate. DST is the 2% levy on a non-resident provider's transactions described here. VAT on digital services is a distinct charge within Nepal's value-added tax system, and the IRD has issued procedures covering VAT on cross-border digital supplies as well.
For a non-resident provider, the practical point is that DST and VAT obligations are assessed separately, and a provider should check both rather than assume one covers the other.
Key takeaway: DST and VAT on digital services are separate charges — a non-resident provider should assess each on its own terms, not treat one as covering the other.
Conclusion: A Standalone Tax on the Digital Economy
Digital Service Tax is Nepal's answer to taxing value that crosses its borders entirely online. For the global platforms in scope, it is a straightforward 2% on Nepal transactions above NPR 3 million, with a clean register-file-pay cycle run through the IRD — and the major players are already complying.
If you operate a digital business reaching Nepali users, the prudent step is to confirm whether you cross the threshold and, if so, to handle registration and filing with the IRD or a qualified tax advisor.
Notary Kathmandu does not provide tax registration. Where a business needs certified translation or notarisation of corporate documents for any Nepal-facing requirement, our team in Kathmandu can assist with that document layer.
Reviewed by: The Legal Team at Notary Kathmandu — Nepal Bar Council registered advocates
Last reviewed: April 2026
This article is for informational purposes only and does not constitute legal advice, advertisement, or solicitation. Notary Kathmandu and its team are not liable for any consequences arising from reliance on this information. For legal advice, please contact us directly.
Frequently Asked Questions
Digital Service Tax (DST) is a 2% tax non-resident digital companies pay on services sold to consumers in Nepal.
The Digital Service Tax rate in Nepal is 2% of the transaction value, charged on digital services supplied to Nepali consumers.
DST applies when a non-resident provider's annual transactions in Nepal exceed NPR 3 million. Once crossed, the 2% applies to the entire transaction value.
DST is paid by non-resident persons — companies or individuals based outside Nepal — who supply digital services to Nepali consumers and exceed the annual transaction threshold. Resident Nepali businesses are taxed under regular income tax and VAT rules instead, so DST specifically targets foreign digital providers.
Digital services include internet-delivered, largely automated offerings such as streaming and OTT (movies, music), online advertising, cloud and data storage, online gaming, e-commerce platforms, software and updates, and digital educational content sold to Nepali consumers.
Digital Service Tax was introduced through the Finance Act 2079/80 (2022) and is administered by the Inland Revenue Department. A dedicated Procedure Relating to Digital Service Tax 2079 sets out the registration, return, and payment process for non-resident providers.
A taxable non-resident must apply to the Nepali tax authorities for a Permanent Account Number within thirty days of crossing the transaction threshold. A non-resident may also register voluntarily at any time, and registration is handled through the Inland Revenue Department.
A non-resident provider files the DST return online and pays the 2% tax within three months of the end of the Nepali income year, which closes in mid-July. Both filing and payment are done online because the taxpayers are based outside Nepal.
Once a non-resident provider's annual transactions exceed NPR 3 million, the 2% DST is levied on the entire transaction value, not just the portion above the threshold. This makes crossing the threshold significant for the total tax due.
Yes. Major global platforms — including names such as Apple, Google, Microsoft, Netflix, and TikTok — have registered for DST in Nepal and begun paying it. The tax is designed precisely to capture revenue these companies earn from Nepali users.
DST is the 2% levy on a non-resident provider's Nepal transactions. VAT on digital services is a separate charge within Nepal's value-added tax system. They are assessed independently, so a non-resident provider should check both obligations rather than assume one covers the other.
No. DST is triggered by the volume of transactions with Nepali consumers, not by having an office or branch in Nepal. A non-resident provider with no physical presence still owes DST once it crosses the annual transaction threshold.
No. DST is a distinct levy with its own 2% rate, threshold, and filing cycle, aimed at non-resident digital providers. It sits within the wider IRD-administered tax framework alongside income tax and VAT, but is calculated and filed separately from them.
Yes. The annual transaction threshold was raised to NPR 3 million by a later amendment, up from the NPR 2 million figure that applied when DST was introduced. The 2% rate has remained, and the higher threshold is the current position.
No. DST registration and filing are tax matters handled with the Inland Revenue Department or a qualified tax advisor. Notary Kathmandu can assist only with the document layer — notarisation and certified translation of corporate documents where a Nepal filing requires them.
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