The Government of Nepal presented the Budget for Fiscal Year 2081/82 (2024/25) on 29 Ashadh 2081 (mid-July 2024). Nepal follows the Bikram Sambat calendar; its fiscal year runs mid-July to mid-July. Below are the highlights most relevant to businesses operating in or investing into Nepal.
Income Tax Changes
Corporate income tax rate for banks and financial institutions revised from 30% to 28%, effective from the current fiscal year.
Special industries operating in designated zones now qualify for a 5-year income tax holiday, extended from the previous 3-year window.
Withholding tax on dividends to non-residents reduced from 15% to 10% for investments exceeding NPR 100 million.
VAT & Indirect Tax
VAT threshold raised from NPR 5 million to NPR 8 million annual turnover, reducing the compliance burden on small enterprises.
New VAT exemptions introduced for agricultural processing equipment and renewable energy components.
Digital service providers (both domestic and foreign) now required to register for VAT if annual turnover from Nepal exceeds NPR 2 million.
Foreign Investment
Minimum FDI threshold reduced from USD 50,000 to USD 20,000 for technology-focused enterprises.
Repatriation procedures simplified: single-window clearance now available for profit remittances below USD 500,000.
New incentive structure for joint ventures in hydropower — 100% foreign ownership now permitted for projects above 500 MW.
Compliance Deadlines
Annual return filing deadline for companies registered at the OCR brought forward by 30 days.
Transfer pricing documentation now mandatory for all transactions with related parties exceeding NPR 10 million (previously NPR 30 million).
Our Take
This budget signals a clear intent to attract foreign capital into infrastructure and technology while tightening compliance frameworks for existing enterprises. Businesses should review their tax structures immediately — particularly around transfer pricing and the new VAT thresholds. Contact our team for a detailed impact assessment specific to your sector.
Need a detailed assessment?
Our team can provide a confidential briefing on how this development affects your specific situation.
Request a Consultation