KATHMANDU, Aug 11: The government has given continuity to a five percent tax on the earnings by content creators using social media.
Unveiling the tax regime for the current fiscal year on Monday, the Inland Revenue Department (IRD) made public the income tax structures for earners in various sectors. “Individuals who receive payment in foreign currency for providing software or electronic services outside Nepal or who earn income by uploading audio-visual content on social media (including YouTube and TikTok) will have to pay 5 percent tax on the amount received,” reads the IRD notice.
Since last year, the government has started imposing tax on earnings of content creators using social media platforms. The content creators have been subjected to a flat five percent tax deducted at source (TDS), which is withheld directly by banks when the funds are transferred into local accounts.
The creators’ income from revenue earned from YouTube AdSense, TikTok Creator Reward, Instagram bonuses and Facebook in-stream ads, among others, is now subject to tax. Likewise, brand deals including paid promotions, sponsored posts, product reviews and affiliate commission are also subject to a five percent tax.
Tax reform committee proposes increasing Social Security Tax to...
Similarly, the paid online courses, downloadable templates and online sales also fall under this category.
The IRD has also stated a 25 percent corporate profit tax on net taxable income has been imposed for general businesses. However, specific sectors like banks, financial institutions, general insurance, and tobacco or petroleum manufacturing are taxed at a higher rate of 30 percent.
Meanwhile, the IRD has also defined the tax to be paid by small businesses. A firm with transactions of Rs 3 million per annum and earnings of up to Rs 300,000 a month annually needs to pay yearly tax of Rs 7,500 if they operate in metropolis and sub-metropolis areas. The tax amount is Rs 4,000 in municipalities and Rs 2,500 in other areas.
For the businesses with annual turnover between Rs 3 million and Rs 10 million, one percent tax will be levied on goods transactions and two percent tax on services transactions.
When selling real estate property, 7.5 percent capital gains tax will be levied on those who have owned it for more than five years and 10 percent on those who have owned it for less than five years.
In case of capital gains from the stock exchange market, there is a provision that 7.5 percent tax will be levied on those who hold shares for more than 365 days and 10 percent tax on those who hold it for less than that period.
For salary earners, they need to pay one percent tax for up to annual income of Rs 1 million. The rate is 10 percent for salary earners between Rs 1 million and 1.5 million, 20 percent for income between Rs 1.5 million and Rs 2.5 million, 27 percent for those earning between Rs 2.5 million and Rs 4 million, 29 percent for earnings above Rs 4 million annually.
In case of taxpayers registered as sole proprietors, pensioners and contributors to the contribution-based social security fund, one percent tax will not be imposed on the first slab of Rs 1 million.
