IRD asks foreign service providing companies to pay 1.5 percent of contract amount as income tax

KATHMANDU, OCT 18: The government has fixed the income tax for the foreign service providing companies at 1.5 percent of the contract amount.

Issuing a public notice, the Inland Revenue Department (IRD) has asked the foreign companies to submit income tax at the rate of 1.5 percent of their generated income. Resolving the controversy on whether the foreign companies should pay 1.5 percent or five percent, the IRD has set the income tax rate.  

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The tax authority has asked the foreign companies to consider the total contract amount of any construction related works or the services as their revenue to pay the income tax. Foreign companies need to receive permanent account numbers to submit the prescribed rate of income tax in the form of electronic tax deducted at source (eTDS).