This Article covers the procedure, requirements, deductions, concessions on How can NRN file Tax in Nepal along with a detailed assistance on tax filing process.

1.Do NRNs need to file taxes in Nepal?

Non-Resident Nepalis (NRNs) are generally not required to file taxes in Nepal for income earned outside of Nepal. However, they may have tax obligations if they earn income from Nepali sources or if they meet specific residency criteria.

1. Income from Nepali Sources: NRNs are subject to Nepali taxation on income earned within Nepal, such as rental income from property in Nepal, business income generated in Nepal, or interest income from Nepali bank accounts.
2. Residency Status: NRNs who spend more than 183 days in Nepal within a tax year are considered residents for tax purposes and are subject to Nepali taxation on their worldwide income, including income earned abroad.
3. Tax Treaties: Nepal has tax treaties with several countries to prevent double taxation for NRNs. These treaties may provide exemptions or reduced tax rates on certain types of income earned by NRNs.

2.
What documents are required for tax filing?

As a Non-Resident Nepali (NRN), the following documents are typically required for tax filing in Nepal:

1. Passport:
   • A copy of your valid passport, which serves as proof of your non-resident status.
2. Permanent Account Number (PAN) Card:
   • A copy of your Permanent Account Number (PAN) card, which is a unique identification number assigned by the Inland Revenue Department (IRD) of Nepal.
3. Bank Statements:
   • Copies of bank statements for your NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts in Nepal, covering the relevant tax year.
   • These statements help provide evidence of your income and financial transactions.
4. Income Proof:
   • Copies of documents that substantiate your income sources and amounts, such as:
     • Salary slips or employment certificates from your employer(s) outside Nepal.
     • Statements or receipts for any rental income, business income, or investments in Nepal.
     • Certificates for interest earned on your NRE and NRO accounts.
5. Deduction Proofs:
   • Copies of documents that support any eligible deductions or tax exemptions, such as:
     • Receipts for charitable donations made in Nepal.
     • Invoices or bills for any medical expenses incurred in Nepal.
     • Receipts for tuition fees paid for dependents studying in Nepal.
6. Tax Residency Certificate:
   • A Tax Residency Certificate (TRC) issued by the tax authorities of your country of residence, which confirms your non-resident status.
7. Power of Attorney (if applicable):
   • If you are authorizing someone else to file your tax return on your behalf, you will need to provide a power of attorney document.
8. Other Supporting Documents:
   • Depending on your specific circumstances, the IRD may request additional documents, such as:
     • Copy of your marriage certificate (if filing jointly with your spouse).
     • Proof of ownership for any immovable property in Nepal.
     • Invoices or receipts for any major transactions or investments in Nepal.

3. How can NRN file Tax in Nepal?

the process for filing taxes online in Nepal was not widely available or fully implemented for all taxpayers. However, the Government of Nepal has been making efforts to digitize and streamline the tax filing process, including introducing online tax filing systems. Here are the general steps for filing taxes online in Nepal:

1. Register for an Online Tax Account: Visit the official website of the Inland Revenue Department (IRD) of Nepal or the designated tax portal and register for an online tax account. You may need to provide personal information and create login credentials.
2. Gather Required Documents: Collect all necessary documents related to your income, deductions, and tax liabilities, such as salary statements, bank statements, investment details, and any other relevant documents.
3. Complete the Online Tax Return Form: Log in to your online tax account and complete the tax return form provided by the IRD. Enter accurate information regarding your income, deductions, and tax liabilities.
4. Upload Supporting Documents: Scan and upload supporting documents as required by the online tax filing system, such as salary statements, investment certificates, and receipts for deductions.
5. Review and Submit: Review the information entered on the tax return form to ensure accuracy and completeness. Once satisfied, submit the form electronically through the online tax portal.
6. Pay Taxes Due: If you have any tax liabilities, arrange for payment through the online tax portal using the available payment options, such as bank transfer, debit card, or mobile banking.
7. Receive Confirmation: Upon successful submission and payment of taxes, you should receive a confirmation of your tax filing via email or through the online tax portal.

4.
What is the tax rate for NRNs?

The tax rates for Non-Resident Nepalis (NRNs) in Nepal are as follows:

1. Income Tax Rates:
   • NRNs are subject to the same income tax rates as Nepali residents, which are:
     • Up to NPR 400,000 (for individuals) or NPR 450,000 (for couples filing jointly): 1%
     • NPR 400,001 to NPR 1,000,000: 10%
     • NPR 1,000,001 to NPR 2,000,000: 20%
     • Above NPR 2,000,000: 30%
2. Withholding Tax:
   • NRNs are subject to withholding tax on certain types of income, such as:
     • Rental income from property in Nepal: 10% withholding tax
     • Interest income from NRE (Non-Resident External) accounts: 5% withholding tax
     • Dividends from Nepali companies: 5% withholding tax
3. Capital Gains Tax:
   • NRNs are subject to capital gains tax on the sale of certain assets in Nepal, such as:
     • Immovable property (land and buildings): 5% capital gains tax
     • Shares and securities: 10% capital gains tax
4. Tax Exemptions:
   • NRNs may be eligible for certain tax exemptions, such as:
     • Interest income from NRO (Non-Resident Ordinary) accounts: Exempt from income tax
     • Income from investments in government-approved projects: Exempt from income tax
     • Income from investments in certain financial instruments: Partial tax exemption

5.
Are there tax exemptions for NRNs?

Tax exemptions for Non-Resident Nepalis (NRNs) are:

1. Home Country Tax Laws: NRNs are typically subject to the tax laws of their country of residence. Some countries have tax treaties with Nepal that might provide certain tax exemptions or relief to avoid double taxation.
2. Income Earned Abroad: Income earned outside of Nepal by NRNs is generally not subject to Nepalese income tax. However, NRNs need to check the tax regulations of their country of residence to ensure they comply with local laws.
3. Investment in Nepal: The Government of Nepal has provided various tax incentives to NRNs to encourage investment in the country. For example:
   • Tax Holidays: NRNs investing in certain industries or regions in Nepal may be eligible for tax holidays or reduced tax rates for a specified period.
   • Repatriation of Earnings: NRNs may be allowed to repatriate profits from investments in Nepal, often subject to certain conditions and approval from the Nepal Rastra Bank.
   • Dividend Tax: Dividend income from investments in Nepal might be subject to lower withholding tax rates for NRNs.
4. Foreign Direct Investment (FDI): NRNs engaging in FDI in Nepal may benefit from various tax exemptions or incentives under the Foreign Investment and Technology Transfer Act, 2019.
5. Remittances: Remittances sent by NRNs to Nepal are generally not subject to income tax in Nepal. Additionally, some countries provide tax benefits on foreign remittances.
6. Tax Residency: The tax residency status of an NRN can influence the applicability of tax exemptions. NRNs are usually considered non-residents if they do not reside in Nepal for more than 183 days in a tax year.
7. Property and Capital Gains: Tax exemptions or reductions might apply to NRNs on the sale of property or capital gains in Nepal, but these are subject to specific conditions and regulations.

6.
Can NRNs get tax advice in Nepal?

Yes, Non-Resident Nepalis (NRNs) can get tax advice in Nepal. There are several options for NRNs to obtain tax-related guidance and assistance in Nepal:

1. Chartered Accountants (CAs) and Tax Professionals:
   • NRNs can consult with Chartered Accountants (CAs) or other qualified tax professionals in Nepal who specialize in NRN tax matters.
   • These professionals can provide advice on tax planning, compliance, and filing requirements specific to NRNs.
   • They can also assist with tax return preparation, representation before tax authorities, and resolving any tax-related issues.
2. Accounting and Tax Firms:
   • There are various accounting and tax consulting firms in Nepal that have expertise in NRN taxation.
   • These firms can offer comprehensive tax advisory services, including tax planning, compliance, and representation.
   • They can also provide guidance on the interpretation of tax laws, regulations, and Double Taxation Avoidance Agreements (if applicable).
3. Government Resources:
   • The Inland Revenue Department (IRD) of Nepal, which is the tax authority, provides some general information and guidance for NRNs on its website.
   • NRNs can also directly interact with the IRD, either in person or through their authorized representatives, to seek clarification on tax-related matters.
4. Industry Associations:
   • Organizations like the Non-Resident Nepali Association (NRNA) and the Institute of Chartered Accountants of Nepal (ICAN) may offer tax-related resources and guidance to their members.
   • These associations can provide information on tax regulations, compliance requirements, and connect NRNs with qualified tax professionals.
5. Online Resources:
   • There are various online platforms and forums where NRNs can find information and seek advice on tax-related matters in Nepal.
   • These include websites, blogs, and discussion forums maintained by tax professionals, accounting firms, and NRN communities.

7.
How to calculate taxable income?

Steps to Calculate Taxable Income for NRNs

1. Determine Worldwide Income
   • Compile all sources of income earned worldwide. This includes salaries, business income, rental income, interest, dividends, and any other income.
   • Gross Income = Worldwide Income
2. Exclude Foreign Income (if applicable)
   • Generally, NRNs are taxed on income earned within Nepal. Income earned outside Nepal is usually not subject to Nepalese tax.
   • Income Subject to Nepal Tax = Income Earned in Nepal
3. Adjustments to Income
   • Subtract specific adjustments to income, such as contributions to approved retirement plans, if applicable under Nepalese law.
   • Adjusted Gross Income (AGI) = Income Subject to Nepal Tax – Adjustments
4. Deductions
   • Standard Deduction: NRNs may be eligible for the standard deduction provided under Nepalese tax law.
   • Itemized Deductions: If applicable, NRNs can choose to itemize deductions for expenses such as medical expenses, charitable donations, and mortgage interest paid within Nepal.
   • Taxable Income Before Exemptions = AGI – (Standard Deduction or Itemized Deductions)
5. Personal Exemptions
   • Verify if personal exemptions are applicable based on current tax regulations in Nepal.
   • Taxable Income After Exemptions = Taxable Income Before Exemptions – Personal Exemptions

Example Calculation for an NRN

Let’s go through a hypothetical example for an NRN with income earned in Nepal:

1. Gross Income in Nepal
   • Salary earned in Nepal: NPR 1,000,000
   • Rental income in Nepal: NPR 200,000
   • Interest income in Nepal: NPR 50,000
   • Total Income in Nepal: NPR 1,250,000
2. Adjustments to Income
   • Contributions to an approved retirement plan: NPR 50,000
   • Adjusted Gross Income (AGI) = NPR 1,250,000 – NPR 50,000 = NPR 1,200,000
3. Deductions
   • Standard Deduction (example figure): NPR 100,000
   • Taxable Income Before Exemptions = NPR 1,200,000 – NPR 100,000 = NPR 1,100,000
4. Personal Exemptions
   • Assume personal exemptions (example figure): NPR 50,000
   • Taxable Income After Exemptions = NPR 1,100,000 – NPR 50,000 = NPR 1,050,000

Important Considerations for NRNs

• Tax Treaties: Check if there is a tax treaty between Nepal and the country of residence, which might provide specific tax reliefs or credits.
• Foreign Tax Credits: If foreign income is also taxed by the country of residence, NRNs may be eligible for foreign tax credits to avoid double taxation.
• Income Sourcing Rules: Ensure accurate determination of what constitutes Nepalese income, as this is the basis for Nepal tax liability.

8.
Are there penalties for late tax filing?

Let’s consider an NRN who owes NPR 200,000 in taxes and files the return 4 months late, and also pays the taxes late. Here’s how the penalties and interest might be calculated:

Late Filing Penalty:

A fine of NPR 100 per day may be imposed for failing to file the return within the stipulated time frame. If a tax return is not filed within the extended time period, a penalty of 0.1% of the turnover may be imposed.

NPR 100 per day for 4 months (assuming 30 days per month): 4 * 30 * 100 = NPR 12,000

Late Payment Penalty:

If the tax due is not paid within the due date, a late payment penalty of 15% of the unpaid tax amount is imposed.

15% of the unpaid tax amount: 15% of NPR 200,000 = NPR 30,000

Interest on Unpaid Taxes:

Interest is charged at a rate of 15% per annum on the unpaid tax amount.

• Interest at 15% per annum for 4 months: (15% / 12) * 4 * NPR 200,000 = 5% * NPR 200,000 = NPR 10,000

Total Penalties and Interest:

• Late Filing Penalty: NPR 12,000
• Late Payment Penalty: NPR 30,000
• Interest: NPR 10,000
• Total Penalties and Interest: NPR 12,000 + NPR 30,000 + NPR 10,000 = NPR 52,000

9.

How to get a tax identification number?

Obtaining a Tax Identification Number (TIN) is a crucial step for any taxpayer, including Non-Resident Nepalis (NRNs), who need to file taxes in Nepal. Here’s a step-by-step guide on how to get a TIN in Nepal:

Steps to Obtain a TIN in Nepal

1. Prepare Required Documents:
   • Personal Identification: For individuals, a copy of your citizenship certificate or passport is required. NRNs will need their NRN ID card.
   • Business Registration: For businesses, copies of business registration certificates are required.
   • Address Proof: Documents such as utility bills or rental agreements to prove your address in Nepal.
   • Photos: Passport-sized photographs might be required.
2. Complete the Application Form:
   • Visit the Inland Revenue Department (IRD) website or the nearest Taxpayer Service Office to obtain the TIN application form.
   • Fill out the form with accurate details, including personal information, business details (if applicable), and address.
3. Submit the Application:
   • Submit the completed application form along with the required documents to the IRD or Taxpayer Service Office.
   • For NRNs, this can be done through representatives if they are not physically present in Nepal.
4. Verification Process:
   • The IRD will verify the submitted documents and information. This might involve checking the authenticity of the documents and ensuring all details are correctly filled out.
5. Issuance of TIN:
   • Once the verification process is completed, the IRD will issue a TIN. This number will be unique to you or your business and will be used for all tax-related matters.

Additional Considerations for NRNs

• Representation: If you are an NRN and cannot be physically present in Nepal, you can appoint a representative to apply for the TIN on your behalf. This representative will need a power of attorney or authorization letter from you.
• Online Application: Check if the IRD offers an online application process for obtaining a TIN, which can simplify the procedure for NRNs who are abroad.

10.
Can NRNs file joint taxes with spouses?

Joint Tax Filing for NRNs

In Nepal, the concept of joint tax filing, similar to what is available in some other countries like the United States, is not typically a feature of the tax system. Instead, tax laws in Nepal generally require individuals to file their tax returns separately. However, here are some key points to consider:

1. Individual Tax Filing:
   • In Nepal, individuals are generally required to file their tax returns separately. This means that both the NRN and their spouse would need to file individual tax returns.
2. Income Tax Act of Nepal:
   • According to the Income Tax Act, 2002 of Nepal, there is no provision for joint tax filing for spouses. Each individual is responsible for reporting their own income and paying taxes accordingly.
3. Tax Benefits and Deductions:
   • While joint tax filing is not an option, individuals can still claim certain tax benefits and deductions as per the tax laws. For example, deductions for medical expenses, charitable donations, and contributions to retirement funds can be claimed individually.
4. Filing as an NRN:
   • NRNs are subject to different tax rules compared to residents. It is essential for NRNs to understand the specific tax obligations that apply to them, including reporting worldwide income and availing of any tax treaties between Nepal and their country of residence.

Considerations for NRNs with Spouses

• Separate Filing: Since joint filing is not an option, NRNs and their spouses should ensure that they separately report their income, deductions, and any applicable credits on their individual tax returns.
• Documentation: Maintain clear documentation for all sources of income and expenses, as this will be necessary for accurate individual filings.
• Tax Advice: Given the complexity of tax regulations for NRNs, it is advisable to consult with a tax professional who is familiar with both Nepalese tax laws and international tax treaties.

Example Scenario

If an NRN earns income from abroad and their spouse earns income in Nepal, each will need to file separate tax returns as follows:

• NRN:
  • File a tax return reporting income earned in Nepal and any other applicable income as per Nepalese tax laws.
  • Claim any deductions or credits individually.
• Spouse:
  • File a tax return reporting their income earned in Nepal.
  • Claim any deductions or credits individually.

11.
How to claim tax deductions?

Steps to Claim Tax Deductions for NRNs

1. Understand Eligible Deductions:
   • Familiarize yourself with the deductions allowed under Nepalese tax law. These might include deductions for retirement contributions, medical expenses, education expenses, charitable donations, and more.
2. Maintain Accurate Records:
   • Keep detailed records of all expenses that you intend to claim as deductions. This includes receipts, invoices, bank statements, and other relevant documents.
3. Complete the Tax Return Form:
   • Obtain the appropriate tax return form from the Inland Revenue Department (IRD) of Nepal or their website.
   • Fill in the form with accurate information, including your income and all eligible deductions.
4. Attach Supporting Documents:
   • Attach copies of all necessary supporting documents to your tax return to substantiate your claims for deductions.
   • Make sure these documents are organized and clearly labeled to match the deductions claimed on your form.
5. File Your Tax Return:
   • Submit your completed tax return form along with all supporting documents to the IRD or the relevant tax office. Ensure that you meet the filing deadlines to avoid penalties.
   • NRNs can file their returns through authorized representatives if they are not physically present in Nepal.

Common Tax Deductions for NRNs

Here are some of the common deductions that NRNs might be eligible to claim:

1. Contributions to Retirement Funds:
   • Contributions made to approved retirement funds or pension schemes can be claimed as a deduction.
2. Medical Expenses:
   • Certain medical expenses incurred for yourself or dependents may be deductible if they exceed a specified threshold.
3. Charitable Donations:
   • Donations to approved charitable organizations and NGOs can be claimed as deductions. Ensure you have receipts or acknowledgments from the organizations.
4. Educational Expenses:
   • Tuition fees and other educational expenses for children or dependents might be deductible under specific conditions.
5. Interest on Home Loan:
   • Interest paid on loans taken for the purchase or construction of residential property may be deductible.

Example Scenario

Let’s consider an NRN who has the following expenses and wants to claim deductions:

1. Income:
   • Salary earned in Nepal: NPR 1,200,000
   • Rental income in Nepal: NPR 300,000
2. Deductions:
   • Contribution to Retirement Fund: NPR 50,000
   • Medical Expenses: NPR 40,000
   • Charitable Donations: NPR 20,000
   • Interest on Home Loan: NPR 30,000
3. Tax Calculation:
   • Total Income: NPR 1,500,000
   • Total Deductions: NPR 140,000 (Retirement Fund + Medical Expenses + Charitable Donations + Home Loan Interest)
   • Taxable Income: NPR 1,360,000 (Total Income – Total Deductions)

Tips for Claiming Deductions

• Stay Updated: Tax laws and regulations can change. Ensure you are aware of the latest tax rules and eligible deductions each tax year.
• Consult a Tax Professional: For personalized advice and to ensure compliance with all tax requirements, consider consulting a tax professional who specializes in NRN taxation.
• File on Time: Avoid penalties by filing your tax return and claiming deductions within the stipulated deadlines.

12.
What are the deadlines for tax filing?

Here are the general deadlines for tax filing in Nepal:

Individual Taxpayers

1. Annual Income Tax Return:
   • Filing Deadline: The annual income tax return must be filed by the end of the third month of the Nepalese fiscal year, which is typically by the 15th of October (Ashwin end) for the fiscal year ending in mid-July (Ashad end).

Business Entities

1. Annual Income Tax Return:
   • Filing Deadline: Similar to individual taxpayers, business entities must file their annual income tax return by the end of the third month of the fiscal year, which is typically by the 15th of October (Ashwin end).
2. VAT Return:
   • Monthly VAT Return: For businesses registered under VAT, the VAT return must be filed monthly. The deadline is usually the 25th of the following month.

Other Tax Deadlines

1. Advance Tax Payment:
   • Taxpayers are required to pay advance tax in three installments:
     • First Installment: By the end of Poush (mid-January) – 40% of the estimated tax.
     • Second Installment: By the end of Chaitra (mid-April) – 70% of the estimated tax.
     • Final Installment: By the end of Ashad (mid-July) – 100% of the estimated tax.
2. Withholding Tax Returns:
   • Monthly Filing: Withholding tax returns must be filed monthly, typically by the 25th of the following month.

Penalties for Late Filing

• Late Filing Penalty: There is typically a penalty for failing to file the return within the stipulated time frame, such as NPR 100 per day for late filing.
• Late Payment Penalty: If the tax due is not paid within the due date, a late payment penalty of 15% of the unpaid tax amount may be imposed.
• Interest on Unpaid Taxes: Interest is generally charged at a rate of 15% per annum on the unpaid tax amount.

13. How to pay taxes from abroad?

eps to Pay Taxes from Abroad for NRNs

1. Determine Tax Liability:
   • Calculate your total tax liability by filing the appropriate tax return forms. Ensure all sources of income, deductions, and credits are accurately reported.
2. Choose a Payment Method:
   • Bank Transfer: This is the most common method for NRNs to pay taxes from abroad. You can transfer the amount directly to the Inland Revenue Department’s (IRD) designated bank account.
   • Online Payment: Some tax authorities may offer online payment options through their websites. Check if the IRD provides such services.
   • Authorized Representative: You can appoint a representative in Nepal to make the payment on your behalf. This representative can use local payment methods to settle your tax dues.
3. Obtain Payment Instructions:
   • Visit the IRD’s website or contact their office to get the detailed instructions for making payments from abroad, including the bank account details and reference information required for the transfer.
4. Complete the Payment:
   • Bank Transfer:
     • Use your bank’s online banking platform or visit your local bank branch to initiate an international wire transfer.
     • Provide the required bank details of the IRD, including the bank name, account number, SWIFT code, and any other necessary information.
     • Ensure to include a reference (such as your TIN and tax year) in the payment details to identify your tax payment correctly.
   • Online Payment:
     • Follow the instructions on the IRD’s website for online payments. This may involve using an international credit card or online banking facility.
   • Through Representative:
     • Provide your representative with the necessary funds and instructions to make the payment locally on your behalf.
5. Confirm Payment:
   • After completing the payment, keep a record of the transaction details, including the payment confirmation or receipt.
   • Notify the IRD of your payment by sending them an email or through their online portal, including the transaction reference number and details.
6. File Proof of Payment:
   • Attach the proof of payment (transaction receipt or confirmation) to your tax return or send it separately to the IRD if required.
   • Ensure your tax return is filed by the deadline, along with any necessary documentation.

14. Can NRNs get tax refunds?

Circumstances When NRNs May Receive Tax Refunds:

1. Overpayment of Taxes:
   • If an NRN has paid more taxes than their actual tax liability, either through withholding or estimated tax payments, they may be eligible for a refund of the excess amount.
2. Tax Credits:
   • NRNs may be eligible for tax credits, such as foreign tax credits or credits for taxes paid in Nepal, that exceed their tax liability. In such cases, the excess credits can be refunded.
3. Excess Deductions:
   • If NRNs have claimed deductions or exemptions that exceed their taxable income, resulting in a negative tax liability, they may be entitled to a refund for the excess deductions.
4. Tax Treaty Provisions:
   • Tax treaties between Nepal and other countries may include provisions for the avoidance of double taxation and procedures for claiming refunds of overpaid taxes.

15. How to update tax information?

Steps to Update Tax Information:

1. Gather Necessary Documents:
   • Collect any documents or information that will be needed to update your tax information. This may include identification documents, proof of address, income statements, and documentation for any changes you want to make.
2. Complete the Relevant Forms:
   • Obtain the appropriate tax update form from the Inland Revenue Department (IRD) of Nepal or their website. Different forms may be required depending on the type of update you need to make.
   • Fill out the form with accurate and up-to-date information. Be sure to include any changes to your personal details, income, deductions, or other relevant information.
3. Attach Supporting Documents:
   • If you are updating specific information, such as changes to income or deductions, attach any supporting documents that verify the changes. This could include pay stubs, bank statements, receipts, or other relevant documentation.
4. Submit the Form:
   • Once the form is completed and all necessary documents are attached, submit the form to the IRD or the relevant tax office. You may be able to do this in person or by mail, depending on the procedures in place.
5. Follow Up:
   • After submitting the form, follow up with the IRD or tax office to ensure that your information has been updated correctly. You may receive a confirmation or acknowledgment of the update.

16. Are there tax treaties for NRNs?

Yes, Nepal has tax treaties with several countries that can potentially benefit Non-Resident Nepalis (NRNs). The key aspects of tax treaties for NRNs are as follows:

1. Double Taxation Avoidance Agreements (DTAAs):
   • Nepal has signed Double Taxation Avoidance Agreements (DTAAs) with various countries, including India, China, Thailand, Mauritius, and Pakistan, among others.
   • These DTAAs aim to prevent the dual taxation of income earned by individuals who are residents of one country but have income sources in another.
2. Reduced Tax Rates:
   • Under the DTAAs, NRNs may be eligible for reduced tax rates on certain types of income, such as:
     • Dividends
     • Interest
     • Royalties
     • Capital gains
3. Exemptions and Deductions:
   • The tax treaties may provide exemptions or deductions for NRNs on specific types of income, such as:
     • Pensions and other retirement benefits
     • Income from independent personal services
     • Income from employment
4. Tax Credit:
   • NRNs may be able to claim a tax credit in their country of residence for the taxes paid in Nepal, depending on the provisions of the DTAA.
   • This can help to avoid double taxation on the same income.
5. Mutual Assistance:
   • The DTAAs often include provisions for the exchange of information and mutual assistance between the tax authorities of the signatory countries.
   • This can facilitate the resolution of tax-related issues and disputes for NRNs.

17. How to handle tax disputes?

Steps to Handle Tax Disputes:

1. Review Notice or Assessment:
   • If you receive a notice or assessment from the IRD that you disagree with, carefully review the details to understand the basis of the dispute. Identify the specific issues or discrepancies that need to be addressed.
2. Gather Evidence:
   • Collect all relevant documents, records, and evidence that support your position in the dispute. This may include tax returns, financial statements, receipts, correspondence with the IRD, and any other relevant documentation.
3. Consult with a Tax Professional:
   • Consider seeking advice from a tax professional or advisor who is knowledgeable about Nepalese tax laws and procedures. They can provide guidance on your rights, options, and the best course of action to resolve the dispute.
4. Request Informal Resolution:
   • Before initiating formal dispute resolution procedures, you may attempt to resolve the issue informally with the IRD. Contact the relevant tax office or official to discuss your concerns and provide any supporting documentation.
5. File a Formal Objection:
   • If the dispute cannot be resolved informally, you have the right to file a formal objection with the IRD. Prepare a written statement outlining the grounds for your objection and submit it to the designated authority within the prescribed time frame.
6. Attend Mediation or Settlement Discussions:
   • In some cases, the IRD may offer mediation or settlement discussions to resolve the dispute without resorting to formal legal proceedings. Participate in these discussions in good faith and consider any proposed resolutions.
7. Appeal to the Tax Tribunal:
   • If the dispute remains unresolved after the objection process, you have the right to appeal to the Tax Tribunal. Lodge an appeal with the Tribunal within the specified time limit, providing all necessary documentation and evidence to support your case.
8. Consider Legal Action:
   • As a last resort, if you are unsatisfied with the outcome of the appeal to the Tax Tribunal, you may consider taking legal action through the courts. Consult with a legal advisor to assess the feasibility and implications of pursuing legal remedies.

18.
Can NRNs appeal tax decisions?

Yes, Non-Resident Nepalis (NRNs) can appeal tax decisions made by the Nepali tax authorities. The process for appealing tax decisions in Nepal is as follows:

1. Administrative Appeal:
   • NRNs can file an administrative appeal against any tax assessment, decision, or order made by the tax authorities.
   • The appeal must be submitted to the Inland Revenue Department (IRD) within 30 days of receiving the tax decision.
   • The IRD will review the appeal and make a decision within 60 days.
2. Appellate Tribunal:
   • If the NRN is not satisfied with the decision made by the IRD, they can further appeal to the Inland Revenue Appellate Tribunal.
   • The Appellate Tribunal is an independent administrative body that hears appeals against tax decisions.
   • The appeal to the Tribunal must be filed within 30 days of receiving the IRD’s decision.
   • The Tribunal will review the case and issue a decision, which can be either in favor of the NRN or the tax authorities.
3. Judicial Appeal:
   • If the NRN is still not satisfied with the decision of the Appellate Tribunal, they can file a judicial appeal with the High Court of Nepal.
   • The judicial appeal must be filed within 35 days of receiving the Tribunal’s decision.
   • The High Court will review the case and make a final determination on the tax dispute.
4. Supreme Court:
   • If either the NRN or the tax authorities are dissatisfied with the High Court’s decision, they can further appeal to the Supreme Court of Nepal.
   • The Supreme Court’s decision will be final and binding.

19.
What is the process for tax audit?

The tax audit process in Nepal is conducted by the tax authorities, primarily the Inland Revenue Department (IRD), to verify the accuracy and completeness of taxpayers’ financial records, tax returns, and compliance with tax laws. Here’s an overview of the tax audit process:

1. Selection for Audit:

• Taxpayers may be selected for audit based on various criteria, including:
  • Random selection.
  • Specific risk factors, such as discrepancies in tax returns, high-value transactions, or unusual financial activities.
  • Referral from other government agencies or sources.

2. Notification:

• Once selected for audit, the taxpayer receives a notification from the IRD informing them of the audit and specifying the time, date, and location of the audit. The notification may also outline the scope and purpose of the audit.

3. Preparation:

• The taxpayer should prepare for the audit by gathering all relevant documents and records, including:
  • Financial statements.
  • Tax returns.
  • Bank statements.
  • Invoices and receipts.
  • Any other supporting documentation related to income, expenses, deductions, and tax payments.

4. Conducting the Audit:

• During the audit, tax officers from the IRD review the taxpayer’s financial records and documentation to assess compliance with tax laws. The audit may involve:
  • Interviewing the taxpayer or their representatives to gather information and clarify any discrepancies.
  • Examining accounting records and documents to verify the accuracy of reported income, expenses, deductions, and tax payments.
  • Inspecting physical assets or properties, if necessary.
  • Performing tests and analyses to assess the taxpayer’s compliance with tax regulations.

5. Findings and Assessment:

• After completing the audit, the tax officers prepare a report outlining their findings, observations, and any discrepancies identified during the audit. This report may include proposed adjustments to the taxpayer’s tax liability based on the audit findings.

6. Discussion and Resolution:

• The taxpayer has the opportunity to review the audit findings and discuss any concerns or disagreements with the tax authorities. They may provide additional explanations, clarifications, or evidence to support their position.
• If there are disagreements or disputes regarding the audit findings, the taxpayer and the tax authorities may engage in discussions, negotiations, or dispute resolution procedures to resolve the issues.

7. Final Assessment and Compliance:

• Once any disputes or discrepancies are resolved, the tax authorities issue a final assessment of the taxpayer’s tax liability based on the audit findings. The taxpayer is required to comply with the assessment by paying any additional taxes owed or claiming any refunds, credits, or adjustments.

8. Appeal Process:

• If the taxpayer disagrees with the final assessment or decision of the tax authorities, they have the right to appeal the decision through the prescribed appeal process, which may involve filing an appeal with the Tax Tribunal or pursuing other legal remedies.

20.
How to correct tax filing errors?

If Non-Resident Nepalis (NRNs) identify any errors or mistakes in their tax filings in Nepal, there are a few steps they can take to correct them:

1. Amending the Tax Return:
   • NRNs can file an amended tax return to correct any errors or omissions in their previously submitted tax return.
   • The amended return must be filed within the applicable time frame, which is generally within 3 years from the end of the relevant tax year.
   • The amended return should clearly indicate the changes being made and provide the correct information.
2. Voluntary Disclosure:
   • If the NRN has failed to report any income or has underreported their tax liability, they can make a voluntary disclosure to the Inland Revenue Department (IRD).
   • By making a voluntary disclosure, the NRN can potentially avoid penalties and interest charges that may have been applicable if the error was discovered by the tax authorities.
   • The voluntary disclosure should be accompanied by the correct tax return and payment of the outstanding tax liability.
3. Requesting Correction:
   • NRNs can also request the IRD to correct any errors or mistakes in their tax assessments or decisions.
   • This can be done by submitting a written request to the IRD, along with supporting documentation to justify the correction.
   • The IRD will review the request and, if satisfied, will issue a revised assessment or decision.
4. Appealing the Assessment:
   • If the NRN disagrees with the IRD’s decision on the corrected tax assessment, they can file an administrative appeal.
   • The appeal process involves submitting the appeal within the specified time frame and providing the relevant evidence to support the NRN’s position.

FAQ’s

References:

https://www.lawimperial.com/rights-of-non-resident-nepali-nrn-in-nepal/

https://atlaswealth.com/au/how-we-can-help/expat-tax-accountant/qualifying-as-a-non-resident/#:~:text=Factors%20the%20ATO%20take%20into,Family%2Fbusiness%20ties.

https://orbitax.com/taxhub/countrychapters/NP/Nepal/f422ca9b24bb422f820ed2741b8b2b00/Withholding-Taxes-594

https://dk.nepalembassy.gov.np/nrn-id/

https://thehimalayantimes.com/nepal/door-opens-to-nrns-for-nepali-citizenship