What is Reverse Charge VAT (उल्टो कर) on foreign services in Nepal?

Under Section 8(2) of the Nepal Value Added Tax Act 2052 and Rule 15 of the VAT Rules 2053, when a person or registered business residing in Nepal purchases taxable services from an entity located outside Nepal (non-resident), the recipient in Nepal is legally deemed the service provider for tax purposes and must self-assess and deposit 13% VAT directly to the Inland Revenue Department (IRD).

Does paying for Meta (Facebook) or Google Ads require Reverse VAT and TDS in Nepal?

Yes. Even if payments are made using a commercial bank prepaid dollar card ($500 limit) or international wire, the Nepali business must self-assess 13% Reverse Charge VAT under Section 8(2) of the VAT Act. Furthermore, under Section 89 of the Income Tax Act 2058, service payments to non-resident entities are subject to 15% Withholding Tax (TDS) prior to settlement.

Can businesses claim Input Tax Credit (कर कट्टी) on Reverse Charge VAT?

Yes, provided the business is registered for VAT and the foreign service (e.g. AWS hosting, Google Workspace, Meta advertising) is directly utilized to conduct taxable business operations. Under Section 17 of the Nepal VAT Act 2052, the 13% Reverse VAT deposited to the IRD can be claimed as full Input Tax Credit in your monthly VAT Return (अनुसूची १०).

What is Section 89 TDS on payments to non-resident entities?

Under Section 89(1) of the Nepal Income Tax Act 2058, any resident person or company in Nepal paying a service fee to a non-resident person or foreign vendor must withhold 15% tax at source. If the foreign vendor demands full net payment (contract gross-up), the Nepali entity must absorb the 15% TDS as an additional tax cost.

What documentation do commercial banks require for foreign exchange SWIFT TT remittances?

To release foreign currency via SWIFT Telegraphic Transfer (TT), commercial banks in Nepal require: (1) foreign vendor proforma invoice/contract, (2) TDS deposit voucher (१५% कट्टी) paid to IRD, (3) 13% Reverse Charge VAT deposit voucher, (4) Tax Clearance Certificate or IRD No Objection Certificate (NOC), and (5) company board resolution.

How does ByaparOS automate Reverse Charge VAT and foreign service accounting?

ByaparOS automatically records international vendor invoices, calculates foreign exchange gains/losses based on NRB transaction dates, posts 13% Reverse VAT to your Purchase Register (Annex 6), and generates withholding TDS certificates (Section 89) so your business stays 100% audit-compliant with zero manual spreadsheet calculations.

Nepal Reverse Charge VAT & Foreign Services Tax Calculator

Common Foreign Service Presets (Quick-Fill): Click to populate live figures

Foreign Service Invoice Details

Currency, foreign invoice amount, and statutory tax parameters

Invoice Currency

Invoice Amount ()

Custom / NRB Exchange Rate (1 in NPR)

NPR

Converted Base in NPR:

Foreign Service Nature & Category

Your Nepal Tax Entity Type (कर दर्ता स्थिति)

Section 89 Foreign TDS Contract Terms (१५% अग्रिम कर) Non-resident tax treatment

Total Statutory Cash Outflow Act 2052 & 2058

Rs.

Total Tax to IRD

Rs.

13% VAT + 15% TDS

Net Real Business Cost

Rs.

Foreign Invoice Face Value: Rs.

Remittance to Foreign Vendor (): (Rs. )

13% Reverse VAT (VAT Act Sec 8(2)): + Rs.

15% Non-Resident TDS (Income Tax Sec 89): + Rs.

Input Tax Credit (Sec 17 - Annex 10): - Rs. Rs. 0.00 (Ineligible)

Statutory Obligation: Under Nepal VAT Act Section 8(2), the resident buyer must deposit 13% Reverse VAT to IRD on or before the 25th of the following Nepali month (along with standard monthly return). Failure incurs 15% annual interest + 10% penalty.

Nepal Rastra Bank (NRB) Payment Channel Check

Eligible for $500 Annual Prepaid Dollar Card: Amount fits within individual/company NRB $500 annual prepaid card limit. Ensure your bank card transactions are backed by Reverse VAT deposit vouchers for tax audit defense.

Requires Commercial Bank SWIFT TT Approval: Invoices exceeding $500 USD must be settled through an A-Class commercial bank via SWIFT Wire Transfer. Bank requires IRD TDS & Reverse VAT vouchers before releasing forex.

Automated Double-Entry Accounting Journal (Nepali General Ledger)

Proper ledger entries for ByaparOS, Tally, or spreadsheet accounting under Nepal Accounting Standards (NAS)

Balanced Entry: Dr = Cr

Account Head (खाता विवरण)	Type	Debit (Dr.) NPR	Credit (Cr.) NPR
Expense Gross Base Value	Expense (P&L)		-
Input VAT Recoverable (Sec 17 - Annex 10) 13% Tax Credit	Current Asset		-
Reverse VAT (Unrecoverable Tax Expense) Direct Cost	Expense (P&L)		-
Commercial Bank / Prepaid Dollar Card Payable Net Foreign Settlement	Bank / Asset	-
IRD Section 89 Withholding TDS Payable 15% Non-Resident TDS	Current Liability	-
IRD Reverse Charge VAT Payable (Sec 8(2)) 13% Output Tax Assessed	Current Liability	-
TOTAL JOURNAL BALANCE		Rs.	Rs.

Commercial Bank Requirements

Nepal Commercial Bank SWIFT TT Foreign Remittance Checklist

Commercial banks in Nepal (Nabil, Global IME, NIC Asia, Everest, etc.) are mandated by Nepal Rastra Bank (NRB) Foreign Exchange Management Department to verify the following documents before transmitting international wire transfers:

Foreign Proforma Invoice / Contract

Original invoice or agreement explicitly detailing service scope (software licensing, hosting, engineering consulting), foreign vendor name, country, and bank IBAN/SWIFT code.

Section 89 TDS Deposit Voucher (१५%)

Tax deposit voucher confirming 15% non-resident Withholding Tax has been deposited to the IRD revenue account (राजस्व खाता) under your company's PAN.

Section 8(2) Reverse VAT Voucher (१३%)

Challan / voucher proving self-assessed 13% Reverse Charge VAT has been paid to the Inland Revenue Office (IRO / कर कार्यालय) prior to outward remittance.

Tax Clearance or IRD Recommendation

Valid Tax Clearance Certificate (कर चुक्ता प्रमाणपत्र) of the remitting entity for the current fiscal year, or an IRD Foreign Remittance No-Objection Letter (NOC).

Company Board Resolution

Formal decision of the Board of Directors approving procurement of the foreign service and authorizing designated bank signatories to remit foreign exchange.

NRB Forex Remittance Application Form

Standard commercial bank application for foreign currency draft/telegraphic transfer under Nepal Rastra Bank Unified Directives.

Legal & Tax Questions

Frequently Asked Questions on Nepal Reverse Charge VAT & Foreign Remittance

ByaparOS Foreign Expense & VAT Automation

Never Miss Reverse Charge VAT or Section 89 TDS Compliance Again

ByaparOS automatically imports multi-currency cloud & advertising invoices, posts 13% Reverse VAT into your statutory Purchase Register (Annex 6), and generates Section 89 TDS certificates ready for IRD filing and commercial bank remittances.