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Which tax exemptions apply to my business?
Nepal gives businesses far more tax relief than most owners know about — but it is buried in six pages of statute. Answer three questions about your business and see the ones that could apply to you, in plain language, for FY 2083/84.
Three things that catch people out
- You usually get only one.
- Where more than one relief could apply to the same income, you choose one — you do not stack them. The exception is the section 11(2Kha) reduction, which can sit on top.
- Two businesses, two calculations.
- If you run two businesses with different reliefs, the income must be worked out as though each were a separate person.
- The clock usually starts at commercial operation.
- Most exemption periods run from the date business actually began, not from registration. Getting that date wrong costs a year.
The statutory wording
- Section 11(4)
- Where a person carries on more than one business qualifying for separate exemptions, income must be computed as if each business were carried on by a separate person.
- Section 11(5)
- Where more than one exemption could apply to the same income, the person may claim only one of their choosing — in addition to the relief under section 11(2Kha).
- Section 11Ka
- Where the Government of Nepal has entered into an agreement with a person for the construction and operation of infrastructure, the tax concessions available under the Act at the time of that agreement continue for the term of the agreement.
Finding the exemption is the easy part. Qualifying for it is not.
Most reliefs turn on facts you have to be able to evidence — employee numbers held through the year, capital actually invested, the location of the industry, the date business began. Where a claim is material, the position should be documented before it is taken, not after it is questioned.
Summarised from the Inland Revenue Department schedule of section 11 exemptions for FY 2083/84. Conditions are abbreviated here and the statute governs. Amounts, dates and thresholds change with each Finance Act. This is a reference, not advice on a specific claim.