The Office of the Auditor General has stated that social media and virtual meeting applications providing services in Nepal must be registered in Nepal.
In the 58th annual report released by the office on Friday, it is mentioned that payments are being made from Nepal for the use of such applications and since they are within the tax jurisdiction of Nepal, arrangements should be made for registration.
It is mentioned in the report that Viber, Messenger, Skype, WhatsApp, WiChat, IMO, which provide telephone services through the Internet, and Zoom, Wavex, and Cisco, which conduct meetings, are operating without interruption. The office mentioned in the report that although the payment for using these services was from Nepal, it was not registered.
According to Section 67 of the Income Tax Act, the office has made the provision that registration should be mandatory as it is within the taxable territory of Nepal. The office has suggested that such service providers should be registered and revenue should be collected through legal and policy reforms.
Earlier, the bill prepared by the government to regulate information technology also provided for the registration of social networks such as Facebook and Twitter in Nepal, but the provision was widely criticized as it would restrict freedom of expression.
The Office of the Auditor General has stated that the Income Tax Act itself states that there should be a provision for registration for revenue collection as the source of payments made in Nepal for business activities is in Nepal.
“Section 67 (6) of the Income Tax Act, 2058 stipulates that the payment received by a person who conducts a business of transmitting information through a communication medium such as wires, radio optical fibers or satellites is considered to be sourced in Nepal through a mechanism established in Nepal,” the report states.
The office has submitted the argument that registration should be made mandatory as money is being paid from US dollar accounts for some of these services.
Similarly, the report has mentioned that in order to widen the revenue base by bringing all kinds of economic activities under the scope of taxation, e-commerce and online advertisements on social networks such as Viber, Messenger, Skype, WeChat, Facebook etc. should also be brought under the scope of taxation. Gorkhapatra
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