Hello everyone,
Starting a new Private Limited Company in Nepal is an exciting venture, but understanding your tax obligations from day one is crucial for smooth operations and avoiding penalties. This thread aims to provide a basic overview of key tax compliance requirements for newly registered companies.
Once your company is registered with the Company Registrar's Office (CRO), you will typically also have your Permanent Account Number (PAN) issued. This is fundamental for all your tax-related activities. Ensure all transactions are recorded under this PAN.
One of the primary obligations is Income Tax. Companies are required to file annual income tax returns with the Inland Revenue Department (IRD). Even if your company has no income in its first year, a 'nil' return must still be filed. Additionally, depending on projected income, you might need to pay advance income tax in three installments throughout the fiscal year.
Many businesses also fall under the Value Added Tax (VAT) regime. If your annual turnover exceeds the threshold set by the government (currently NPR 5 million for services and goods), you must register for VAT. Once registered, you are required to file monthly or bimonthly VAT returns, even if there are no transactions.
Another important aspect is Withholding Tax (TDS). As an employer or payer for certain services, you may be required to deduct tax at source from payments made to employees (salary tax), service providers (e.g., consultants, landlords), and others, and then deposit this withheld amount to the IRD. Regular monthly filings for TDS are mandatory.
If your company plans to hire employees, compliance with the Social Security Fund (SSF) Act is also very important. Employers and employees both contribute a percentage of the basic salary to the SSF, providing benefits like medical treatment, maternity protection, and old-age security. Registration with SSF is required within three months of starting operations if you have employees.
Keeping meticulous records of all financial transactions is paramount. This includes sales invoices, purchase bills, bank statements, and payroll records. Maintaining proper books of accounts is not just good practice but also a legal requirement.
Given the complexities and potential changes in tax laws, it is always highly recommended to consult with a professional tax advisor or chartered accountant in Nepal. They can provide tailored advice and ensure your company remains fully compliant with all applicable laws.
Feel free to share your experiences or specific questions about tax compliance for new businesses in Nepal below!
Starting a new Private Limited Company in Nepal is an exciting venture, but understanding your tax obligations from day one is crucial for smooth operations and avoiding penalties. This thread aims to provide a basic overview of key tax compliance requirements for newly registered companies.
Once your company is registered with the Company Registrar's Office (CRO), you will typically also have your Permanent Account Number (PAN) issued. This is fundamental for all your tax-related activities. Ensure all transactions are recorded under this PAN.
One of the primary obligations is Income Tax. Companies are required to file annual income tax returns with the Inland Revenue Department (IRD). Even if your company has no income in its first year, a 'nil' return must still be filed. Additionally, depending on projected income, you might need to pay advance income tax in three installments throughout the fiscal year.
Many businesses also fall under the Value Added Tax (VAT) regime. If your annual turnover exceeds the threshold set by the government (currently NPR 5 million for services and goods), you must register for VAT. Once registered, you are required to file monthly or bimonthly VAT returns, even if there are no transactions.
Another important aspect is Withholding Tax (TDS). As an employer or payer for certain services, you may be required to deduct tax at source from payments made to employees (salary tax), service providers (e.g., consultants, landlords), and others, and then deposit this withheld amount to the IRD. Regular monthly filings for TDS are mandatory.
If your company plans to hire employees, compliance with the Social Security Fund (SSF) Act is also very important. Employers and employees both contribute a percentage of the basic salary to the SSF, providing benefits like medical treatment, maternity protection, and old-age security. Registration with SSF is required within three months of starting operations if you have employees.
Keeping meticulous records of all financial transactions is paramount. This includes sales invoices, purchase bills, bank statements, and payroll records. Maintaining proper books of accounts is not just good practice but also a legal requirement.
Given the complexities and potential changes in tax laws, it is always highly recommended to consult with a professional tax advisor or chartered accountant in Nepal. They can provide tailored advice and ensure your company remains fully compliant with all applicable laws.
Feel free to share your experiences or specific questions about tax compliance for new businesses in Nepal below!
