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Nepal Corporate Tax Guide (CIT)

Nepal's Corporate Income Tax (CIT) is levied at a standard rate of 25% on business profits. Reduced rates apply: 20% for manufacturing and tourism companies, and 10% for IT and software companies. Additional levies include 7% rural municipality tax and 3% social security fund contribution on net profit. The tax year follows the Nepali calendar (mid-July to mid-July). All amounts in NPR.

Nepal's corporate tax system, administered by the Inland Revenue Department (IRD), applies to resident companies on their worldwide income. Non-resident companies are taxed only on Nepal-source income. The standard 25% rate applies to most businesses, with significant reductions for priority sectors. Tax returns are due within 3 months of the fiscal year-end (by October 15 for calendar year-end companies). For related guidance, see our VAT Guide →, IT Sector Guide →, and Tax Filing Guide →.

Corporate Tax Rates

  • Standard rate — 25%: Applies to all companies not qualifying for a reduced rate. This includes trading, services, construction, financial institutions (banks, insurance), and general business activities.
  • Manufacturing and tourism — 20%: Companies engaged in manufacturing (production of goods) and tourism-related businesses (hotels, travel agencies, trekking companies) benefit from a reduced rate of 20%. To qualify, the company must be primarily engaged in these activities as certified by the relevant ministry.
  • IT and software — 10%: Information technology, software development, and digital service companies enjoy a preferential rate of 10%, subject to meeting criteria set by the IRD and the Ministry of Science and Technology. See our IT Sector Guide → for details.
  • Special industries — 0% (initial years): Certain special industries may qualify for a tax holiday (0% rate) for the first few years of operation, typically under Industrial Enterprise Act provisions or specific government incentives for priority sectors.

Additional Levies

  • Rural municipality tax — 7%: An additional 7% tax on net profit is levied as a rural municipality tax. This is calculated on the same taxable base as CIT and is paid to the respective municipality where the company operates.
  • Social Security Fund (SSF) — 3%: Employers must contribute 3% of net profit to the Social Security Fund. This is in addition to the employee/employer SSF contributions on payroll (see our Social Contributions Guide →). The 3% on profit applies to the company's net profit after tax.
  • Combined effective rate: For a standard company earning NPR 10 million profit, the total tax cost would be: 25% CIT (NPR 2.5M) + 7% rural tax (NPR 700K) + 3% SSF on profit (NPR 300K) = an effective rate of approximately 35% before including the employee-related SSF contributions.

Depreciation and Capital Allowances

  • Depreciation rates: Nepal allows depreciation on fixed assets at prescribed rates under the Income Tax Act. Common rates: buildings 5%, machinery and equipment 20%, furniture and fixtures 15%, vehicles 20%, computers 25%, and intangible assets 15% (straight-line or declining balance depending on the asset class).
  • Initial allowance: Certain qualifying assets may attract an initial allowance (additional first-year depreciation) for industries in priority sectors, typically 20% on top of normal depreciation.
  • Loss carry-forward: Tax losses can be carried forward for up to 7 years. The loss must be claimed in chronological order, and the business must continue to carry on the same activity to utilise the loss. No loss carry-back is permitted.

Filing and Compliance

  • Tax return deadline: Corporate tax returns must be filed within 3 months of the end of the fiscal year. For companies following the Nepali fiscal year (ending mid-July), the deadline is approximately October 15.
  • Advance tax payments: Companies must make quarterly advance tax payments estimated on the prior year's liability. Payments are due in the third month of each quarter (Paush, Chaitra, Ashad, and Ashwin).
  • PAN requirement: All companies must obtain a Permanent Account Number (PAN) from the IRD. The PAN must be quoted on all tax filings, invoices, and correspondence with tax authorities.
  • Withholding taxes: Companies must deduct withholding tax (WHT) on payments such as dividends (10%), interest (10-15%), royalties (15%), and payments to contractors. WHT must be remitted to the IRD within 25 days of the end of the month.

For VAT registration and compliance, see our VAT Guide →. For reduced rates applicable to the technology sector, see our IT Sector Guide →.

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