IT Sector Suggestions in New Budget: From Tax Cuts to Digital Infrastructure Recommendations

Kathmandu: The Nepal Association of Software and Information Technology Companies (NAS IT) has put forth extensive recommendations to the government for the budget of the upcoming fiscal year 2083/84. In an event held on Sunday, NAS IT President Gaurav Pandey made these suggestions public. NAS IT has proposed a tax regime where IT companies would only be subject to a 1% income tax for up to the next 10 years to encourage companies to make profits in Nepal and increase foreign currency earnings. Additionally, they suggested providing an 8% export incentive to IT companies bringing foreign currency into the country and recommended creating mechanisms to address the ambiguity related to VAT on IT exports to facilitate timely refunds. NAS IT urges the government to limit the highest individual income tax rate for IT sector employees to 25% to retain skilled workforce within the country. They have also requested that startups be allowed to pay taxes only when selling equity shares, rather than during investment, and proposed entering into double taxation avoidance agreements with countries like the United States, the United Kingdom, and Australia. The government agencies have been suggested to prioritize Nepali companies while procuring software, with NAS IT demanding that IT projects worth up to 10 billion Nepalese rupees be exclusively reserved for Nepali companies and at least 30% of work in major projects be allocated to local companies. To promote the advancement of the IT sector, there is a proposal to establish a National IT Development Board and promote Nepal's IT capabilities through diplomatic missions abroad. In terms of education, there is a call to integrate AI education from school level onwards and revise university curricula according to industry needs. Furthermore, suggestions have been made to make timely amendments to the Electricity Business Act for cyber security, data privacy, and digital governance. NAS IT believes that if these suggestions are implemented, Nepal could create thousands of jobs in the coming decade and significantly increase foreign currency earnings.