Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Government of Nepal has officially terminated its Double Tax Avoidance Agreement (DTAA) with Mauritius, a decision taken during the Cabinet meeting on Monday.
The bilateral agreement with Mauritius had been in place since 3 August 1999. According to the Inland Revenue Department (IRD), Director General Madan Dahal, acting as the authorized representative of the Government of Nepal, formally communicated the termination through diplomatic channels in accordance with Article 29, Sub-article 1 (termination provisions) of the agreement.
IRD Spokesperson Basudev Paudel explained that the strategic decision was necessary to align Nepal’s international tax structure with significant changes in both domestic law and the global tax environment. “Modern anti-abuse provisions in the Income Tax Act 2058, especially Section 73(5) concerning limited benefits, affect the implementation of the agreement. Moreover, the global tax landscape has undergone substantial reforms since 1999, requiring more transparency and stricter measures against tax abuse,” Paudel stated.
The department added that the termination would pave the way for future bilateral agreements compliant with contemporary global minimum standards, while maintaining Nepal’s commitment to transparent and mutually beneficial international tax relations.
Despite the termination, Nepal remains committed to promoting economic and tax cooperation with Mauritius. Paudel noted that the move opens the possibility of negotiating a modern DTAA and a bilateral investment protection treaty, emphasizing that any future agreement will prioritize mutual interest, transparency, and alignment with the evolving domestic and global economic environment.
According to the IRD, the termination provisions of the existing agreement will be effective from 1 Shrawan 2083 (mid-July 2026) for Nepal.
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