Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The government refunded more than Rs 4 billion in taxes in a single fiscal year, with significant amounts returned to diplomatic missions, diplomats, international agencies, exporters, and project-based taxpayers.
According to the Inland Revenue Department (IRD), during fiscal year 2081/82 (2024/25), diplomatic missions, diplomats, and various diplomatic agencies submitted tax refund claims totaling Rs 526.21 million. Of this amount, the government refunded Rs 455.88 million.
Similarly, offices under the IRD provided substantial tax refunds to taxpayers based on continuous credit, export-based claims, and project-related provisions. Such taxpayers and projects submitted refund claims amounting to Rs 22.52 billion. However, the government approved and refunded Rs 4.38 billion under these categories.
The IRD stated that a total of 1,433 refund claims were filed during the fiscal year from diplomatic missions, diplomats, diplomatic agencies, and other taxpayers under continuous credit, export, and project-based systems.
Overall, refund claims worth Rs 23.04 billion were submitted in the fiscal year. Out of this, the department decided to refund Rs 4.84 billion, as noted in its annual report.
The Tax Refund Section of the Inland Revenue Department is responsible for processing value-added tax (VAT) refunds for diplomatic missions and diplomats, handling VAT refunds for international organizations granted tax exemptions by the Ministry of Finance, and monitoring and facilitating refund-related work carried out by subordinate offices.
The section also works to resolve policy and legal complexities related to tax refunds by forwarding cases for decisions to higher divisions and authorities, expediting VAT refunds for diplomatically privileged entities, facilitating and monitoring refund procedures at subordinate offices, and maintaining proper records of refund activities.
To streamline the process, the government approved and implemented the “Electronic VAT Refund Procedure for Diplomatic Missions, Diplomats, and Diplomatic Agencies, 2080” on October 20, 2023, enabling refunds through electronic means.
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