Tax on OTT & Streaming Platforms Operating in Nepal

Streaming a movie on your phone feels like the most borderless activity imaginable — until you look closely at the invoice and notice a tax line item. Over-the-top (OTT) platforms like Netflix and similar global streaming services fall squarely within Nepal's evolving digital taxation framework. Here's how the tax actually works, who is responsible for paying it, and whether it changes what you pay as a subscriber.

Regulatory Background

OTT and streaming platforms are explicitly captured within Nepal's definition of "digital services" for tax purposes, alongside online advertising, cloud computing, and digital marketplaces. This means a subscription-based streaming service delivered to a Nepali consumer over the internet — with no physical office or local server presence required — is treated the same way as any other digital service supplied by a non-resident provider, and is therefore subject to the same VAT and Digital Service Tax framework that applies to platforms like Google and Meta.

VAT Applicability on Subscription Revenue

Nepal levies a standard 13% VAT on digital services — including OTT subscriptions — supplied by a non-resident provider to a consumer based in Nepal, once the provider's transactions from Nepali users cross the prescribed registration threshold within a trailing 12-month period. In addition, a separate 2% Digital Service Tax applies on the same qualifying turnover, since OTT subscription income is treated as a digital service transaction earned from Nepal-based users.

Both levies are calculated on the value of the subscription paid by Nepali users, converted into Nepali Rupees at the prevailing exchange rate for the relevant filing period.

Compliance Obligations for Foreign OTT Providers

• Register with the Inland Revenue Department and obtain a Permanent Account Number (PAN) once the transaction threshold from Nepal-based subscribers is crossed.
• Charge and collect VAT on the subscription price at the point of sale to Nepali consumers.
• File VAT returns electronically on a monthly basis, and income-related DST filings as prescribed under the Digital Service Tax procedure.
• Issue a proper tax invoice for each subscription transaction, showing the service description, price, and applicable tax, in the format prescribed by IRD.
• Pay tax electronically and convert foreign currency receipts to Nepali Rupees using the exchange rate applicable on the date the return is filed.

Because these providers have no physical presence in Nepal, enforcement relies heavily on payment-channel visibility — banks and payment gateways processing subscription charges play an important role in the practical administration of this tax.

Consumer Price Impact

For subscribers, the direct effect of VAT and DST being applied to OTT subscriptions is typically reflected in the final price charged, since compliant platforms build the applicable tax into what the Nepali consumer pays rather than absorbing it separately. In practice, this means subscription pricing for Nepali users may not always match the headline price advertised globally, since the base price is grossed up to account for local tax obligations.