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Taxation for international markets

Taxation is a global concern for many businesses, and they need highly skilled people to manage any risks that may arise related to tax policy in multiple countries.

International tax managers are employed by multinational corporations and public accounting firms to oversee and authenticate tax information on a global scale. They are generally in charge of ensuring the company is in compliance with tax regulations enforced by the international community. This is crucial for organizations that conduct business in multiple countries, as well as those that earn income from foreign investments or other corporate activities across borders.

Most international tax managers start their careers as accountants in one form or another. They tend to specialize in tax law and tax planning, but are generally familiar with the structure of modern corporations and global financial markets.

The defining characteristic of international tax managers is their worldwide focus—they may be specialists in the tax regulations of a single foreign country or broadly familiar with the most important international trade laws as they relate to the company in question.

Typical responsibilities of an international tax manager include:

  • Overseeing compliance with tax regulation as it relates to specific business lines, products, or another concern of the organization
  • Delivering value in terms of calculating accurate projections of tax liabilities, filing reports on time and within the requirements of the law, and other things that advance the firm’s interests
  • Participating in year-end reporting and analysis of past projections, performance, and other metrics critical to successful tax planning
  • Staying up-to-date on changes to international tax laws or accounting standards
  • Advising stakeholders on strategic tax issues, emergent risks related to international tax regulations, and more

Building credibility, serving as a trusted advisor, embracing technology and innovation, enhancing technical and interpersonal skills, and building relationships with stakeholders can go a long way in smoothing the path to this next tax-based promotion

Domestic Taxation

Tax is basically divided into two groups. One direct tax and other indirect tax. Direct tax is levied to the tax payer against the income earned and indirect tax is consumption tax which is levied on consumption.

The main taxes that businesses are subject to in Nepal are as follows:

Income tax, made up of:

  • Normal corporate tax: at 25%. Certain sectors like hydropower are taxed at concessional rate of 20% and other sectors like banking are taxed at 30% (section 2(4), Schedule 1, Income Tax Act 2002 (ITA)));
  • Dividend: at 5% (section 88 (2) (a), ITA); and
  • Capital gains for the gain from the disposition of the shares of non-listed company) are subject to withholding tax at 10% for a natural person and at 15% for others (section 95A, ITA).

However, the entire capital gain is subject to tax at the normal corporate rate applicable to the particular entity/person.

  • Value Added Tax (VAT): at 13% on the goods and service subject to VAT (Value Added Tax Act 1996).
  • Withhold taxes: certain payments are subject to withholding including payment of royalties (15%) and rent (10%).
  • Custom duty: applies at the rate as imposed by the Fiscal Act introduced each fiscal year based on the nature of the goods being imported.

Tax returns are filed under a self-assessment system and must be certified by the auditor and submitted along with the audited accounts within the stipulated time.

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