Growth of Social Media and IT Companies in Nepal: Economic Potential and Future Prospects

January 29, 2025
Growth of Social Media and IT Companies in Nepal

Social media and information technology services have become an integral part of life for common Nepali people, just like in the rest of the world. Primarily, social media is used as an easy medium for expressing personal freedom. Apart from this, social media is also used for promoting businesses, conducting various campaigns, and fulfilling social responsibilities.

As a result, today, the first comments on any event are often posted on social media. If a patient suddenly needs blood from a particular group, social media proves to be very useful. It has become easier to provide and receive professional services. Through these platforms, individuals have been able to carry out their personal or professional tasks more effectively, increasing both the speed and quality of their work.

In the future, the dependence on such companies and platforms is expected to increase, and these companies will also see a rise in their revenues. As a result, they are now practicing paying taxes in Nepal according to the scale of their economic activities. This is a positive development, opening up broader possibilities.

The government, through the budget for the fiscal year 2079/80, announced the inclusion of electronic social media under the tax system for the first time. Since then, social media and information technology companies have started registering in Nepal. Accordingly, 18 companies, after registering with the Internal Revenue Department and obtaining PAN numbers, have recorded a business turnover of NPR 2,75,80,32,000 for the fiscal year 2080/81.

For this business, these companies have paid VAT amounting to NPR 35,85,44,000 and electronic service tax of NPR 5,81,75,000 to the Nepal government. As a result, the government has received a total of NPR 41,67,19,000 in revenue from this new avenue. With the addition of another company this year, the number of such companies has reached 19. In the future, the number of companies, their services, businesses, and taxes will continue to expand.

From the beginning of the current fiscal year, from Shrawan to Mangsir, these companies, with a total business turnover of NPR 49,30,41,000, have already filed NPR 6,40,95,000 VAT to the large taxpayer office. Considering the size of our population and the number of users, this revenue for the state is quite positive. It can be seen as a sustainable and alternative source of income for the state.

Currently, some of the major global IT companies paying taxes in Nepal include Microsoft, Google, Meta, TikTok, Adobe, Netflix, Amazon, and Apple. The registration of these prestigious global corporations in Nepal, connecting with the local system, is beneficial not just in terms of revenue but also in terms of enhancing Nepal’s reputation.

By observing these companies, others in similar industries may be encouraged to register in Nepal, conduct business, and pay taxes to the state. This will give users access to more options and generate more income for the state. Through such processes, Nepal’s prestige may rise, and it could create an environment conducive to other forms of investment as well.

The basis for any foreign company registering in Nepal is the market and business environment they perceive here. When considering the population, Nepal is neither a huge market nor a small one for social media and IT companies. Due to the relatively open society, the reliance on such platforms is expected to increase further in the future. For this, the government needs to make its legal and regulatory framework business-friendly. Policies should be made stable or evolving.

While companies must be held accountable to domestic laws, this should not be done in a burdensome or negative manner. As the government continues to provide a cooperative and positive environment, it is possible that large companies will eventually establish offices in Nepal. This would contribute to greater prestige, increased investment, and job creation. Therefore, the government should make long-term strategies based on current signals for sustained benefits.

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