Corporate Income Tax: Rates, Bases and Sector Variations

The rate a Nepali company pays is nowhere in the statute that imposes the tax. The Income Tax Act 2058 (2002) creates the charge and defines the base. Schedule 1 carries the rates, and the Schedule is rewritten every year by that year’s Finance Act. For FY 2083/84 (2026/27) the operative instrument is the Finance Act 2083, published in the Nepal Gazette on 31 Ashad 2083 (15 July 2026) and commencing on 1 Shrawan 2083 (17 July 2026). Anyone quoting a Nepali corporate rate without naming a fiscal year is quoting something that may already have lapsed.

Which rate applies

For FY 2083/84 the standard entity rate is 25 percent of taxable income. A defined list of sectors is charged at 30 percent: banks and financial institutions, insurance, telecommunications and internet service, money transfer, capital-market and securities businesses, entities dealing in petroleum, and businesses in tobacco and alcohol.

Category	Rate for FY 2083/84 (2026/27)
Entity, general	25%
Banks and financial institutions; insurance; telecommunications and internet; money transfer; capital market and securities; petroleum; tobacco; alcohol	30%
Non-resident providing water transport, air transport or telecommunication service, on income from carriage departing Nepal	5%
The same non-resident services, on income from carriage or transmission within Nepal	2%
Income of a foreign permanent establishment repatriated out of Nepal	5%

Two features of that table are worth separating. The 5 percent and 2 percent figures for shipping, aviation and telecommunications work as gross-basis substitutes for a normal profit computation, applied to a class of non-resident Nepal has no practical way of auditing on a net basis. They are not concessions. The 5 percent on repatriated permanent establishment income is a second-layer charge on top of the ordinary entity tax, doing the work a dividend withholding does on a subsidiary.

The taxable base

Taxable income is business income plus investment income plus employment income, computed on an accrual basis for entities, less allowable deductions. Three areas generate most assessment disputes: interest paid to related parties, provisions in the accounts of banks and insurers, and the depreciation pools in Schedule 2, which do not follow the accounting depreciation in Nepal Financial Reporting Standards financial statements. File a tax computation that is a lightly adjusted copy of the audited profit figure and it will not survive an assessment.

Loss carry-forward is the second adjustment. Ordinary business losses may be carried forward for a limited number of years, with longer periods for defined long-gestation sectors. We do not state the number of years for FY 2083/84, because we could not verify it against the current statute text, and it is one of the provisions Finance Acts have moved.

How concessions work

Section 11 of the Income Tax Act 2058 grants exemptions and concessions, and almost all of them are drafted as a percentage rebate on the tax otherwise payable rather than as a separate rate. The distinction is not cosmetic. A “20 percent concession” for a special industry means 20 percent off the 25 percent charge, giving an effective 20 percent. A “90 percent exemption” for a special industry in a least-developed area means 90 percent off, giving an effective 2.5 percent for the years the concession runs.

Three consequences follow, and a CFO should price all three in. Concessions attach to an activity or a location rather than to a legal entity, so a company running a concessionary line alongside an ordinary one has to segregate the income. Most concessions run for a stated number of years from the commencement of business or commercial operation, so the effective rate rises on a known schedule that belongs in the model. And the conditions are continuing rather than one-off. A headcount-linked concession fails in the year the headcount fails. Tax incentives, exemptions and rebates for industry sets out the categories.

What changed this year

The corporate side of the FY 2083/84 budget, presented on 29 May 2026 by Finance Minister Swarnim Wagle, was quiet. The 25 and 30 percent rates carried over from FY 2082/83 unchanged. The movement was elsewhere. The schedule for natural persons was compressed and the top marginal rate fell sharply, and advance-tax rates on disposals of listed shares and of land and buildings both rose from 1 Shrawan 2083.

For a group with a Nepali operating company and Nepali resident shareholders or founders, the gap between the corporate rate and the top personal rate has widened. That gap drives the classic structuring question in Nepal: extract profit as salary, as dividend, or not at all. Dividend withholding on distributions by a resident company is a final tax in the shareholder’s hands, which makes the comparison arithmetic rather than judgemental, and sensitive to a rate change in either schedule.

Residence and classification

Residence determines the reach of the charge, and incorporation is only one route to it. An entity is resident in Nepal if it is incorporated under Nepali law or if its effective management is exercised in Nepal during the income year. A resident entity is taxed on its worldwide income; a non-resident entity only on income with a Nepali source. The effective-management limb catches groups who assume a holding company registered offshore is automatically outside Nepal. It is also the hardest limb to litigate, because Nepal has little published authority on what evidence of management the Department will accept.

Sector classification is the other boundary that generates argument. The 30 percent list is drawn by activity rather than by licence, so a company with no banking licence can still land inside it if part of what it does is characterised as a capital-market or money-transfer business. Where activities are mixed, the question is whether the Department applies the higher rate to the whole entity or only to the segment, and the answer turns on how the accounts are kept. Segmented accounts prepared from the start of the year are worth more in an assessment than a reconstruction prepared after a query.

Administration sits with the Inland Revenue Department: the Large Taxpayers Office for the largest entities, and Inland Revenue Offices and Taxpayer Service Offices elsewhere. Which office holds the file shapes the audit posture a company should expect, and the taxpayer does not choose it. The return, the instalment obligations and the assessment and appeal route are covered in tax and corporate compliance.

What is not stated here

We do not publish a corporate minimum tax figure. We do not publish loss carry-forward periods. And we do not publish the full section 11 concession list as though it were settled law for FY 2083/84. The Inland Revenue Department’s rate notifications of 22 Shrawan 2083 are served as PDF attachments we could not retrieve, and the consolidated statute on the Department’s own site was still current only to the Finance Act 2082 when we checked on 26 August 2026.

The gap is the practical point. Between the budget in late May and the appearance of a consolidated statute, Nepali taxpayers work from the Finance Act text, the Department’s annual rate notifications and professional summaries of both. For a rate a board is going to rely on, get the notification, and check the fiscal year on its face first.

Sources

1. आ.व.२०८३।०८४ लागि निकायको लागि आयकरको दर (Income tax rate for entities for FY 2083/84)

   Inland Revenue Department, Ministry of Finance · 22 Shrawan 2083 (August 2026) · Tier 2 — Official publication

   Supports: That the IRD published a dedicated entity rate notification for FY 2083/84. The attached rate table itself could not be retrieved.

   Accessed 26 August 2026

2. आर्थिक ऐन, २०८३ — मिति (Finance Act 2083, date of publication in the Nepal Gazette)

   Inland Revenue Department, Ministry of Finance · Published in the Nepal Gazette 31 Ashad 2083 (15 July 2026) · Tier 1 — Primary legal instrument

   Supports: The existence, gazette date and status of the Finance Act 2083 as the instrument setting rates for FY 2083/84.

   Accessed 26 August 2026

3. आर्थिक विधेयक, २०८३ (Finance Bill 2083), full text

   Government of Nepal, as published by the Nepal Law Commission · Presented 15 Jestha 2083 (29 May 2026); commencement 1 Shrawan 2083 (17 July 2026) under section 1(2) · Tier 1 — Primary legal instrument

   Supports: Commencement date of 1 Shrawan 2083 for most provisions, with sections 56, 58 and 59 in effect immediately.

   Accessed 26 August 2026

4. आयकर ऐन, २०५८ (आर्थिक ऐन, २०८२ ले गरेको संशोधन सहित) — Income Tax Act 2058, as amended by the Finance Act 2082

   Inland Revenue Department, Ministry of Finance · Posted 18 Poush 2082 (January 2026) · Tier 1 — Primary legal instrument

   Supports: That the IRD's consolidated statute text was current only to the Finance Act 2082 as at the date of access.

   Accessed 26 August 2026

5. Client Briefing — Income Tax Rates 2083-84 (2026-27 AD)

   Pradhan & Associates · 20 July 2026 · Tier 6 — Professional or news source

   Supports: Entity rates by sector for FY 2083/84, non-resident transport and telecommunication rates, the 5 percent charge on repatriated permanent establishment income, and the structure of section 11 concessions.

   Accessed 26 August 2026

6. Tax Rates 2082-83 (2025-26)

   T R Upadhya & Co (PKF member firm, Nepal) · 1 June 2025 · Tier 6 — Professional or news source

   Supports: The comparable FY 2082/83 rate structure, used here only to show what changed and what did not.

   Accessed 26 August 2026