66. Removed by the Finance Act, 2076

Chapter-13

International Taxation

67. Source of income, loss, gain and payment: (1) The source of income of a person from any employment, business or investment shall be deemed to be in Nepal to the extent that the amount under clause (a) exceeds the amount under clause (b):-

(a) amounts sourced in Nepal included in computing such income,

(b) amounts sourced in Nepal deducted in computing such income.

(2) The source of a loss incurred by a person from any business or investment shall be deemed to be in Nepal to the extent that the amount under clause (a) exceeds the amount under clause (b):-

(a) amounts sourced in Nepal deducted in computing the income from such business or investment,

(b) amounts sourced in Nepal included in computing such income.

(3) An amount included in computing income shall be deemed to be sourced in Nepal in the following circumstances:-

(a) net gains under clause (c) of sub-section (2) of section 7 or clause (b) of sub-section (2) of section 9, arrived at after deducting losses incurred from the disposal of an asset or liability sourced in Nepal from gains derived from the disposal of an asset or liability sourced in Nepal,

(b) gains and amounts included in computing income as mentioned in clause (d) of sub-section (2) of section 7 or clause (c) of sub-section (2) of section 9, where assets located in Nepal or liabilities to be borne in Nepal are involved,

(c) payments received sourced in Nepal, subject to clauses (a) and (b).

(4) Where assets located in Nepal or liabilities to be borne in Nepal are involved, the source of any gain or loss arising from the disposal of such asset or liability shall be deemed to be in Nepal.

(5) Where amounts deducted in determining income include the following amounts, the source of such amounts shall be deemed to be in Nepal:-

(a) deductible cost expenditure under sub-section (1) of section 15 in respect of assets located in Nepal,

(b) expenses under sub-section (1) of section 16 in respect of assets located in Nepal, and expenses to the extent deductible under section 19, and

(c) payments sourced in Nepal, subject to clauses (a) and (b).

(6) The source of the following payments shall be deemed to be in Nepal:-

(a) dividends paid by a resident entity,

(b) interest paid by a resident person,

(c) payments for natural resources made in respect of, or computed by reference to, natural resources derived from land situated in Nepal,

(d) rental amounts paid for the use of any property located in Nepal,

(e) royalties received by a person for allowing the use of any property located in Nepal, or for a right to use such property, or for agreeing not to use such property,

(f) general insurance premiums paid in respect of a risk located in Nepal, and premiums paid to a person for general insurance,

(g) payments received by a person operating a land, sea, or air transport or charter service business in Nepal, otherwise than as a result of transshipment, for:-

(1) the carriage of departing passengers, or

(2) the consignment of mail, livestock, or other direct movable property.

(h) payments received by a person operating a business of transmitting news or information through communication means such as wire, radio, optical fiber, or satellite, in respect of the transmission of news or information from facilities established in Nepal, whether or not such news or information originates in Nepal,

(i) payments, including service fees, for engaging in employment or providing services, or for agreeing not to do so, of the kind not mentioned in clause (g) or (h), in the following circumstances:-

(1) where the services are performed in Nepal, wherever the payment is made, or

(2) Amended by the Finance Act, 2076.where the payment is made by the Government of Nepal, wherever the employment is performed.

(j) annuity amounts, life insurance amounts, and retirement payment amounts not falling within clause (i) paid by a resident person, and any premium or other payment given to a resident person to secure such amounts,

(k) gifts received in respect of a business or investment conducted from property located in Nepal, and

(l) payments other than those mentioned in clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), and (k) above, being:-

(1) payments made in respect of the disposal of property located in Nepal or the acquisition of a liability to be borne in Nepal, or

(2) payments made in respect of activities carried on in Nepal.

(7) Any income, loss, amount, gain, or payment not deemed to be sourced in Nepal under the above sub-sections shall be deemed to be sourced in a foreign country, and for the purpose of determining in which foreign country such income, loss, amount, gain, or payment is sourced, references to Nepal in this Act shall apply as if they were references to a particular foreign country.