VAT Refund of 10% for Online Payments at Hotels, Restaurants, and Bars
Consumers will receive a 10% refund of the value-added tax (VAT) on payments made online at hotels, restaurants, and bars. The Internal Revenue Department decided this on 21st Bhadra. This initiative aims to promote electronic transactions and strengthen the culture of tax compliance in Nepal.
According to the department, this arrangement is provided under Section 25, Subsection 1 of the Value Added Tax Act, 2052.
The Act states: “If a consumer makes a payment for goods and services as specified by the department’s published notice through an electronic medium, 10% of the VAT paid on such purchases will be refunded to the consumer’s bank account after completing the prescribed procedure.”
Which Services Will the Refund Apply To?
According to the department, this condition will apply to services provided at bars (liquor-serving establishments). The refund provision will also be applicable to restaurant services. Additionally, all types of hotels, motels, lodges, and guesthouse services will also be eligible for the 10% VAT refund if payment is made online.
Conditions for the Refund
The department specifies that only VAT-registered taxpayers who issue approved electronic invoices can participate in this system.
Vendors who accept payments through electronic means such as debit/credit cards, QR codes, and mobile payments must ensure that the 10% VAT amount is automatically refunded to the consumer’s account. As per the decision based on the Value Added Tax Act 1996, the refund will be credited directly to consumers’ bank accounts when payments are made electronically.
Software and equipment suppliers related to electronic invoicing must also update their systems to comply with this regulation.
Vendors participating in the system must display information at their business premises notifying consumers about the VAT refund facility for electronic payments.