Registration and De-Registration of PAN and VAT in inland revenue department in Nepal

1. PAN is 9 digit numeric number provided by Inland Revenue Department of Nepal to the tax payers. 2. PAN can be personal PAN and Business PAN according to the purpose and uses. 3. Personal PAN can be converted into business PAN, if required. Any person, who already has personal PAN, should not obtain New Business PAN instead the same personal PAN shall be converted into business PAN. Documents required to Obtain Personal PAN: a. Nepali Citizenship b. For Indian Citizen obtaining PAN in Nepal, Identity Card issued by Government of India and Recommendation letter for employment in Nepal. c. For other foreign Nationals, a copy of passport and identity card issued by diplomatic commission, Work permit, and Employers Recommendation letter. d. A passport size photo. e. Online form duly filled in the prescribed format. Documents required to Obtain Business PAN: a. Business Registration Documents b. Citizenship Certificate c. Property documents (in case of Owned property) or Rent agreement d. duly filled form In case of Entity: e. Partnership Agreement f. JV Agreement g. AOA, MOA in case of company If wanted to registered under VAT, such requeset should be submitted with the same online form. Certain Firms need compulsory registration under the VAT. De-Registration of under Income Tax and VAT: Income Tax De-Registration: Close of Business D1/D2/D3 an online entry shall be made:

VAT De-Registration : an online entry to be made at IRD website for VAT close business entry. at Website: www.ird.gov.np

Set - Off, Carry Forward and Set - Off of Business Losses:

Loss from business or investment: Section 20. (1) For the purposes of computing the income earned by any person from any business or investment in any income year, such person may deduct the loss as mentioned below: (a) Loss suffered by that person from any other business and not deducted in that year, and (b) Loss suffered by that person from any business and not deducted in the last seven income years. Provided that in the case of a project of building and operation of any public infrastructure, which is then transferred to the Government of Nepal, a project on construction of powerhouse and generation and transmission of electricity, and an entity conducting petroleum work pursuant to the Nepal Petroleum Act, 2040 (1983), loss not deducted in the last twelve income years. Example: A Pvt. Ltd. suffered Loss of Rs. 75,00,000 during FY 2072/73. This loss can be carried forward to set-off with the income of the any of the Next Seven Years, and can be carried upto FY 2078.079. (2) For the purposes of computing the income earned by any person from any investment in any income year, such person shall be allowed to deduct the loss suffered by that person from any other investment and not deducted in that year and the loss incurred by that person from such investment or any other investment which could not be deducted in the past seven years. Note: Loss on Business can be set-off against the Income from the Investment. But Loss on Investment can be set-off only against Investment Income (cannot be set-off against the business income).