Nepal Global TechHub Reforms: CAN Federation Urges 1% Corporate Tax for IT
26th May 2026, Kathmandu
In a bid to reshape the country’s economic landscape, the Computer Association of Nepal (CAN Federation) has urged the government to introduce immediate, wide-ranging policy reforms.
Nepal Global TechHub Reforms
Chiranjibi Adhikari, Acting President of the CAN Federation, emphasized that with the right regulatory framework, Nepal has the potential to establish itself as a prominent Global Tech Hub.
Speaking at an interactive seminar titled “Upcoming Budget and Common Issues of Industrialists and Businessmen,” organized by Himsila Media Pvt. Ltd. under Arthabazar.com on Tuesday, Adhikari outlined a comprehensive roadmap to boost the country’s information technology sector.
1. Financial Policies to Strengthen the Digital Economy
To solidify Nepal’s digital foundation, the CAN Federation highlighted the need for synergistic action between the Government of Nepal and Nepal Rastra Bank (the central bank). Adhikari stated that tailored financial policies must be introduced specifically for IT and software development enterprises.
Crucially, he advocated for the formal classification of the IT sector, stating:
“The IT industry must officially be recognized as an ‘Industry’ by the state to unlock essential manufacturing and corporate benefits that other traditional sectors enjoy.”
2. Competitive Tax Incentives and Export Subsidies
A major focal point of Adhikari’s address was making Nepalese IT services globally competitive through aggressive fiscal incentives. To prevent brain drain and attract foreign investment, he proposed the following tax structures:
Corporate Tax Relief: Implementing a highly concessionary 1% corporate tax rate for IT companies for a period of 10 years.
Export Incentives: Providing an 8% cash incentive/subsidy on IT service exports to encourage foreign currency inflow.
Income Tax Caps: Limiting the personal income tax rate to a maximum of 25% for skilled IT professionals to retain local talent.
VAT Simplification: Streamlining and easing the value-added tax (VAT) refund process for technology service providers.
Advertisement
3. Empowering Domestic IT Firms in Public Procurement
The CAN Federation raised serious concerns regarding how public sector technology projects are handled. Adhikari recommended creating a distinct IT Procurement Act, separating technology acquisitions from standard physical infrastructure rules.
To empower local innovators, he recommended:
Exclusive Local Contracts: Government IT contracts valued up to Rs 100 million (10 Crore) should be strictly reserved for Nepalese IT companies.
Mandatory Joint Ventures: For mega public projects executed by foreign firms, a minimum of 30% of the total work must be legally mandated to local tech partners.
Double Taxation Avoidance Agreements (DTAA): Expanding bilateral DTAA frameworks with major tech export destinations, including the United States, the United Kingdom, and Australia, to protect local businesses from being taxed twice.
4. Modernizing Cybersecurity, AI, and Telecom Infrastructure
Looking toward future-proof infrastructure, the Acting President noted that economic growth cannot happen without a secure and modern digital ecosystem. He urged the upcoming fiscal budget to prioritize:
Cybersecurity & AI Governance: Establishing strict regulatory guidelines and robust support for artificial intelligence and data protection.
Cloud & Data Infrastructure: Fast-tracking the development of local data centers and cloud services.
Reducing Digital Barriers: Slashing the high tax burdens currently levied on internet services and the telecommunications sector, which directly inflate the cost of doing business in Nepal.
As the government finalizes its upcoming fiscal budget, incorporating these aggressive IT reforms could mark a turning point—shifting Nepal from a traditional economy into a thriving, self-sustaining digital exporter.
For more: Nepal Global TechHub Reforms
