Fintech Boom in Nepal? VAT Removal Fuels Digital Payment Growth
30th May 2025, Kathmandu
In a landmark decision poised to revolutionize digital transactions across the nation, the Government of Nepal has officially abolished Value Added Tax (VAT) on digital payments.
Fintech Boom in Nepal
This significant move, announced by Finance Minister Bishnu Prasad Paudel during his presentation of the national budget for the fiscal year 2082/83 to the Federal Parliament, aims to propel Nepal towards a more robust digital economy.
The elimination of VAT, previously levied on services rendered by payment clearing houses, signifies a crucial step towards fostering cashless payments and reducing the country’s dependence on physical currency.
This policy shift is widely anticipated to increase the adoption of digital platforms for financial transactions, benefiting both consumers and businesses by easing transaction costs. Industry experts have lauded the decision, recognizing its potential to accelerate Nepal’s digital transformation.
The removal of this tax burden addresses a key deterrent to the widespread adoption of digital payment systems, which, despite their growing popularity, particularly in urban areas, faced resistance due to additional taxes on payment gateway services and clearing house transactions. With VAT no longer a factor, digital transactions are set to become more affordable and efficient for all users.
Furthermore, this VAT exemption is expected to provide a significant impetus to Nepal’s burgeoning fintech industry and advance financial inclusion initiatives.
By lowering the cost barrier, the government aims to draw a larger segment of the population, especially those who are unbanked or underbanked, into the formal financial system.
The Ministry of Finance is slated to issue comprehensive guidelines on the implementation of this VAT exemption across various digital payment platforms. Stakeholders, including commercial banks, digital wallet providers, and payment service providers, express optimism that this reform will spur innovation and attract further investment into Nepal’s digital financial infrastructure.
This forward-thinking policy decision underscores Nepal’s commitment to its long-term vision of a cashless and digitally empowered economy. Such tax reforms are deemed vital in shaping a more inclusive and efficient financial ecosystem as the nation continues to embrace digital innovation.
For more: Fintech Boom in Nepal
