Kathmandu-Nepal Association for Software and IT Services Companies  (NAS IT) has submitted budget suggestions to the government, which aims to boost employment and earn foreign currency through the IT sector. The organization has proposed that registered IT firms should be taxed at a 1 percent corporate income tax rate for 10 years, to encourage entrepreneurship and further investment in research.

Entrepreneurs argue that a lower tax burden would motivate investment and help Nepali IT companies become more competitive in the global market. While some tax concessions currently exist for IT companies, they are seeking clearly defined benefits with a fixed time frame.

They also emphasized that since the IT sector can generate foreign currency at relatively low cost, it should receive export promotion incentives. They propose an 8 percent export subsidy, arguing that it would improve competitiveness.

They note that such support is common in other countries that promote employment and foreign exchange earnings. Countries like Vietnam and Bangladesh, which have recently succeeded in IT service exports, provide similar incentives, and entrepreneurs suggest Nepal adopt the same approach. Although Nepal provides export subsidies for other goods, the IT sector is currently excluded, and even existing subsidy mechanisms are questioned for their effectiveness.

Entrepreneurs have also urged improvements in the VAT refund system, stating that many companies in Nepal have yet to receive refunds they are legally entitled to.

Globally, personal income tax is a major concern for IT professionals. Workers tend to relocate or seek opportunities in countries with lower tax rates. In this context, entrepreneurs have suggested setting the maximum personal income tax rate in Nepal at 25 percent.

They have also recommended signing double taxation avoidance agreements with countries that offer strong business and trade opportunities. The lack of such agreements, they say, makes it difficult to attract investment, technology, and business into Nepal.