Kathmandu. The government has decided to terminate the double tax avoidance agreement with Mauritius. According to the Inland Revenue Department, the agreement will be revoked from July 1.

The Government of Nepal has formally informed about the cancellation of the bilateral Double Taxation Avoidance Agreement signed with the Government of the Republic of Mauritius on August 3, 1999. Madan Dahal, Director General of the Inland Revenue Department, sent a formal letter annulling the agreement in accordance with Article 29 (1) of the agreement through diplomatic channel today.

The Government of Nepal has taken this strategic decision as it needs to align its international tax structure with significant changes in both domestic law and the global tax environment.

Nepal’s Income Tax Act, 2058 has included certain provisions to control modern tax misuse affecting the implementation of the treaty. It specifically includes the provision of limited benefits under Section 73 (5) of the Act.

Since 1999, there have been radical changes in the global tax regime. There have been calls for greater transparency in international tax agreements and curbing tax abuses through initiatives such as tax base reduction and profit shifting projects.

“The cancellation paves the way for a contemporary agreement that adheres to new global minimum standards,” it said.