KATHMANDU, DECEMBER 10
The government has officially notified Mauritius of the termination of the bilateral Double Taxation Avoidance Agreement (DTAA) signed on August 3, 1999. The notification was sent through diplomatic channels.
According to Madan Dahal, Director General of the Inland Revenue Department, the letter was dispatched to the Government of Mauritius in accordance with Article 29(1) of the Agreement. This diplomatic step was deemed necessary to align Nepal's tax framework with significant changes in domestic tax laws and the evolving global taxation system.
The decision was taken during Monday's meeting of the Council of Ministers.
The Department stated that Nepal has undertaken extensive reforms to the Income Tax Act, incorporating advanced provisions aimed at preventing tax abuse, which no longer align with the treaty. In particular, the limitation-of-benefits provision under Section 73(5) of the Act poses challenges to implementing the Agreement. The government emphasized that terminating outdated treaties will pave the way for new tax agreements that better reflect contemporary economic and fiscal realities.
Nepal has also reaffirmed its commitment to continuing collaboration with Mauritius in the areas of economic and tax cooperation.
In a press statement, the Department underscored that any future agreements will be based on mutual interest, transparency, and the current global economic context.
The termination of the Double Taxation Avoidance Agreement will take effect in Nepal from the first day of the fiscal year 2083/84 (mid-July 2026), in accordance with the termination provisions specified in the Agreement itself.