KATHMANDU, Dec 11: The Government of Nepal has formally notified the Republic of Mauritius that it has terminated the bilateral Double Taxation Avoidance Agreement (DTAA) signed on August 3, 1999.
Madan Dahal, Director General of the Inland Revenue Department (IRD) and the designated competent authority on behalf of Nepal, sent the formal notice through diplomatic channels as per Article 29(1) of the DTAA.
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According to the government, the decision aims to align Nepal’s international tax framework with the domestic tax regime and the rapidly evolving global tax environment.
Nepal’s Income Tax Act, 2002, includes modern provisions to curb tax abuse. The limited-benefits clause under Section 73(5) has been cited as having a direct impact on the treaty’s implementation.
The government noted that the international tax landscape has undergone major changes since 1999, with initiatives like the OECD-led Base Erosion and Profit Shifting (BEPS) project prioritizing global tax transparency and anti-abuse measures. Nepal believes the termination of the current agreement will pave the way for new, modern tax treaties that meet contemporary international standards.
Nepal has also expressed its commitment to continuing bilateral economic and tax cooperation with Mauritius. It has kept open the possibility of negotiating a new DTAA and a Bilateral Investment Protection Agreement (BIPA) that reflects mutual interests, enhanced transparency, and the evolving domestic and global economic environment.
According to the IRD, the terminated DTAA will cease to apply to Nepal from July 17 of the Fiscal Year 2026/27, in line with Article 29 of the treaty.
