Moving from Nepal Tax Guide 2026: IRD Income Tax, EPF/CIT Pension & Tax Obligations When Leaving Nepal

KEY INSIGHT

When leaving Nepal, you should settle all outstanding IRD (Inland Revenue Department) income tax and obtain a tax clearance certificate (Kar Chuktara) before departure. EPF (Employees' Provident Fund) contributions are fully refundable as a lump sum when you resign or emigrate — a significant financial asset for many Nepali workers. CIT (Citizens Investment Trust) units can be redeemed or transferred. The Nepalese rupee (NPR) has a fixed peg to the Indian rupee (NPR 1.6 = INR 1), and the IRB (Nepal Rastra Bank) regulates outward remittances. Nepal has a massive remittance economy — over 25% of GDP comes from Nepali workers abroad, primarily from the Gulf states and Malaysia.

At a glance

Key Facts

Nepal IRD Income Tax — Rates and Departure Procedures

Nepal's income tax is administered by the Inland Revenue Department (IRD — ird.gov.np). Income tax rates (2025/26 fiscal year — Nepali FY 2082/83): Natural persons (individual): 0% on NPR 0–600,000/year (~$4,500); 10% on NPR 600,001–1,400,000; 20% on NPR 1,400,001–2,000,000; 30% on NPR 2,000,001+. Additional 1% on income above NPR 5,000,000. Social security tax (SST): 1% on taxable income — additional levy. Married couples: higher threshold applies (NPR 0–700,000 at 0%). Remote worker/foreign employment: Nepali citizens working abroad — if not resident in Nepal — are taxed only on Nepal-source income. Foreign employment income: Nepal technically taxes Nepali residents on worldwide income. However, practically, the foreign employment income of Nepali workers in the Gulf and Malaysia has historically been lightly enforced on remittances. What to do when leaving: settle all outstanding IRD liabilities (income tax returns for all years). Obtain Kar Chuktara (tax clearance certificate) from local IRD office — essential document for many departure-related procedures. PAN (Permanent Account Number): you keep your PAN even after emigrating — needed to file returns for any remaining Nepal-source income (e.g., rental property). Nepali fiscal year: mid-July to mid-July (Shrawan 1 to Ashadh end in Vikram Samvat calendar). This is important for timing departure to minimise pro-rata obligations.

EPF and CIT — Pension and Investment Withdrawal on Departure

Nepal has two main mandatory saving/pension schemes: (1) EPF (Employees' Provident Fund — Karmachari Sanchaya Kosh): administered by EPF (sanchaya.gov.np). Contribution rates: employee 10% of basic salary + employer 10% = 20% total. Applies to government employees mandatorily; voluntary for private sector workers (though increasingly common under SSPF below). Lump-sum withdrawal: EPF members can withdraw their accumulated balance when leaving employment — including on emigration. The full individual account balance (contributions + interest) is refundable. Interest rate: EPF declares an annual return — typically 8–10% in recent years. Process: resign from employment → submit EPF withdrawal application with resignation letter, citizenship certificate, and bank details. Timeline: 2–4 weeks for processing. Note: EPF is separate from the newer SSPF (Social Security Fund) which launched under the Social Security Act 2017. (2) SSPF (Social Security Fund — Samajik Suraksha Kosh): contribution: employee 11% + employer 20% = 31%. Four benefit packages: medical, maternity, accident, and old-age. Old-age pension: unlike EPF, the SSPF old-age benefit is NOT fully refundable as a lump sum for emigrants. It functions more like a traditional pension — payable at age 60. Partial: accidental and other benefits may be accessible. Foreign workers in Nepal: no entitlement to SSPF benefits in most cases. (3) CIT (Citizens Investment Trust): government-backed investment fund with units available to Nepali citizens. Units can be redeemed at current NAV. Redemption proceeds: subject to capital gains tax at 5% (for natural persons on units held). Redemption is straightforward — contact CIT Bhawan, Minbhawan, Kathmandu.

NPR Remittance Rules — Sending Money Out of Nepal

Nepal Rastra Bank (NRB) regulates all foreign exchange outflows: NPR/INR peg: the Nepalese rupee is pegged to the Indian rupee at NPR 1.6 = INR 1 — this peg has been maintained for decades and provides stability relative to INR. NPR is freely convertible into INR. NPR vs USD/GBP/EUR: the peg to INR means NPR follows INR movements against hard currencies. NRB outward remittance limits for residents: foreign exchange for personal travel: USD 5,000 per trip (or equivalent). Transfer of foreign employment savings: NRPs (Non-Resident Nepalis) can remit savings from abroad — limited for residents sending money out. EPF/CIT/savings transfer on emigration: obtain NRB permission for lump-sum transfers above USD 50,000. Process: IRD clearance + NRB approval + bank transfer. For typical EPF balances (often NPR 500,000–2,000,000, equiv. ~$3,800–$15,000): amounts within normal NRB limits for documented foreign employment savings — process with your bank. Non-Resident Nepali (NRN) accounts: once abroad, open a NRN bank account (available at most major Nepali banks — NRB Bank, Nabil Bank, Standard Chartered Nepal). NRN accounts can receive foreign currency and hold in USD/EUR/GBP — provides flexibility. Remittance landscape: Nepal is one of the world's top remittance-receiving countries. eSewa, IME, Prabhu Money Transfer: major domestic services for receiving remittances. For sending money home from abroad: Wise, Western Union, Ria are commonly used by Nepali diaspora.

Nepali Workers Abroad: Gulf States and Malaysia Tax Context

The majority of Nepali emigrants are labour workers in the Gulf states and Malaysia — the tax implications are simple but important: Gulf states (Qatar, UAE, Saudi Arabia, Kuwait, Bahrain, Oman): 0% personal income tax in all six GCC states. Nepali workers: receive full salary with no host-country income deduction. Nepal: if genuinely non-resident (not in Nepal for 183+ days/year), Nepal's IRD does not tax Gulf-earned income. The remittances sent home: not subject to Nepali income tax when received by the family. Qatar: large Nepali construction and service worker community (~400,000 workers). Qatar-Nepal DTA: no DTA in force — but moot for zero-tax Gulf states. Malaysia: income tax applies, but most Nepali workers are in the informal sector or low-income bracket below the taxable threshold (MYR 5,000/month). LHDN (Malaysia IRD) requires a tax clearance certificate (CP21) from foreign workers who leave Malaysia permanently. Nepal-Malaysia: no DTA. Destination countries for professional diaspora: UK (Nepal-UK DTA — 2011): allocates employment income to country of employment. Australia (no Nepal-Australia DTA): Australian tax law applies based on residence. USA: no Nepal-USA DTA — US tax law applies. Canada: no Nepal-Canada DTA.

Introduction

Nepal is one of the world's most remittance-dependent economies — with over 25% of GDP flowing from Nepali workers abroad, primarily in Qatar, UAE, Saudi Arabia, Kuwait, Malaysia, and India. The scale of this diaspora means that emigration from Nepal is not an unusual life event but a well-trodden path, with established procedures for EPF withdrawal, tax clearance, and international money transfer. Key features that distinguish Nepal's departure tax picture: the EPF's full lump-sum refundability (unlike many countries where employer contributions are forfeited), the NPR/INR peg providing currency stability relative to INR, and the new SSPF (Social Security Fund) scheme whose old-age component is not accessible on departure. The Nepali fiscal year runs mid-July to mid-July — an important timing consideration for tax planning.

Section 01

Key Steps When Leaving Nepal

Step 1 — IRD Tax Clearance: File your final income tax return with IRD covering the Nepali fiscal year to the date of departure. Pay any outstanding balance. Obtain the Kar Chuktara (tax clearance certificate) — required for many departure-related transactions. Online filing: IRD's tax portal (ird.gov.np) enables e-filing — practical for those who have already relocated and need to file for Nepali-source income.

Step 2 — EPF Withdrawal: If you are an EPF member, submit your withdrawal application as soon as your employment terminates. Collect all contributions + accrued interest. This is often the largest single financial asset for departing Nepali workers. Check your EPF balance via sanchaya.gov.np. SSPF members: check your individual account status — old-age benefit preserved to retirement age; check if any medical/accidental component is accessible.

Step 3 — CIT Redemption (if applicable): If you hold CIT units, calculate current NAV and decide whether to redeem now or hold as a Nepal-source investment (manageable remotely). Redemption: 5% CGT on gain. Units can be held by Non-Resident Nepalis.

Step 4 — Banking and Transfer: Transfer your savings via NRB-compliant channels. For EPF proceeds: your bank will assist with the outward transfer documentation. Open a NRN (Non-Resident Nepali) account if you plan to keep Nepal-based financial relationships — receives foreign currency, easier international management.

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FAQ

Frequently Asked Questions

How much can I withdraw from EPF when I emigrate from Nepal?

EPF withdrawal on emigration from Nepal: you are entitled to your full individual EPF balance — employee contributions + employer contributions + accumulated interest. There is no forfeiture of employer contributions when you leave employment (including on emigration) — the entire accumulated amount is yours. Typical balances: for a private sector employee earning NPR 30,000/month (about $225) for 5 years: employee contributions: 10% × NPR 30,000 × 60 months = NPR 180,000. Employer contributions: same = NPR 180,000. Total contributions: NPR 360,000. Interest at 8.5% compounded annually on the balance: approximately NPR 60,000–80,000 additional. Total withdrawal: approximately NPR 420,000–440,000 (~$3,100–$3,300). For higher earners in formal employment over longer periods, EPF balances can be NPR 1,000,000–3,000,000+ (~$7,500–$22,500). Process: obtain Withdrawal Application form from EPF (available at sanchaya.gov.np or physically). Attach: resignation acceptance letter from employer, copy of citizenship certificate, bank account details, and EPF membership card. Submit to your regional EPF office. Timeline: approximately 2–4 weeks for processing. Payment: directly to your designated bank account.

Do I owe Nepali tax on my salary if I work in the UAE after leaving Nepal?

Nepali income tax on UAE salary: (1) Nepali tax residency: Nepal taxes residents on worldwide income and non-residents on Nepal-source income only. Residency: you are a Nepali tax resident if you are present in Nepal for 183+ days in a fiscal year OR your principal home is in Nepal. (2) Once you are genuinely resident in the UAE and not resident in Nepal: Nepal only taxes your Nepal-source income (e.g., rental income from Nepal property, interest from Nepali banks). Your UAE employment income is not subject to Nepali tax. (3) UAE income: no income tax in UAE = 0% host country tax. (4) Remittances home: money you send home to family in Nepal is not income for your family — it is a transfer. Not subject to Nepali income tax when received. (5) Nepal-UAE: no DTA between Nepal and UAE. However, since UAE has 0% income tax, there is no double taxation risk — the question only becomes relevant for countries that do tax, like the UK. (6) Practical: many Nepali workers in the Gulf have never filed an IRD return for Gulf income — technically they should be deregistered as Nepali residents once abroad, but enforcement of the worldwide taxation of Nepali non-residents is minimal in practice. It remains best practice to obtain the Kar Chuktara (tax clearance) and deregister as a resident when you leave.

Disclaimer:This guide provides general tax information for educational purposes only. Nepali tax law is administered in the Nepali fiscal year (mid-July to mid-July). EPF withdrawal procedures and SSPF benefit rules change — verify with the EPF (sanchaya.gov.np) and Social Security Fund (ssf.gov.np) directly. NRB remittance limits are subject to change. Do not use this guide as financial advice — consult a qualified Nepali tax adviser and a qualified adviser in your destination country.

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