Meta Implements VAT on Ads in Nepal: What Businesses Need to Know?

Greetings from illionSo! As a leading IT company and a trusted partner in Nepal’s digital landscape since 2020, we strive to keep our valued clients informed about pertinent industry updates. We’re here to shed light on the recent development by Meta, the parent company of Facebook, regarding the implementation of Value-Added Tax (VAT) on its advertising services, including Workplace and WhatsApp products. These changes, set to go into effect from August 2023, hold significance for businesses and individuals alike. Let’s delve into the details together.

The Meta VAT Policy Unveiled

Starting this August, Meta’s ads, along with its Workplace and WhatsApp products, sold to domestic Nepal customers not procuring them for business purposes, will be subject to VAT. The tax will be applied at the prevailing local rate. This new policy is applicable to customers who have listed their ‘Sold To’ country as Nepal on their business or personal address and haven’t indicated that their purchases are intended for business use in their Meta account settings.

Declaration and PAN: Navigating the VAT Terrain

For businesses acquiring Meta products for legitimate business needs, a declaration accompanied by the submission of their Permanent Account Number (PAN) is required within the Payment Settings. This action triggers the application of VAT under the reverse charge mechanism. This innovative approach transfers the responsibility of VAT payment from Meta to the customer, streamlining the tax collection process and enhancing transparency.

Non-Business Purpose Transactions

In cases where customers do not furnish a declaration or their PAN, Meta will assume that the purchase is not intended for business purposes and will levy VAT at the applicable local rate. However, even non-business purchasers can take a proactive step by entering their Nepalese PAN in their Ad Account Settings. This PAN information will then be duly reflected on the invoices generated by Meta.

Billing and Payment Dynamics

We’d like to clarify that the addition of VAT charges will not expedite a customer’s billing threshold. While VAT will be integrated into the customer’s total charges, the billing threshold calculation will remain unaffected. For those utilizing manual payment methods, VAT will be accounted for and applied at the prevailing local rate upon funding the ad account. This process will determine the comprehensive balance available for advertising-related expenditures.

Professional Advice is Key

We understand that tax matters can be intricate. Therefore, it’s important to note that illionSo does not provide tax advice. If you have queries or concerns pertaining to taxation, we recommend seeking counsel from your tax advisors or local tax authorities. This is particularly relevant for businesses operating within complex tax structures or facing specific tax-related queries.

At illionSo, we view the incorporation of VAT on Meta’s ads, Workplace, and WhatsApp products for non-business customers in Nepal as a significant stride in the digitization and taxation landscape. This shift introduces novel dimensions of compliance and tax regulations that businesses and individuals must navigate. As you acclimate to these changes, remember that seeking expert tax advice and comprehending your responsibilities will be pivotal to seamlessly engaging with Meta’s offerings. Should you have any questions or require assistance, our team at illionSo is here to help guide you through these transitions. Stay informed, stay empowered!