The Inland Revenue Department (IRD) has enforced the guideline on electronic billing system with the aim of eventually implementing it at all points of sale.

The electronic billing system connects the point of sale to the IRD’s computer over the internet, and each time a sale is made and a sales receipt is issued, the transaction is recorded in real time by the taxman. The system is expected to reduce the possibility of tax evasion and under-invoicing.

The new guideline on electronic billing system supersedes the Computerised Billing System 2015. The guideline has been in effect since December 31, said IRD Deputy Director General Yagya Prasad Dhungel.

Cloud-based computing, which means storing and accessing data over the internet, is one of the key features of the new guideline. A firm offering cloud computing services is required to maintain its server in the country.

Likewise, a service provider using a foreign rented server has to keep the server operator in the country. These firms have to use servers based on multi-tenancy architecture that allows separate storage of transaction records.

According to the guideline, multinational companies providing cloud-based services that have their server and data storage system in a foreign country should maintain a separate audit log server in Nepal to store transaction records.

“The server used by multinational companies should be accessible to the IRD and related tax offices,” states the guideline. According to Dhungel, the department has asked firms registered for computerised billing system to implement the new system within the next three months. More than 600 firms are currently using the computerised billing system. New firms are required to install the system while getting registered with the authorities. “We have planned to extend the system successively to other taxpayers using a manual billing system,” Dhungel said.

According to the IRD, a total of 1.6 million taxpayers are registered with the department. Among them, 184,000 are registered for VAT. It said 900,000 business firms fall below the VAT threshold while more than 600,000 individual taxpayers have received permanent account numbers.

The IRD has been implementing the electronic billing system as a complement to its plan to enforce a full-fledged central billing monitoring system. The department launched the system as a pilot project by installing it at Sipradi Trading on November 17. Dhungel said two to three other firms using the computerised billing system have started to implement the central billing monitoring system. “In addition, a number of others have applied at the department seeking to implement the system.”

Under the new guideline, both software developers and firms using it need to receive approval from the IRD. The department has okayed 156 software makers to implement the electronic billing system.