The government has officially notified Mauritius about the termination of the bilateral Double Taxation Avoidance Agreement 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 necessary to align Nepal with significant changes in domestic tax laws and the global taxation system.
The Monday's meeting of the Council of Ministers took a decision to this effect.
The Department stated that Nepal has undertaken extensive reforms to the Income Tax Act, and the incorporation of advanced provisions aimed at preventing tax abuse no longer aligns 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 The government has said that terminating outdated treaties will pave the way for new tax agreements that better reflect contemporary needs.
Nepal has also expressed its commitment to continuing its collaboration with Mauritius in the areas of economic and tax cooperation.
In a press statement, the Department said the government is firm that any future agreement should be based on mutual interest, transparency, and the current global economic context.
The termination of the Double Taxation Avoidance Agreement will take effect for Nepal from the first day of the fiscal year 2083/84 (mid-July 2026). The date has been determined in accordance with the termination provisions specified in the Agreement itself.
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