KATHMANDU: Nepal has formally informed the Republic of Mauritius of its decision to terminate the bilateral Double Taxation Avoidance Agreement (DTAA).
In his capacity as the competent authority designated by the Government of Nepal, Madan Dahal, Director General of the Inland Revenue Department (IRD), on Wednesday dispatched an official termination notice through diplomatic channels in accordance with Article 29(1) of the DTAA.
Nepal and Mauritius signed the agreement on August 3, 1999. According to IRD Spokesperson Basudev Poudel, the government’s strategic decision aims to align Nepal’s international tax framework with major changes in domestic law and global tax standards.
Nepal’s Income Tax Act, 2002 introduced modern anti-tax-avoidance measures that affect treaty implementation, including limited-benefit provisions under Section 73(950), the department stated.
The IRD noted that international tax governance has undergone significant changes since 1999, particularly following global initiatives such as the OECD’s Base Erosion and Profit Shifting (BEPS) project, which demand greater transparency and stronger safeguards against tax misuse. The termination, it argued, paves the way for treaties that comply with contemporary global minimum standards.
However, the department clarified that Nepal remains committed to promoting bilateral economic and tax cooperation with Mauritius. It added that the decision opens the possibility of negotiating a new, modern DTAA and a Bilateral Investment Protection Agreement (BIPA) based on mutual interest, transparency, and compatibility with the evolving domestic and international economic environment.
The terminated agreement will cease to apply from July 17 of the upcoming fiscal year 2026/27, the department stated.
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