Nepal game developers press Shah for tax relief and Google Play access
Two Nepali games have passed 150 million and 200 million downloads, but developers say tax and payment rules cap their growth, just as the prime minister promises a home-grown unicorn.
Two games made in Nepal have drawn huge global audiences: Callbreak, from Teslatech, with more than 150 million downloads, and Ludo, from Yarsa Labs, with more than 200 million. Yet developers say Nepali companies cannot open merchant accounts on Google Play, which limits how they can earn.
That gap sits behind a meeting at Singha Durbar, the seat of government in Kathmandu, where Prime Minister Balendra Shah invited game developers and software engineers to discuss the industry. Afterwards he wrote on Facebook that his government would work to create conditions for Nepal to produce a global unicorn in gaming and information technology. Developers say what they need is action on tax, payments and capital.
An interest with a history
At the meeting Shah enquired about the performance of Nepali games and expressed interest in Clash of Clans. He also raised GTA VI, the next Grand Theft Auto title from Rockstar Games, which is reportedly the most expensive video game ever made, with development costs estimated at more than $1bn.
A unicorn is a privately held startup valued at $1bn or more. At the central bank's rate of Rs 150.56 to the dollar, that is about Rs 150.6bn.
Shah said work had begun on tax and policy hurdles. He pledged support for game jams, startup events and hackathons, which are intensive coding competitions, and regular talks between industry, Nepal Rastra Bank (NRB), the central bank, and the finance ministry. He also promised to ease taxes and reform rules on international earnings so that companies can reinvest more easily.
The interest is not new. As mayor of Kathmandu, Shah pledged support for esports, and the city set aside Rs 10m for competitions in its 2022/23 budget. The programme was never carried out after the spending drew sharp criticism on social media and in public debate.
The 30% problem
The heaviest burden, developers say, falls on the costs of selling abroad: overseas servers, advertising and campaigns to win international users. Three levies apply to such payments: 13% value-added tax, 15% tax deducted at source and a 2% digital services tax. Together they come to 30%, and developers say the total burden can exceed that.
Sujan Shakya, chief of Teslatech, says the extra tax makes it extremely hard to compete with foreign firms. Asim Basnet of Dark Matter Game Productions says companies must reinvest foreign earnings to grow, and that VAT and withholding tax take a large share of them.
No merchant account, no in-app sales
The second obstacle, developers say, is that Nepali companies cannot open merchant accounts on Google Play.
They want the government to engage with Google and make the policy changes needed for access.
Analysis: this is a point where government action is possible but not wholly within its control. Tax rules are Nepal's to change. A decision by a US platform is not.
Capital and the outsourcing question
NJ Subedi, founder of Yarsa Labs, argues that policy treats two different businesses as one. Outsourcing firms work on intellectual property they do not own. Product companies keep it in Nepal and, in his view, offer more growth and more reason for talent to stay. Developers want locally developed products recognised as a separate category.
He also points to money. Nepal has few investors able to back companies at unicorn scale, he says, and local venture capital cannot fill the gap. Foreign investors, he says, hesitate to back Nepal-registered companies because of the policy and business environment. He cites Singapore and Dubai as models of openness.
Games make the problem sharper because heavy spending on development, marketing and user acquisition comes before significant returns.
Analysis: the studios' complaints form a chain. High taxes on foreign spending cut the cash left to reinvest. Payment limits keep revenue narrow. Thin local capital and wary foreign investors leave little to replace retained earnings. Easing one link without the others may help less than the rhetoric suggests.
What to watch
Watch whether the finance ministry moves on the 13% VAT, 15% withholding and 2% digital services tax as applied to overseas server, advertising and user acquisition payments, and whether any relief is written into law rather than announced online.
Watch for contact with Google over merchant accounts. Finally, watch whether policy begins to separate product companies from outsourcing firms. For developers, the measure of success will be concrete changes in how the state treats their money, payments and investors.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
