A new NRB notice for social media ads payment and receiving earnings from online work has been published. The central bank or Nepal Rastra Bank (NRB) published a notice regarding payments on social media platforms for ads and receiving remittances. It is a hot topic because the use of social media is very high these days. Moreover, people and companies are pouring money into social media marketing. The government is noticing the outward flow of money and moreover, flow in illegal ways. This is why NRB restricted illegal payments other than those done through the banking channel.
Since January 31st, 2020, the online media space of Nepal and the online worker’s industry is murmuring. Everyone’s questions are regarding NRB’s notice on social media and online advertisements. The notice especially points out the illegal way of paying for those online advertisements. We want to make some things clear to our readers because there are lots of rumors and confusion. Some big news media agencies are also putting very wrong titles. So do read this whole article to be more clear.
This new notice has created a lot of discussion among people on social media. People are confused about its implications on Facebook boosting, sponsored ads, freelancing, affiliate earning, and ad revenue. This has also created some confusion among AdSense, Fiverr, Upwork, and Freelance users as well. NRB rules regarding legal payments may seem unclear at the moment. So we want to help our readers in the best way possible.
First, you should know that Nepal’s central bank or NRB doesn’t allow international online payment through domestic NPR cards. In countries like India, you can pay in USD with your debit card even if you have an INR account. But in the case of Nepal, users need to have FCY accounts or USD cards to make such payments. We also talked about this in another article that discusses different international online payments in Nepal. It is clear that currently at this time of year of February of 2020, it is very hard to make international payments from Nepal.
NRB Notice for Social Media Ads Payment and Receiving Earning from Online
The new notice issued on 2076/10/17 B.S. or 2020/01/31 A.D. states that paying for advertising on social media platforms such as Facebook, Twitter, YouTube, and similar sites through unofficial channels is illegal. It also talks about receiving money from such sites. The next line says that such transactions fall under foreign exchange misuse and anyone involved in such activity can be punished according to Foreign Exchange (Regulation) Act, 2019. NRB also warns people about the consequences and legal actions.
People have been worried about this notice. It is natural but people are spreading rumors as well. So here is everything we know. As mentioned earlier, the only legal way to pay for advertising on Facebook, Twitter, Google, etc. is to use an international USD card in Nepal. We can use PayPal as well but that also needs an international dollar card. PayPal works in Nepal with legitimate USD cards but there is a limitation. We can only make payments and we can’t receive payments. Very few people have foreign currency (FCY) accounts so there are very fewer dollar cards in use.
How are people paying for digital advertisements in Nepal?
The first thing we need to understand is that we need a payment instrument or card that can pay in foreign currency such as the dollar to pay on platforms like Google, Facebook, and Twitter. Very few people have such cards in Nepal but some companies who have licenses and permit from NRB also have such cards. Usually, hotels, travel agencies, and businesses involved in traveling and tourism have such payment instruments because they deal with tourists who have foreign currency. So these people and organization can use their own FCY cards and accounts to make payments for advertisements.
On the other hand, normal Nepalese people don’t have such cards and even many organizations don’t have access to those payment options. So they either use the help of friends, family, or some third party. Most people and companies pay for such ads with the help of friends abroad. They ask their friends and relatives for their credit/debit card information. Then people pay the card owner’s family members here or send them money in their local account. Or the money goes to foreign from multiple hands.
This is how it is working. The government wants to stop this because they want to make it go through the banking channel. Currently, there is no other way to pay for such payments and services. Therefore everyone is at a halt. It is good that the government wants to collect taxes and have transparency. However, people are stranded with no options left. On the other hand, many people have confused about receiving payments too.
Online Jobs and Receiving Advertisement Revenue in Nepal
There are many freelancers who do online jobs. There are people like us who do blogging, vlogging, run YouTube channels, make content, provide software support, build websites, build software and do affiliate marketing. Everyone earns from online sources such as advertisement revenue from Google AdSense, Amazon Affiliates, or from service charges from Fiverr, Freelance, Upwork, and many other sources. So everyone receives money in Nepal in different ways.
The government just wants everyone to use the legal way or banking channel, pay their taxes, and follow NRB directives. Most of us get payments through direct wire transfer to the bank account, Western Union, or check. Google sends payment for YouTube and website earnings through wire or Western Union. Amazon also sends money to the bank. For people who get payment in Payoneer, we can link the Nepali bank account to Payoneer as well. All of these are using the banking system. The country gets foreign currency from these ways and remittance is increased.
The next part of such notice is actually about tax as well. If we are earning online, we should also pay taxes. People who run a business alone can also pay income tax. Companies should also pay taxes on their earnings and transactions. So the NRB wants all these transactions and remittances tracked for making everything transparent. If people send money and receive money from unofficial channels, there is no way to tax people or no way to increase forex reserves.
Many online workers do receive payments through banks but there are exceptions because of a lack of options. Sometimes, people fall into the grey zone or the illegal way when they use methods that are not in the system. For example, the Nepali PayPal account only allows sending payments and not receiving them. However online workers do need to receive payment and that is actually beneficial for NRB too. But as there is no way to receive payment in PayPal, people use unofficial channels.
Similarly, people can only receive money in Nepal easily but people can’t send it easily. Creators, programmers, builders, developers, bloggers, and digital experts do need to purchase software, application, tools, and subscriptions for doing work and making earnings. As there is no easy way to pay for such things in Nepal, people again use unofficial channels. So we have to admit that the lack of official options has also compelled people to use unofficial ways.