This article analyses the provisions regarding the definition of a PE and its taxation in Nepal under the domestic tax law as well as tax treaties. It also indicates which of Nepal’s treaties vary from the standard articles 5 and 7 of the UN and OECD Models and throws light on the need to update the ITA 2002 as well as Nepalese tax treaties in line with the recommendations made by the OECD/G20 BEPS Action Plans.