Tel: +977-1-2239876, info@ccnepal.com.np

Setting Up Business in Nepal

 

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Nepal is a landlocked country on the southern slope of the Himalayas, located between China in the north and India in east, south and west- two huge countries with vibrant economies. Politically, it has been designated as a Federal Democratic Republic since May 2008. Nepal has been in transition since the decade-long conflict that ended in 2006, focusing its efforts in achieving sustainable peace, economic growth, employment generation, inclusive development, poverty alleviation, food security, and a reliable electricity supply. The government and private sector institutions have been addressing issues such as reforming the financial sector, strengthening the private sector's capacity, streamlining the private sector's development agenda, finding solutions to double-digit growth issues, and increasing industrialization based on trade competitiveness.

 

Over the past few years, Nepal has witnessed significant reforms in the commercial sector that have removed obstacles that previously hindered the establishment of both small and large-scale businesses.

 

Nepal has embarked on "Investment Year 2012-2013," with the aim of increasing Foreign Direct Investment (FDI). Some of the major steps undertaken include:

  • Establishment of the Nepal Investment Board;
  • Identification of potential sectors for investment, such as hydropower, tourism, infrastructure, agriculture, mining and quarrying, and IT;
  • Dedication by the government to create investor-friendly FDI policy reforms;
  • Creation of a one-window solution for potential investors in big projects; and
  • Provision of a separate industrial security force.

 

Why Nepal?

 

  • Locational Advantages,
  • Liberal Policies,
  • Low Human Resources Cost,
  • Abundant and untapped Natural Resources and
  • Hospitable Climate & People

 

Guidance For Foreign Investor

 

Foreign Investment in Nepal


Foreign investment in Nepal is regulated and administered by the Foreign Investment and Technology Transfer Act and Industrial Enterprises Act. The Department of Industries (DOI) is the sole agency for administration and implementation of the Foreign Investment and Technology Transfer Act in Nepal.

 

Forms of Foreign Investment (FI)

FI can be made in any industry in the following forms:

 

  1. Investment in shares (equity);
  2. Reinvestment of the earnings derived from equity;
  3. Investment made in the form of loans or loan facilities; and
  4. Investment in kinds, e.g. machineries and equipment.

 

However, as per the decision of the Government made on September 5, 2012, the minimum amount of FDI has increased to NPR 5 million for each investor from USD 20,000 (Approximately NPR 1.6 million).


Areas allowed for FI

 

Foreign investors are permitted to own up to 100% equity share in any industries except the following:

 

  1. Cottage industries (except industries using electricity more than 5 kW)
  2. Personal service businesses (e.g. hair cutting, beauty salon, tailoring, driving training, etc.)
  3. Arms and ammunition industries
  4. Gunpowder and explosives
  5. Industries related to radio-active materials
  6. Real estate business (excluding construction industries)
  7. Film industries (national languages and other recognized languages of Nepal)
  8. Security printing
  9. Bank notes and coins
  10. Retail business (excluding international chain retail businesses with business in at least two countries)
  11. Tobacco (excluding more than 90% exportable)
  12. Internal courier service
  13. Atomic energy
  14. Poultry
  15. Fisheries
  16. Bee keeping
  17. Consultancy services (e.g. management, accounting, engineering, legal services); (Maximum of 51% FI is allowed)
  18. Processing of food grains on rent
  19. Local catering Services
  20. Rural tourism

 

Entry Conditions on Investment

 

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Foreign Investment and Technology Transfer Act (FITTA) 1992 allows foreigners to invest only in private limited companies and in public limited companies registered with the Company Register Office (CRO). They are not allowed to invest in proprietorship or partnership firms.

 

Following are the legal procedures to be complied with:

  • FDI Approval process of Nepal,
  • Company Registration,
  • Tax license, Trade License, Export-Import Licence,
  • Permission from Board of Investment ,
  • Work permit and Visas & Bank Permissions,
  • All other legal compliances to be complied with.

 

Service we offer:

 

CCN is a one point solution in providing consultancy to foreign investors, multinational firms and their professional advisers on all aspects of investing and doing business in Nepal with focus on legal and regulatory matters. Our Services help you to formulate and execute entry strategy options for your business. Our services broadly cover:

 

  • Investment vehicles (Setting up subsidiary, branch, JV and liaison office in Nepal) for foreign investment
  • Necessary approval from competent/respective authority
  • Advise on Tax Implications / Restrictions/Repatriation/Incentives / Licenses and Regulations
  • Legal Advisory Support
  • Study of due diligence
  • Feasibility study

For More Details Contact Corporate Catalyst Nepal (info@ccnepal.com.np)

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