The Foreign Investment and Technology Transfer Act 2075 aims to attract foreign capital and technology to Nepal by easing business regulations for foreign investors and making the Nepalese economy more competitive. Key aspects of the act include provisions for transferring technology through agreements, various modes of allowed foreign investment, approval processes and repatriation of profits. The act also establishes authorities like the Industrial Promotion Board and Department of Industries to facilitate foreign investment and regulate industries established through foreign capital. Industries receiving foreign investment are eligible for facilities, concessions and assistance under the act.
The Foreign Investment and Technology Transfer Act 2075 aims to attract foreign capital and technology to Nepal by easing business regulations for foreign investors and making the Nepalese economy more competitive. Key aspects of the act include provisions for transferring technology through agreements, various modes of allowed foreign investment, approval processes and repatriation of profits. The act also establishes authorities like the Industrial Promotion Board and Department of Industries to facilitate foreign investment and regulate industries established through foreign capital. Industries receiving foreign investment are eligible for facilities, concessions and assistance under the act.
Original Description:
Foreign information and technology transfer act 2075
The Foreign Investment and Technology Transfer Act 2075 aims to attract foreign capital and technology to Nepal by easing business regulations for foreign investors and making the Nepalese economy more competitive. Key aspects of the act include provisions for transferring technology through agreements, various modes of allowed foreign investment, approval processes and repatriation of profits. The act also establishes authorities like the Industrial Promotion Board and Department of Industries to facilitate foreign investment and regulate industries established through foreign capital. Industries receiving foreign investment are eligible for facilities, concessions and assistance under the act.
The Foreign Investment and Technology Transfer Act 2075 aims to attract foreign capital and technology to Nepal by easing business regulations for foreign investors and making the Nepalese economy more competitive. Key aspects of the act include provisions for transferring technology through agreements, various modes of allowed foreign investment, approval processes and repatriation of profits. The act also establishes authorities like the Industrial Promotion Board and Department of Industries to facilitate foreign investment and regulate industries established through foreign capital. Industries receiving foreign investment are eligible for facilities, concessions and assistance under the act.
Foreign Investment and Technology Transfer Act 2075 By: Santosh Adhikari
Chapter 1: Preliminary
To attract foreign capital, technology
Purpose To ease doing business by To make foreign competitive investors economy
Technology Transfer • Transferring technology based on agreement between industry and foreign investor including following matters in agreement: •Patent, design, goodwill, formula, process, specialized technology •User License, know-how sharing or franchise sharing •Foreign technical advisor, management and marketing services or other technical knowlege and skills
Foreign Investment • Following investment made by foreign investor in industry or company: •Share investment in FCY, Re-investment of dividend, Lease Financing (Sec. 6) •Investment in venture capital fund (Sec. 9), •Investment in listed securities via secondary market (Sec. 10) •Investment by aquiring share or assets of Nepalese Entity •Investment received by issuing securities by Nepalese entity in foreign capital markets •Investment made through technology transfer •Foreign investment maintained by establishing and expanding industry in Nepal
Page 1 of 10 Foreign Investment and Technology Transfer Act 2075 By: Santosh Adhikari
Chapter 2: Foreign Investment
Foreign investor may individually or jointly, invest in Nepal in following modes:
Lease in airlines, Obtaining project Loan ship, machinery, Modes of or financing from Foreign construction Foreign Financial Institutions equipment etc. in Investment prescribed limit.
Note: ➢ Maximum limit of FDI shall not be fixed. ➢ Foreign Investors can conclude Escrow Agreement with Nepalese Banks.
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Chapter 3: Approval & Repatriation of Foreign
Investment
Application to Approving Authority for
Obtaining Approval of Foreign Investment
Application to be accompanied Approving authority shall notify
with investment timeline and work within 7 days if it is not appropriate plan. to grant approval with grounds of ➢ If it is deemed appropriate, refusal approving authority shall grant ➢ Investor, who is not satisfied with approval within 7 days. decision can appeal in ministry and ➢ However, approval is not required decision shall be provide within 30 for re-investment of profit earned days of appeal. from already approved investment
After Approval
Information to be Provided NRB & Approving Authority
• Written information should be provided to NRB with self-declaration regarding legal source of investment. • Investment should be brought in convertible foreign currency (Indian investors can bring INR through banking channel) • In case of change in status or underlying ownership of any asset or share, due to transaction within or outside of Nepal, concerned company should inform to approving authority within 30 days of such transaction.
More than 6 Billion Investment Board of NPR Nepal Foreign Investment Approving Authority UP to 6 Billion Department of Industries NPR
Page 3 of 10 Foreign Investment and Technology Transfer Act 2075 By: Santosh Adhikari
Repatriation of Foreign Investment and Profits
• By paying all applicable taxes, any foreign investor desiring to dispose their holding fully or partially, can repatriate following amounts in same currency they brought-in or in other convertible FCY: ➢ Disposal proceeds of share of foreign investment. ➢ Profit or dividend eared as a result of foreign investment. ➢ Residual amount remaining after meeting all liabilities on liquidation ➢ Royalty as per Technology Transfer Contract. However, industries producing liquor product (except exporting 100% product) shall not permitted to repatriate more than 5% of total sales. ➢ Lease rent under Lease Investment ➢ Compensation or fine received on final settlement of legal dispute or arbitration ➢ Amount of Loan and interest realized from auction of collateral in case of loan default
• After verification of abiding all the terms and legal grounds, approving authority shall grant approval of repatriation within 15 days of application.(Then apply NRB for foreign currency exchange)
Page 4 of 10 Foreign Investment and Technology Transfer Act 2075 By: Santosh Adhikari
Chapter 4: Promotion, Simplification and
Regulation of Foreign Investment
Right, Functions and Duties of Authorities
• Following are the rights, function and duties of Industrial Promotion Board established as per section 20 of Industrial Enterprise Act 2076: ➢ Suggesting government regarding policy & structural reforms for attracting foreign investment ➢ To grant approval for establishment of infrastructural industries based on foreign investment ➢ Coordination, facilitation, assisting in implementation of policies ➢ Arrangement for receipt of facilitation and services through One Point Service Center
• Following are the fights, function and duties of Department of Industries:
➢ Maintain friendly environment for establishment and operation of industries ➢ Facilitate on Environmental Impact Assessment (EIA), Make recommendation for Visa ➢ Maintain records & Docs, Grant approval for repatriation of salary allowances ➢ Formulate & implement standard procedures and supervise and monitor ➢ Facilitate establishment of industries under foreign investment in industrial area and SEZ
Registration, Administration & Approval PAN regd. Work Permit facilitation & & Visa Forex Facilities approval
One Point Servie Center
Quality Concession & control and Facilities EIA approval Focal point for energy and infrastructure
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Chapter 5: Facilities and Concessions to
Industries Established Under Foreign Investment
Facilities & Concessions
Industrial Foreign Specialists & Industrial
Identity Facilities Currency Managers Security
All the facilities, With approval First Priority to Equal security Department may concessions & from Authority & Nepalese should facilities like for provide Identity discounts under NRB Industry can be given for hiring other industries Card in prescribed prevailing use FCY for: technical experts established in format to the industrial law •Remuneration & specialists. If Nepal shall also foreign investor. shall be available, Payment N/A then can hire be provide to except applicable •Payment of foreign nationals. industries facilities for sick Interest and Information shall established under industries Principle of be provided to foreign Debenture Department. investment. •Repatriation
Visa Facilities
Visa Facility Type Eligibility Visa Duration
A foreigner visiting Nepal for conducting study, research or 6 Months Non-Tourist Visa survey for investment in Nepal For foreign specialist, technician or managerial person As required Foreign investor or his/her authorized agent and his/her family Till foreign Business Visa member (spouse, father, mother & minor children). Max two investment is persons can avail this facility for prescribed limit of investment. retained Till foreign Investor or his/her authorized agent with foreign investment of Residential Visa investment is 1,000,000 USD or more at a time. retained
➢ Industries under foreign investment pursuant to this Act shall not be nationalized. (However, can be taken over for public purpose as per prevailing law)
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✓ Foreign investor shall arrange required land by purchasing or by other methods as per prevailing laws. Land ✓ If land could not be arranged and requested, approving authority shall recommend, Facilities facilitate and coordinate with concerned body. they also do it for land limit approval. ✓ Leasing and other provisions shall be as per applicable laws.
National Treatment
Shall be treated as equal as invested by Nepalese person. With following protection:
➢ Industry established by FI shall be treated as similar established by Nepalese citizen ➢ Shall have freedom to determine price of goods or services within prevailing laws. ➢ Shall not be restricted for doing business in line within its industry ➢ Shall not be restricted for repatriation of investment, profit, or principle or interest of loan
However, national treatment is not applicable for following matters:
➢ Compulsory licensing of right to use of intellectual property as per agreement with WTO. ➢ Any rebate provided as per Public Procurement Act to any local industry of merchandise. ➢ Grant or Facility, Non-trading service or Financial services of GoN deemed necessary for protection of interest of investors, participants of security market etc. ➢ Provide special treatment as per regional or multilateral financial or monetary agreement to which GoN is enforcing party. ➢ Conditions imposed by regulators on repatriation of investment, loans, service fees etc. ➢ Matters relating to public health, flora and fauna and environment protection.
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Chapter 6 & 7: Grievances Management &
Miscellaneous
Grievances Management and Inspection
➢ For any grievances relating to functions of approving, registering, regulating authority or One Point Service center, Foreign Investor may submit such grievances to Department of Industry. ➢ For any grievances relating to functions of Department and One Point Service Center, Foreign Investor may submit to Ministry. ➢ Foreign investors should abide the terms and conditions of Approving Authority. ➢ Designated person from department, may inspect the industry.
Settlement of Disputes
Mutual Discussions and Negotiation
Department of Industries shall provide necessary facilitation.
If not Resolved within 45 days
➢ If resolved – Provide information to Approving Authority within 15 As per Joint Agreement days (may not disclose terms). Dispute shall be resolve as per Joint Investment Agreement or ➢ Dispute Resolution Agreement Dispute Settlement agreement can be concluded before or after dispute by informing authority. If not Resolved or Agreement not available
Arbitration Arbitration shall be held in Nepal
Except otherwise agreed, procedures of United Nations and arbitration laws of Nepal shall Commission on International Trade Law (UNCITRAL) be applicable.
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Validity of Foreign Investment approval
Foreign investment approval shall be valid till the investment is retained however, under following conditions investment approval is deemed to be cancelled: ➢ The approved investment amount is not initiated to bring in Nepal within 2 years of approval without reasonable ground. ➢ The whole ownership of industry under foreign investment is transferred to Nepalese as a result of share transaction. ➢ If approved industry for foreign investment or company establishing such industry’s registration is cancelled.
Power of Attorney
➢ Person desiring of making investment under this act may provide power of attorney for any of all activities on his/her behalf. ➢ Power of Attorney shall be certified by Notary Public & sent to foreign investment approving authority. ➢ Holder of POA cannot delegate such authority to any other person. ➢ Foreign investor can withdraw POA at any time. Withdrawal of delegated authority shall be applicable once it is registered in investment approving authority.
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Industries where Foreign Investment is not allowed:
Annexure-: Relating to section 3 (i.e. Industry or Enterprise restricted for
Foreign Investment): ➢ Primary agriculture sector such as fish farming, animal husbandry, horticulture, milk business ➢ Micro and Cottage enterprises ➢ Personal service businesses (like: hair saloon, tailoring, driving etc.) ➢ Arm and ammunition industry, industry producing biological and chemical weapons, industries related to explosives, gunpowder, radio-active materials, atomic energy etc. ➢ Real Estate business (excluding construction industries), Retail business, internal courier services, local catering services, money changer, remittance etc. ➢ Tourism based travel agency, trekking agency, expedition service provider, home-stay and rural tourism ➢ Mass-media business (such as newspaper, radio, TV and online news), movies of national language ➢ Business and Organizations providing management, accountancy, engineering and legal consultancy services and language training, music training, computer training & ➢ Consultancy services with more than 51% foreign investment.
About the Compiler
CA. Santosh Adhikari WhatsApp/Viber: +977 9845657204 Email: [email protected]
YouTube Video Link: https://youtu.be/8cAR4ZZ1bAM
