A Technology Transfer Agreement (TTA) in Nepal is a legally binding contract through which foreign investors transfer technical knowledge, patents, trademarks, or specialized expertise to Nepali industries without direct equity investment. Governed primarily by the Foreign Investment and Technology Transfer Act, 2019 (FITTA), these agreements have become instrumental in Nepal's industrial modernization, allowing domestic companies to access cutting-edge technology while enabling foreign entities to monetize intellectual property through royalty payments. Whether you are a multinational corporation seeking to license proprietary technology or a Nepali enterprise aiming to upgrade production capabilities, understanding the regulatory landscape is crucial for compliance and successful implementation.
The Technology Transfer Agreement Nepal legal framework is established through multiple statutory instruments:
| Law/Regulation | Year | Key Provisions |
|---|---|---|
| Foreign Investment and Technology Transfer Act (FITTA) | 2019 (2075 BS) | Primary legislation defining technology transfer, approval mechanisms, and royalty repatriation |
| Foreign Investment and Technology Transfer Regulations | 2021 (2077 BS) | Detailed procedural guidelines and royalty caps |
| Industrial Enterprises Act | 2020 (2076 BS) | Industry classification and registration requirements |
| Patent, Design and Trademark Act | 2022 (2079 BS) | Intellectual property protection for transferred technology |
| Income Tax Act | 2002 (2058 BS) | Taxation of royalty payments and withholding obligations |
| Foreign Exchange Regulation Act | 1963 (2019 BS) | Foreign currency repatriation procedures |
On 31 March 2025, Nepal amended FITTA through the Act Relating to Improving Economic and Business Environment and Enhancing Investment 2081 (2025), introducing prior approval requirements for foreign investor equity transfers. While technology transfer agreements remain governed by existing FITTA provisions, investors must now navigate enhanced scrutiny on ownership changes .
Under Nepalese law, Technology Transfer encompasses:
| Authority | Jurisdiction | Contact/Location |
|---|---|---|
| Department of Industry (DOI) | Primary approval authority for all TTAs; royalty rate determination | Singha Durbar, Kathmandu |
| Investment Board Nepal (IBN) | TTAs associated with investments exceeding NPR 6 billion | Kathmandu |
| Nepal Rastra Bank (NRB) | Foreign exchange approval for royalty repatriation | Central Office, Kathmandu |
| Inland Revenue Department (IRD) | Tax clearance and withholding tax administration | Regional offices nationwide |
| Office of Company Registrar (OCR) | Company compliance verification | Kathmandu |
| Department of Intellectual Property | Patent/trademark registration associated with TT | Kathmandu |
FITTA mandates a One-Stop Service Center mechanism at DOI to streamline approval processes, though full operational effectiveness depends on specific government notifications .
| Element | Details |
|---|---|
| What | Legal contract transferring technical knowledge, IP rights, or specialized expertise from foreign entities to Nepali industries |
| Who | Foreign investors (individuals, companies, NRNs, international agencies) and Nepali-registered industries |
| When | Required when foreign technology, know-how, or technical services are provided to Nepali enterprises without equity investment |
| Where | Administered through Department of Industry, Kathmandu; applicable nationwide for registered industries |
| Why | To facilitate technology acquisition, industrial modernization, and foreign knowledge transfer while regulating royalty outflows |
| How | Through formal agreement submission, DOI approval, NRB registration, and ongoing compliance reporting |
Technology transfer is prohibited in:
| Document Category | Specific Requirements |
|---|---|
| Company Documents | Memorandum and Articles of Association; Company registration certificate from OCR; Board resolution authorizing TTA |
| Industry Registration | Valid industrial enterprise registration certificate from DOI |
| Agreement Documents | Draft Technology Transfer Agreement (bilingual: English/Nepali); Technical specifications of transferred technology |
| Ownership Proof | Patent certificates, trademark registrations, or documentation proving foreign provider's ownership rights |
| Financial Documents | Audited financial statements (last 3 years); Tax clearance certificate; Bank solvency certificate |
| Identity Documents | Passport copies of foreign signatories; Citizenship certificates of Nepali representatives; Authorized signatory proof |
| Project Reports | Technology implementation plan; Expected production/sales capacity analysis; Training program outline |
| Additional | Power of Attorney (if applicable); Previous TTA compliance reports (for renewals) |
| Fee Type | Amount (NPR) | Notes |
|---|---|---|
| DOI Application Fee | 5,000 - 15,000 | Based on technology value and complexity |
| Processing Fee | 10,000 - 25,000 | Variable by industry sector |
| Registration Fee | 5,000 | One-time upon approval |
| Renewal Fee | 3,000 - 10,000 | Every 5 years or as specified |
| Late Penalty | 1,000/day | For delayed compliance reporting |
| Service | Estimated Cost (NPR) |
|---|---|
| Legal drafting and review | 50,000 - 150,000 |
| Translation services | 15,000 - 30,000 |
| Financial audit (if required) | 40,000 - 100,000 |
| Patent/trademark registration | 25,000 - 75,000 |
Initial Approval: NPR 125,000 - 300,000 (excluding technology valuation costs)
Annual Compliance: NPR 50,000 - 100,000
| Stage | Duration | Cumulative Timeline |
|---|---|---|
| Document preparation | 2-4 weeks | Week 0-4 |
| DOI application review | 7 days | Week 4-5 |
| Technical evaluation | 5-10 days | Week 5-7 |
| Inter-departmental clearance | 3-5 days | Week 7-8 |
| Final approval issuance | 2-3 days | Week 8 |
| NRB registration | 3-5 days | Week 8-9 |
Total Standard Timeline: 8-10 weeks from document readiness to full operational approval
Under FITTA Section 15(2), DOI must provide approval within 7 days of complete application submission, though practical timelines often extend due to verification requirements .
| Payment Type | Maximum Allowable Rate | Basis |
|---|---|---|
| Domestic sales | 3-5% of net sales | Industry-specific DOI determination |
| Export sales | 5-8% of net export value | Higher rates permitted for export-oriented tech |
| Lump-sum payments | Case-by-case approval | Subject to DOI discretion |
| Important: Alcohol/liquor industries capped at 5% regardless of export status |
A Technology Transfer Agreement is a legal contract where foreign entities transfer technical knowledge, patents, trademarks, or expertise to Nepali companies under Foreign Investment and Technology Transfer Act 2019, requiring DOI approval and enabling royalty repatriation.
Yes, prior approval from the Department of Industry (DOI) is absolutely mandatory under Section 7 of FITTA 2019. Without approval, royalty payments cannot be legally remitted abroad.
Royalty rates are capped at 3-5% of net sales for domestic products and 5-8% for exports, with alcohol industries restricted to 5% maximum. Specific rates are determined by DOI based on technology type.
Standard processing takes 8-10 weeks, though FITTA mandates 7-day approval for complete applications. Practical timelines vary based on document quality and inter-departmental coordination.
Yes, TTAs can be renewed indefinitely subject to 90-day advance application, compliance history review, and continued technology relevance. Initial approvals typically span 5 years.
Required documents include company registration, industry license, draft agreement, technical specifications, ownership proof, financial statements (3 years), tax clearance, and board resolutions.
No, technology transfer can occur without equity investment. However, associated FDI requires minimum NPR 20 million investment per FITTA regulations.
Nepal Rastra Bank (NRB) approves foreign currency repatriation for royalties after DOI approval of the underlying technology transfer agreement.
Expired agreements lose legal validity; continuing royalty payments without valid approval constitutes foreign exchange violation subject to penalties under Foreign Exchange Regulation Act.
Yes, Nepali companies may hold multiple TTAs, but aggregate royalty repatriation cannot exceed statutory caps regardless of agreement count.
Yes, FITTA 2019 explicitly includes information technology services, digital data processing, and software licensing within technology transfer definition.
Royalty payments attract withholding tax at 5-15% depending on applicable double taxation avoidance agreements (DTAAs) between Nepal and the foreign provider's country.
Submit amendment application to DOI with rationale for changes, revised terms, and updated documentation. Approval required before implementing modifications.
Yes, foreign individuals, NRNs, and international agencies qualify as foreign investors under FITTA Section 2(k) and can execute TTAs.
Technology transfer is barred in agriculture, small cottage industries, personal services, arms production, real estate trading, retail, and mass media sectors.
Navigating Nepal's technology transfer regulatory landscape requires specialized expertise that spans corporate law, foreign investment regulations, intellectual property rights, and tax compliance. Attorney Nepal PVT LTD brings unparalleled experience as Nepal's premier legal service provider for technology transfer agreements.
Our team of senior lawyers has successfully facilitated 150+ technology transfer approvals across manufacturing, IT, pharmaceuticals, and engineering sectors. We maintain direct relationships with Department of Industry officials, ensuring expedited processing and proactive issue resolution.
Services We Provide:
Contact Attorney Nepal PVT LTD today for expert consultation on your technology transfer requirements. Our proven track record ensures your technology acquisition or licensing arrangement achieves full regulatory compliance while maximizing operational flexibility.
The information provided in this blog is for general educational and SEO purposes only and does not constitute legal advice. Technology transfer regulations in Nepal are subject to frequent amendments and administrative interpretations. While every effort has been made to ensure accuracy as of February 2025, readers should verify current requirements with the Department of Industry, Nepal Rastra Bank, or qualified legal counsel before making investment decisions. Attorney Nepal PVT LTD accepts no liability for actions taken based on this content without professional consultation. For specific legal guidance tailored to your technology transfer scenario, please contact our office directly.
February 25, 2026 - BY Admin