FDI in Nepal is the process of investing in Nepal by foreigner which is guided by the foreign investment and technology transfer act 2019. The department of investment (DOI), the Nepal Rastra Bank, Nepal Investment Board, Office of Company registrar, and Inland revenue department are the governmental bodies that handle the foreign direct investment approval process in Nepal.
According to UNCATD Foreign direct investment (FDI) is defined as an investment involving a long- term relationship and reflecting a lasting interest and control by a resident entity in one economy. FDI process of investing in foreign country under the domestic economy of the foreign nation. Foreign direct investment is also known as foreign private investment in majority of European countries.
The foreign investment in Nepal is approved, regulated and administered by Foreign Investment and Technology TransferAct (FITTA) 2019 and the Industrial Enterprise Act (IEA) 2020.
The main sole body that involves in the approval of FDI In Nepal is the department of industry (DOI). And it implements all the laws relating to FDI in Nepal.
Finding a good and professional corporate lawyer is the most important part while considering investing in Nepal. Law firms like Attorney Nepal have been serving foreign clients from decade long. Law Firm in Nepal practicing FDI will help foreigner in the following-
- Investment consultation
- Preparation of required documents for FDI in Nepal
- Company registration and Tax office Liasson processing.
- Business visa application and approval
- Injection of investment with collaboration with Nepal Rastra Bank.
The most important documents for FDI approval process in Nepal are:
1. Copy of passport
2. Financial credibility certificate for the investors home country bank.
3. Project report and financial report for the investment in Nepal.
4. If there is Nepali investor also, then Citizenship and NID of the shareholder.
5. Schedule for investment in the industry.
6. Power of attorney
7. Joint venture agreement if there are more than two investor or investor from two different country.
After all the document are gathered the formal process of submission of the document for FDI approval in Nepal is taken forward. The FC, project report are uploaded to DOI’s official website and creation of investor profile is done. The automatic route FDI can be done for investment less than 10 million Nepali rupees which include ICT company in Nepal.
The department has the sole discretion to approval and disapproves investment. Some of the common reason for disapproval of FDI in Nepal are:
1. Investing in prohibited sector as mentioned in the FITTA like:
- Poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds, milk industry and other sectors of primary agro-production;
· Cottage and small industries;
· Personal service business (hair cutting, tailoring, driving etc.);
· Industries manufacturing arms, ammunition, bullets and shell, gunpowder or explosives, and nuclear, biological and chemical (N.B.C.) weapons; industries producing atomic energy and radio-active materials;
· Real estate business (excluding construction industries), retail business, internal courier service, local catering service, moneychanger, remittance service
· Travel agency, guide involved in tourism, trekking and mountaineering guide, rural tourism including homestay;
· Business of mass communication media (newspaper, radio, television and online news) and motion picture of national language;
· Management, account, engineering, legal consultancy service and language training, music training, and computer training; and
· Consultancy services having foreign investment of more than fifty-one percent.
2. Inability to bring strong financial credibility certificate.
3. Inappropriate project report and financial projection.
4. Problem in the joint venture agreement.
After the FDI approval is granted from the DOI, the foreign company can be registered in Nepal in the office of company registrar.
The process of foreign company registration in Nepal are:
- Step- 1: Name reservation of the company through camis.cor.gov.np
- Step- 2: Preparation of MOA and AOA
- Step- 3: Director signature in MOA and AOA
- Step- 4: Document upload and approval from the OCR portal.
- Step-5: Payment of government fess according to the paid-up capital.
- Step-6: Obtaining company registration certificate.
After the company is registered the tax registration must be done in the Inland revenue department. This task must be done physically because it involves Biometric process, corporate law firm help you in this because there may be language barrier in the IRD in Nepal.
Documents required for Pan registration in Nepal:
1. Pan form
2. Letter of Pan
This article is for general informational purposes only and does not constitute legal advice. For advice on your specific situation, please contact Attorney Nepal directly.
