The Foreign Investment and Technology Transfer Act, 2019

Type: Act
Year: २०७५ BS · 2019 AD
Status: In force
Category: खण्ड ८: उद्योग, वाणिज्य तथा आपूर्ति · Volume 8: Industry, Commerce and Supply
Official text: Official page Official text (PDF) Official text (PDF)

Used on our issue pages

Jobs and enterprise

Analysis drawn from official reports, court rulings and published research, each cited. Figures are being double-checked against the source documents; corrections are welcome.

What it does

Foreigners, non-resident Nepalis, foreign governments and international bodies may invest in any industry except those on the Act's 'negative list'. The list includes primary agriculture (other than large export-oriented industries), micro and cottage enterprises, personal services, arms and nuclear materials, real-estate trading, retail trade, travel agencies, trekking guides and homestays, mass media, and certain professional services; ride-sharing is closed above 70 per cent foreign ownership and airlines above set ceilings (80 per cent for international and 49 per cent for domestic airlines). The government may fix a minimum amount for foreign investment by notice in the Gazette.विदेशी व्यक्ति, गैरआवासीय नेपाली, विदेशी सरकार र अन्तर्राष्ट्रिय संस्थाले ऐनको अनुसूचीमा रहेका ('निषेधित सूची') उद्योगबाहेक जुनसुकै उद्योगमा लगानी गर्न सक्छन्। सूचीमा ठूला निर्यातमूलक उद्योगबाहेकका प्राथमिक कृषि, लघु तथा घरेलु उद्यम, व्यक्तिगत सेवा, हातहतियार र आणविक सामग्री, घरजग्गा खरिदबिक्री, खुद्रा व्यापार, ट्राभल एजेन्सी, ट्रेकिङ पथप्रदर्शक र होमस्टे, आमसञ्चार र केही पेसागत सेवा छन्; सत्तरी प्रतिशतभन्दा बढी विदेशी लगानीको राइड सेयरिङ र तोकिएको सीमाभन्दा बढी विदेशी लगानीका वायुसेवा (अन्तर्राष्ट्रियमा ८० र आन्तरिकमा ४९ प्रतिशत) पनि बन्द छन्। विदेशी लगानीको न्यूनतम रकम सरकारले राजपत्रमा सूचना प्रकाशन गरी तोक्न सक्छ। Nepal Law Commission, Government of Nepal Sections 2(ta) and 3, pp. 4–5; Schedule (as amended by Gazette notice 2077/09/20 and the 2081 amendment Acts), pp. 29–30
Foreign investment can take many forms: shares, reinvested dividends, machinery, lease financing, venture capital funds, units of specialised investment funds, shares bought on the secondary market by registered institutional investors, technology transfer, and loans from foreign financial institutions with Nepal Rastra Bank approval. Foreign lenders may now take Nepali immovable property as collateral. There is no general cap on the share of foreign ownership, though limits can be set for service industries within Nepal's WTO commitments.विदेशी लगानी विभिन्न रूपमा गर्न सकिन्छ: शेयर, लाभांशको पुनर्लगानी, मेसिन–उपकरणमार्फत शेयर, लिज लगानी, पूँजी लगानी कोष, विशिष्टीकृत लगानी कोषका इकाई, धितोपत्र बोर्डमा दर्ता भएका संस्थागत लगानीकर्ताले दोस्रो बजारबाट किनेका शेयर, प्रविधि हस्तान्तरण, र नेपाल राष्ट्र बैंकको स्वीकृतिमा विदेशी वित्तीय संस्थाबाट लिइने ऋण। विदेशी ऋणदातालाई नेपालको अचल सम्पत्ति धितो दिन सकिने व्यवस्था पनि थपिएको छ। विदेशी स्वामित्वको अधिकतम सीमा सामान्यतया तोकिँदैन, तर सेवा उद्योगमा विश्व व्यापार संगठनमा गरेको प्रतिबद्धताभन्दा कम नहुने गरी सीमा तोक्न सकिन्छ। Nepal Law Commission, Government of Nepal Section 2(ña), pp. 3–4; Sections 4–12, pp. 4–8; Section 13, p. 8
Investors apply to the Department of Industry, which must approve a complete application within seven days or give written reasons for refusal within seven days; refusals can be reviewed by the Ministry within 30 days. Investment by non-resident Nepalis (under the Non-Resident Nepali Act) needs only notification to the Department. The approved amount must be brought in through the banking system after informing Nepal Rastra Bank, and an approval lapses if no money comes in within two years without good reason. Changes in ownership must be reported within 30 days.लगानीकर्ताले उद्योग विभागमा निवेदन दिनुपर्छ; कागजात पुगेमा विभागले सात दिनभित्र स्वीकृति दिनुपर्छ, नत्र सात दिनभित्र कारणसहित लिखित जानकारी दिनुपर्छ, र त्यस्तो निर्णयउपर मन्त्रालयले तीस दिनभित्र पुनरावलोकन गर्छ। गैरआवासीय नेपालीको लगानीमा विभागलाई जानकारी दिए पुग्छ। स्वीकृत रकम नेपाल राष्ट्र बैंकलाई जानकारी दिएर बैंकिङ प्रणालीमार्फत ल्याउनुपर्छ, र मनासिब कारणबिना दुई वर्षभित्र लगानी भित्र्याउन सुरु नगरे स्वीकृति स्वतः निष्क्रिय हुन्छ। स्वामित्वमा परिवर्तन भए तीस दिनभित्र जानकारी दिनुपर्छ। Nepal Law Commission, Government of Nepal Sections 15–17, pp. 9–11; Section 19, pp. 11–12; Section 43, p. 26
Investors may take home sale proceeds, profits and dividends, liquidation proceeds, royalties and lease rent after paying tax; the approving body must decide within seven days and Nepal Rastra Bank then provides the foreign exchange. Royalties for trademarks used by alcohol industries (other than those exporting all output) are capped at 5 per cent of sales. Foreign-invested industries get national treatment, may not be nationalised, and may be acquired only for a public purpose by due process; incentives granted earlier cannot be cut to an investor's disadvantage.लगानीकर्ताले कर तिरेपछि शेयर बिक्री रकम, मुनाफा र लाभांश, खारेजीपछि बाँकी रकम, रोयल्टी र लिज भाडा फिर्ता लैजान पाउँछन्; स्वीकृत गर्ने निकायले सात दिनभित्र निर्णय गर्नुपर्छ र त्यसपछि नेपाल राष्ट्र बैंकले विदेशी मुद्रा उपलब्ध गराउँछ। शतप्रतिशत निर्यात गर्नेबाहेकका मदिराजन्य उद्योगले ट्रेडमार्क प्रयोगबापत लैजाने रोयल्टी बिक्री मूल्यको पाँच प्रतिशतभन्दा बढी हुँदैन। विदेशी लगानीका उद्योगले राष्ट्रिय व्यवहार पाउँछन्, तिनको राष्ट्रियकरण गरिँदैन र सार्वजनिक प्रयोजनबाहेक अधिग्रहण गरिँदैन; पहिले दिइएका सुविधा लगानीकर्तालाई मर्का पर्ने गरी घटाइँदैन। Nepal Law Commission, Government of Nepal Section 20, pp. 12–15; Sections 32–34, pp. 21–23
Disputes between Nepali and foreign investors go first to negotiation facilitated by the Department; if unresolved in 45 days they follow the parties' agreement, or else arbitration under UNCITRAL rules held in Nepal under Nepali law. The government may offer company registration, industry registration and investment approval through an automatic route, and services are to be delivered through the One-Stop Service Centre. Foreign investment in industries registered by a province also needs the Department's approval. The Act was amended in 2080 and twice in 2081.नेपाली र विदेशी लगानीकर्ताबीचको विवाद पहिले विभागको सहजीकरणमा छलफलबाट सुल्झाउने प्रयास गरिन्छ; ४५ दिनभित्र नटुङ्गिए पक्षहरूबीचको सम्झौताअनुसार, नभए अनसिट्रालका नियमअनुसार नेपालमै नेपाली कानूनबमोजिम मध्यस्थताबाट समाधान गरिन्छ। सरकारले कम्पनी दर्ता, उद्योग दर्ता र विदेशी लगानी स्वीकृति स्वचालित मार्गबाट दिन सक्छ, र सेवा एकल बिन्दु सेवा केन्द्रबाट दिइन्छ। प्रदेशमा दर्ता भएका उद्योगमा विदेशी लगानी गर्दा पनि विभागको स्वीकृति चाहिन्छ। ऐन २०८० मा एक पटक र २०८१ मा दुई पटक संशोधन भएको छ। Nepal Law Commission, Government of Nepal Section 40, pp. 25–26; Sections 23 and 42, pp. 17 and 26; Section 48, p. 28; title page, p. 1

Gaps, loopholes and improvement ideas

Not enforced Most approved foreign investment never arrives. The Act lets an approval lapse if no money comes in within two years. The Department's records show that in 2081/82 investment of Rs 79.69 billion from 1,009 investors was approved but only Rs 11.31 billion (14 per cent) arrived, from 97 investors; in 2080/81 the figures were Rs 81.69 billion approved for 319 investors and Rs 10.29 billion (13 per cent) received from 105. The Auditor General noted the share received has been falling and that over 2079/80–2081/82 outflows recorded by the Department (Rs 78.76 billion) exceeded inflows (Rs 30.81 billion). The High-Level Economic Reform Commission reported that FDI has averaged only 0.22 per cent of GDP over three and a half decades.स्वीकृत भएको विदेशी लगानीको ठूलो हिस्सा भित्रिँदैन। ऐनले दुई वर्षभित्र लगानी नभित्रिए स्वीकृति निष्क्रिय हुने व्यवस्था गरेको छ। विभागको अभिलेखअनुसार २०८१/८२ मा १,००९ लगानीकर्ताको रु. ७९ अर्ब ६९ करोड लगानी स्वीकृत भएकोमा ९७ लगानीकर्ताबाट रु. ११ अर्ब ३० करोड (१४ प्रतिशत) मात्र भित्रियो; २०८०/८१ मा ३१९ लगानीकर्ताको रु. ८१ अर्ब ६९ करोड स्वीकृत भएकोमा १०५ बाट रु. १० अर्ब २९ करोड (१३ प्रतिशत) भित्रियो। महालेखापरीक्षकले प्राप्तिको अनुपात घट्दै गएको र २०७९/८० देखि २०८१/८२ सम्म विभागको अभिलेखमा भित्रिएको रु. ३० अर्ब ८१ करोडभन्दा बाहिरिएको रकम (रु. ७८ अर्ब ७६ करोड) बढी देखिएको उल्लेख गरेको छ। उच्चस्तरीय आर्थिक सुधार सुझाव आयोगका अनुसार साढे तीन दशकमा प्रत्यक्ष वैदेशिक लगानी औसतमा कुल गार्हस्थ्य उत्पादनको ०.२२ प्रतिशत मात्र छ। Office of the Auditor General, Nepal · Office of the Auditor General, Nepal OAG 63rd Annual Report, MoICS chapter, paras 17–18, printed pp. 185–186 (PDF pp. 217–218); OAG 62nd Annual Report, MoICS chapter, paras 16–17, printed pp. 191–192 (PDF pp. 221–222); HLERC report para 77, printed p. 28 (PDF p. 95); FITTA ss. 18 and 43, pp. 11 and 26
Loophole Share sales to foreign buyers have been approved at different prices on the same day. The Auditor General found that the authorities consented to one company selling 15,000 shares at Rs 433.33 and 135,000 shares at Rs 100, and to another selling 25,000 shares at Rs 485 and 175,000 at Rs 100, to foreign entities. It asked for the legal basis for approving one company's shares at different prices on the same date to be established, together with the effect on tax liability (the Income Tax Act requires 15 per cent advance tax on gains from disposing of interests in unlisted entities).एउटै मितिमा फरक–फरक मूल्यमा विदेशी खरिदकर्तालाई शेयर बिक्रीको सहमति दिइएको पाइएको छ। महालेखापरीक्षकका अनुसार एक कम्पनीलाई १५ हजार कित्ता शेयर रु. ४३३.३३ मा र १ लाख ३५ हजार कित्ता रु. १०० मा, र अर्को कम्पनीलाई २५ हजार कित्ता रु. ४८५ मा र १ लाख ७५ हजार कित्ता रु. १०० मा विदेशी निकायलाई बिक्री गर्न सहमति दिइयो। एउटै कम्पनीको शेयर एउटै मितिमा फरक दरमा बिक्री गर्न दिने कानूनी आधार, कारोबारको यथार्थता र कर दायित्वमा परेको असर यकिन गर्न भनिएको छ (आयकर ऐनअनुसार सूचीकृत नभएका निकायको हित निःसर्गबाट भएको लाभमा १५ प्रतिशत अग्रिम कर कट्टी गर्नुपर्छ)। Office of the Auditor General, Nepal · Nepal Law Commission, Government of Nepal OAG 62nd Annual Report, MoICS chapter, Department of Industry para 20, printed p. 193 (PDF p. 223); FITTA s. 19, pp. 11–12
Unclear The Act does not cover Nepali companies raising equity abroad. The High-Level Economic Reform Commission notes that Nepali companies cannot make share offerings on foreign capital markets, and that although the Act lets foreigners invest directly in approved sectors, it does not define a Nepali company's sale of equity instruments abroad as foreign investment, even though such issues bring in foreign currency and work like foreign investment.नेपाली कम्पनीले विदेशमा शेयर जारी गर्ने विषय ऐनले समेटेको छैन। उच्चस्तरीय आर्थिक सुधार सुझाव आयोगका अनुसार नेपाली कम्पनीले विकसित पूँजी बजारमा शेयरको प्राथमिक निष्कासन गर्न पाउँदैनन्, र ऐनले स्वीकृत क्षेत्रमा विदेशीलाई प्रत्यक्ष लगानी गर्न दिए पनि नेपाली कम्पनीले विदेशी पूँजी बजारमा इक्विटी उपकरण बिक्री गर्दा त्यसलाई विदेशी लगानीका रूपमा परिभाषित गरेको छैन, यद्यपि त्यसबाट विदेशी मुद्रा भित्रिन्छ र त्यो विदेशी लगानीसरह हुन्छ। High-Level Economic Reform Commission (उच्चस्तरीय आर्थिक सुधार सुझाव आयोग), submitted to the Ministry of Finance · Nepal Law Commission, Government of Nepal HLERC report, chapter on access to international capital markets, paras 3–4, printed p. 155 (PDF p. 222); FITTA s. 2(ña) and s. 11, pp. 3–8

Ideas to fix it

Make arrangements so that approved foreign investment is actually brought in as committed.प्रतिबद्धताअनुसार स्वीकृत विदेशी लगानी भित्रिने व्यवस्था मिलाउने। Proposed by: Office of the Auditor General (62nd and 63rd Annual Reports) Office of the Auditor General, Nepal · Office of the Auditor General, Nepal
Establish the legal basis, the genuineness of the transactions and the tax effect where one company's shares were approved for sale to foreign entities at different prices on the same date.एउटै कम्पनीको शेयर एउटै मितिमा फरक दरमा विदेशी निकायलाई बिक्री गर्न दिइएको सहमतिको कानूनी आधार, कारोबारको यथार्थता र कर दायित्वमा परेको असर यकिन गर्ने। Proposed by: Office of the Auditor General (62nd Annual Report) Office of the Auditor General, Nepal
Allow non-resident Nepalis to trade on the secondary market individually, using their NRN identity card, by amending Sections 9 and 10 so that they do not have to set up a capital investment fund.दफा ९ र १० परिमार्जन गरी गैरआवासीय नेपालीलाई पूँजी लगानी कोष खडा नगरी गैरआवासीय नेपाली परिचयपत्रका आधारमा व्यक्तिगत रूपमै दोस्रो बजारमा कारोबार गर्न दिने। Proposed by: High-Level Economic Reform Commission (2081) High-Level Economic Reform Commission (उच्चस्तरीय आर्थिक सुधार सुझाव आयोग), submitted to the Ministry of Finance
For hydropower, remove the multiple layers of foreign-investment approval so that a single agency gives all permissions, and make it easier for companies with foreign investors to set up and to repatriate profits after tax, while encouraging reinvestment in Nepal.जलविद्युत्‌मा विदेशी लगानी स्वीकृतिका बहुचरण हटाई एउटै निकायबाट सबै अनुमति दिने, विदेशी लगानीकर्ता संलग्न कम्पनी खोल्न र कर तिरेपछिको नाफा फिर्ता लैजान थप सहज बनाउने, साथै देशभित्रै मुनाफा पुनर्लगानी गर्न प्रोत्साहन गर्ने। Proposed by: High-Level Economic Reform Commission (2081), hydropower chapter High-Level Economic Reform Commission (उच्चस्तरीय आर्थिक सुधार सुझाव आयोग), submitted to the Ministry of Finance

In research

Where it conflicts with other laws

Provisions that overlap or contradict other laws, or the Constitution, with the conflicting sections side by side.

Regulations and rules made under it

Suggest an improvement or point out a loophole

विदेशी लगानी तथा प्रविधि हस्तान्तरण ऐन, २०७५