The Government of Nepal may, without prejudice to this Act and the generality to the Regulation framed under this Act, make and enforce necessary Directives, Procedures or Standards. Non-business visa, i. Are business visas or work permits available? The Ministry shall make a decision on such an application within thirty working days. What approvals are required? Freedom on dispute settlement mechanism: The FITTA provides the freedom to parties to enter into an agreement for settlement of dispute.
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Tax is technolgy at regular tax rates for the technllogy on the amount of gain considered recognized. Purchasers of real property interests are required to withhold tax on payment for the property. FIRPTA overrides most nonrecognition provisions as well as those remaining tax treaties that provide exemption from tax for such gains. The United States tax law requires all people, whether foreign or domestic, to pay income tax on dispositions of interests in U. Domestic persons are subject to this tax as part of their regular income tax. Foreign people are taxed only on certain items of income, including effectively connected income and certain U. Foreign persons, however, are not taxed on most capital gains.
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The Act was published in the Nepal Gazette and has become effective from 27 March The FITTA provides that the minimum cap for equity amount of foreign investment would be as prescribed. Foreign Investment and its forms. Foreign Investor: The definition of foreign investor has included Non-resident Nepali along with foreign person, firm, company, government as well as international institutions. Thus, investment made by a Non-resident Nepali will also be regarded as foreign investment under the current regime.
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The Act was published in the Nepal Gazette and has become effective from 27 March The FITTA provides that the minimum cap for equity amount of foreign investment would be as prescribed. Foreign Investment and its forms. Foreign Investor: The definition of foreign investor has included Non-resident Nepali along with foreign person, firm, company, government as well as international institutions.
Thus, investment made by a Non-resident Nepali will also be regarded as foreign investment under the current regime. Forms of foreign investment: The Previous Act limited the form of foreign investment to i share tdansfer in foreign currency, ii re-investment of dividends and iii investment made in the form of loan or loan facilities.
In contrast, by listing the following investment as foreign investment, the FITTA has broaden the scope of foreign investment:. Positive List and Negative List: Foreign investment is only allowed in industrial activities and not in trading activities. So, even if a sector is not included in the Negative List, if it is not classified as an industry under the Positive List then foreign investment in such sector is not allowed. Moreover, the FITTA provides for more restrictive regime than the Previous Act as business of mass communication, travel agency, primary sectors of agricultural productions and others have been added in the Negative List.
Besides, the Negative List is applicable in the case of investment and loan, however, it is not applicable in the case of transfer of technology in industry set up with local investment. Maximum limit of foreign investment: FITTA provides that the maximum limit of the amount and proportion of foreign investment is not be determined, except in the following two cases:. Foreign Loan Investment. An industry with foreign investment can take loan from foreign financial institution by way of project loan agreement or project financing agreement.
This is a restrictive regime and there is lack of clarity as to whether foreign loan also covers shareholder loan. Also, it lacks clarity on whether industries without foreign investment can take foreign loan.
Foreign Loan: The FITTA permits- a public company, or b corporate body which is allowed to issue securities to obtain loan by issuing its debentures, bond or other securities in foreign stock exchange market. Escrow Agreement: A foreign investor for the purpose of their foreign investment can enter into a tripartite escrow agreement between their partner investor or another foreign investor and any commercial bank certified by NRB or Infrastructure Development Bank.
As per the separate circular issued by NRB, the bank as a party to the escrow agreement acts as an agent for the parties and will also have right of enforcement. However, it appears that the bank has been treated as a trustee rather than agent with wider enforcement power under the FITTA. Self-help remedy : A foreign investor providing loan to an industry or company against mortgage or collateral of movable or immovable property can auction such transfrr for non-payment of loan for recovering the.
However, such action can be exercised against an industry or company and not against a person. Technology Transfer. Requirements and approval: A foreign investor can invest through technology transfer in any industry incorporated in Nepal.
The terms of technology transfer are to be in accordance to agreement related Technology Transfer. Such agreement needs to be approved from the approving authority for foreign investment. Cap on royalty: The transder exceeding royalty as affixed in technology transfer agreement cannot be repatriated.
Approval based regime for foreign investment. Even though the FITTA provides automatic route, approval based regime will be followed till provision on automatic route is given effect by making regulation. Approving agencies: The table below provides for the type of fechnology investment and approving authority for approval of foreign investment:. Change in ownership structure of company with foreign investment: If any change occurs in the ownership structure tranxfer any company having foreign investment due to transfer of its shares, assets or financial instruments within or outside Nepal, such transaction has to be recorded in the concerned authority approving foreign investment, i.
The FITTA requires such authority to record the transaction only after payment of the technoogy tax arising out of such transaction. Information on change in ownership structure: If there occurs rechnology in ownership structure of a company in Nepal due to change in ownership structure of a holding company outside then such needs to be notified to the approving authority. Timeline for bringing foreign investment: It is a requirement under FITTA that the foreign investment amount has to be brought in Nepal within the prescribed period or within the period of maximum 2 years.
Failure to comply with such requirement without any specific reason can result into ineffectiveness of foreign investment approval. Concession and facilities for industries with foreign investment. An industry with foreign investment is entitled to exemptions, facilities or concessions available under the IEA and other prevailing laws in additions to what has been provided under the FITTA. Moreover, industry with foreign investment is entitled to other facilities such as visa, repatriation, opening of a foreign currency account as well as national treatment.
Such provision was not provided under the Previous Act. Prohibition on nationalization or acquisition. Unless for public purpose, no industry can be acquired directly or indirectly. Constitution of Nepal permits nationalization only for public cause and ibvestment paying reasonable compensation. National treatment. Stabilization provision: The FITTA provides that foreign investment is to be treated in same terms applicable on management, maintenance, utilization, transfer or sale of investment made by Nepalese person, until such investment is transfed in Nepal.
However, previous law is applicable ttransfer foreign investment approval obtained under the previous law and no change in law is to be made without the consent of foreign investor in a manner that is detrimental to any facilities enjoyed by the foreign investor under such law. Provision on Visa. Types of visa: The FITTA clearly lays down eligibility for different types of visa such as non-tourist visa, business visa and residential visa for foreign citizens on foreign investment, which is consistent with the Immigration Laws.
Residential visa: Previously, only a foreign investor and family member of such person were eligible for residential visa. However, in terms of the number of authorized representatives, the FITTA has specifically restricted such privilege to the one authorized representative of the foreign investor.
Nevertheless, FITTA provides such benefit to maximum two people in case the amount exceeds the prescribed investment. Non- tourist visa: The FITTA also provides for non-tourist visa for foreign specialist, technician or voreign employee coming to work in an industry, which was not provided under Previous Act. Eligibility: The FITTA provides that a foreign investor can repatriate all forms of investment in accordance to prevailing laws and after paying all the taxes.
Moreover, residual amount after payment of all liabilities in case of dissolution or liquidation and amount of compensation or damages from final settlement of disputes. Ijvestment investor can repatriate the amount in the same currency of investment or in other convertible foreign currency with approval of NRB.
Repatriation process: Steps for repatriation of foreign investment trajsfer provided in the table investemnt. Inquiry on fulfillment of terms and liabilities under the law. One-Stop Service Mechanism.
Services of one-stop mechanism: Government of Nepal can provide exemptions, facilities, concession or services to foreign investors through One-Stop Service Mechanism. Such services are registration of Industries, various approvals, labor permit, visa service, quality check and control of products produced by industries and. Complaint mechanism. Any complaint against actions of officials looking after matters of industry or One-point Center can be filed before DOI.
Use of Electronic medium. FITTA provides that an approving authority can use electronic medium for approval and other necessary activities. However, in practice, even though electronic medium is used, submission of physical copies is still foreitn.
Sub- contract. Any industry can except for main activity of the industry, sub-contract other activities. Dispute Settlement Mechanism.
Freedom on dispute settlement mechanism: The FITTA provides the freedom transter foreign investment and technology transfer act to enter into an agreement for settlement of dispute. This means that investment agreement can be governed by foreign law and any dispute under such agreement can be submitted to the foreign courts or arbitration.
Two major concerns on dispute settlement: Even though the FITTA provides freedom to parties to enter into an agreement for dispute settlement, there two important concerns that needs to be kept in mind. Notification to approving authority on settlement of dispute: The FITTA does provide for requirement of providing information of settlement of dispute to the approving authority with 15 days of settlement of dispute as per the agreement between the parties, even though the parties are not obliged to provide information of terms agreed.
Sectors of primary agricultural production as well inveztment poultry farming, fisheries and bee-keeping, fruits, vegetable, oil seeds, pulse seeds, milk industry and priority production in agricultural sector. Industry producing arms and ammunitions, bullets and shell, gunpower, explosive materials, nuclear, biological and chemical N. Management, account, engineering, legal consultancy service and language training, music training, computer training;. Download the PDF Version.
Toggle navigation. Foreign Investment and its forms 2. Foreign Loan Investment 3. Technology Transfer 4. Approval based regime for foreign investment 5. Approving agencies: The table below provides for the type of foreign investment and approving authority for approval of foreign investment: S. Concession and facilities for industries with foreign investment An industry with foreign investment is entitled to exemptions, facilities or concessions available under the IEA and other prevailing laws in additions to what has been provided under the FITTA.
Prohibition on nationalization or acquisition The FITTA prohibits nationalization of industry with foreign investment. National treatment 8.
Provision on Visa 9. Repatriation One-Stop Service Mechanism Complaint mechanism Any complaint against actions of officials looking after matters of industry or One-point Center can be filed before DOI.
Use of Electronic medium FITTA provides that an approving authority can use electronic medium for approval and other necessary activities. Sub- contract Any industry can except for main activity of the industry, sub-contract other activities. Dispute Settlement Mechanism Arbitration Act, provides that a foreign arbitral award is enforced in Nepal only doreign i Nepal is party to a treaty related to enforcement of foreign arbitral award, and ii the award is rendered in the territory of the party to that treaty subject to the conditions set out at the time of being party to that treaty.
Moreover, it is also crucial that the dispute between the parties amount to commercial dispute under laws of Nepal as well as there needs to be reciprocity between Nepal and the foreign country for enforcement of foreign arbitral award. It requires bilateral treaty as a condition for enforcement of foreign judgment in Nepal. Nepal has not signed any such treaty with any foreign country.
Diksha Kandel Associate. Narayan Chaulagain Partner. Over 30 years of Premium Legal Services. Type of foreign investment.
The Potential of Technology Transfer — David Allen — TEDxTucsonSalon
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The land that is not subject to such ceiling shall be used only for the same purpose for which it has been purchased. Investors can open Nepali rupees accounts in a licensed bank and financial institution in Nepal. Nepal has not signed any such treaty with any foreign country. Nationalisation or expropriation not to be made:. Provision listing: the database follows the source document style. Approving agencies: The table below provides for the type of foreign investment and approving authority for approval of foreign investment: S. Foreign investment in any industry registered in Province:. However, previous law is applicable for foreign investment approval obtained under the previous law and no change in law is to be made without the consent of foreign investor in a foreign investment and technology transfer act that is detrimental to any facilities enjoyed by the foreign investor under such law. Real estate business excluding construction industriesretail business, internal courier service, local catering service, moneychanger, remittance service. Obvious formatting mistakes have been corrected, inconsistencies in formatting have not been changed.
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