The process of Foreign Direct Investment (FDI) in Nepal was streamlined with the implementation of the Foreign Investment and Technology Transfer Act (FITTA) on March 27, 2019. FDI is a welcome venture in Nepal, allowing foreign entities to acquire stakes in Nepalese companies through equity shares, joint ventures, and technology partnerships. This type of investment typically involves the purchase of productive assets like factories and land, signifying a step towards economic globalization.
Table of Contents
1. Eligibility for Foreign Investors
2. Opportunities for Foreign Investment
3. Step-by-Step Guide to Foreign Investment in Nepal
# Eligibility for Foreign Investors
Understanding who qualifies to invest in Nepal is essential. According to Section 2(k) of FITTA 2019, the following entities are eligible:
– Any individual from abroad
– Foreign firms, both incorporated and unincorporated
– Foreign corporations
– Non-resident Nepalis
– Governments of other countries
– Foreign institutional investors, including international agencies and similar corporate bodies, along with their ultimate beneficiaries
# Opportunities for Foreign Investment
Section 2(j) of FITTA 2019 outlines the forms of foreign investment, which include:
– Acquiring shares with foreign currency
– Reinvesting dividends from shares or foreign currency in an industry
– Providing lease financing, particularly for airlines
– Contributing to venture capital funds
– Purchasing securities on the secondary market
– Buying shares or assets of Nepalese companies
# Step-by-Step Guide to Foreign Investment in Nepal
1. Initial Approval: The Department of Industry oversees foreign investments. Investments below $6 billion are approved by the Department, while larger investments require the Investment Board’s nod, as per Section 17 of FITTA.
2. Documentation and Registration: Post-approval, the next steps involve drafting the company’s foundational documents and registering with the Office of the Company Registrar.
3. Tax Registration: Subsequent to company registration, tax registration is mandatory, necessitating the submission of company and other pertinent documents.
4. Local Governance Registration: The company must also register with the local Municipality or Rural Municipality as per the Local Governance Act 2074.
5. Local Authority Recommendation: A recommendation from the local authority is needed for Department of Industry registration.
6. Industry Registration: The final step is registering the industry with the Department of Industry.
7. Verification of Investment Legitimacy: According to Section 16 of FITTA 2019, investors must declare the legitimacy of their investments. Compliance with Nepal Rastra Bank’s regulations is essential to ensure the lawful inflow of foreign capital.
We have a proven track record of aiding foreign investors in setting up operations in Nepal. Their portfolio includes support for multinational companies and individuals in establishing a business presence, in Nepal. They are actively engaged in numerous FDI initiatives within Nepal.
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