Act made to provide for matters relating to foreign investment
and technology transfer
Published in Nepal Gazette
12 November 1992 (049/7127)
First Amendment Published
in Nepal Gazette 24 January 1996 (052/10/10)
Whereas, in the process of industrialization
of the country, ~it is expedient to promote foreign investment
and technology transfer for making the economy viable, dynamic
and competitive through the maximum mobilization of the
limited capital, human and the other natural resources,
Be it enacted by Parliament in the twenty
first year of the reign of His Majesty King Birendra
Bir Bikram Shah Dev.
- Short Title and Commencement:
This Act may be called "The Foreign
Investment And Technology Transfer Act, 1992.
It shall come into force at
Unless the subject or context otherwise
requires, in this Act :
- "Industry" means any industry
as referred to in Section 3 of the Industrial
Enterprises Act, 1992.
- "Foreign Investment" means
the following investment made by a foreign investor
in any industry:
- Investment in share (Equity),
- Reinvestment of the earnings
derived from the investment as referred to in sub-section
- Investment made in the form of
loan or 10an facilities.
- "Technology Transfer" means
any transfer of technology to be made under an agreement
between an industry and a foreign investor on the
following matters:1. Use of any technological right,
specialization; formula, process, patent or technical
know how of foreign origin. 2 Use of any trademark
of foreign ownership. 3. Acquiring any foreign technical,
consultancy, management and marketing service.
- "Foreign Investor" means
any foreign individual, firm, company or corporate
body involved in foreign investment or technology
transfer including foreign government or international
- "Board" means the Industrial
Promotion Board constituted under Section 12 of the
Industrial Enterprises Act, 1992.
- "Department" means the Department
of Industries or Department of Cottage and Small Industries
of His Majesty's Government or any other department,
omce or agency as specified by His Majesty's Government.
- "Prescribed" or "As prescribed
" means prescribed or as prescribed in rules made
under this Act or in an order issued by His Majesty's
Government by notification published in the Nepal
- Permission to be Obtained:
- Permission of the Department shall
be required to be obtained for foreign investment
or technology transfer.
- A person desiring to avail the
foreign investment or technology transfer shall be
required to make an application to the Department
in the prescribed form along with the prescribed particulars
for obtaining permission in that behalf.
- * If an application is made
pursuant to sub-section (2) above, the Department
shall~ in the case of an industry with fixed assets
up to five hundred million rupees, itself, and in
the case of an industry with fixed assets in excess
"hereof, in accordance with the decision of the Board,
grant permission within thiny days from the date of
application. The Department shall communicate the
decision made in regard to such permission to the
- * Notwithstanding
anything contained in sub-sections (1) and (2) above,
no permission shall be granted for making foreign
investment in the industries set forth in the Annex.
Provided that permission may be
granted for the transfer of technology in such industries.
- Facilities and Concessions:
- ** No income tax shall
be imposed to a foreign investor on the interest income
earned from foreign loan.
* 1 a) A foreign investor shall
be levied income tax at a rate of fifteen percent
only, on the income earned from foreign technical
as well as management service fees and royalty.
- A foreign investor making
investment in foreign currency shall be entitled to
repatriate the following amount outside the Kingdom
- The amount received by the
sale of the share of foreign investment as a whole
or any part thereof,
- The amount received as profit
or dividend in lieu of the foreign investment,
- The amount received as the
payment of the principal of, and interest on,
any foreign loan.
- A foreign investor shall be entitled
to repatriate outside the Kingdom of Nepal the amount
received under an agreement for the transfer of technology
in such currency as set forth in the concerned agreement.
- Provisions Relating to Visa:
- A foreign national visiting the
Kingdom of Nepal in connection with undertaking any
study or carrying out any research with the objective
of making investment in the Kingdom of Nepal shall
be provided a non tourist visa for up to six months.
- ** A foreign investor
or dependent family or authorized representative of
such a foreign investor, and dependent family of such
authorized representative shall for the purpose of
stay in the Kingdom of Nepal be provided a business
visa until the foreign investment is retained.
Provided that a foreign investor
who, at a time, makes investment in an amount no
fees than one hundred thousand United States dollar
or in convertible foreign currency equivalent "hereto,
and his dependent family shall be granted a residential
visa until such investment is retained.
- Settlement of Disputes:
- If any dispute arises between a
foreign investor, national investor or the concerned
industry, the concerned parties shall be required
to settle the dispute by mutual consultations in the
presence of the Department.
- If the dispute could not be settled
in the manner as referred to in sub-section ( I )
above, it shall be settled by arbitration in accordance
with the prevailing arbitration rules of the United
Nations Commission on International Trade Law (UNCITRAL).
- The arbitration shall be held in
Kathmandu. The laws of Nepal shall be applicable in
- * Notwithstanding anything
contained in sub-sections (1), (2) and (3) above,
disputes arising in regard to foreign investment made
in the industries with investment as prescribed may
be settled as mentioned in the foreign investment
- Power to Frame Rules:
His Majesty's Government may frame
necessary rules for carrying out the objectives of this
- This Act to Prevail:
Notwithstanding anything contained
in the existing laws, matters stipulated under this
Act and rules made "hereunder shall be dealt accordingly.
*9A. Power to Make Alteration or Amendment
His Majesty's Government may, by notification
in the Nepal Gazette, make necessary alterations or
amendments in Part (B) of the Annex.
- Repeal and Savings:
- The Foreign Investment and Technology
Act, 1981 is hereby repealed.
- All acts performed or actions taken
under the Foreign Investment and Technology Act, 1981
shall be deemed to have been performed or taken under
**Amended by the First Amendment
#Repealed by the First Amendment
* Inserted by the First Amendment
Relating to sub-section (4) of Section
(3)]Industries not to be granted permission for making foreign
- Cottage Industries
- Personal Service Business (Business
such as Hair Cutting, Beauty Parlor, Tailoring, Driving
- Arms and Ammunition Industries.
- Explosives, Gunpowder
- Industries related to Radioactive Materials
- Real Estate Business (Excluding Construction
- Modon Pictures Business (Produced in
national languages and the language of the pation).
- Security Printing.
- Currencies and Coinage Business.
- Retail Business.
- Travel Agency.
- Trekking Agency.
- Water Rafting.
- Pony Trekking.
- Horse Riding.
- Cigarette, Bidi (Tobacco), Alcohol
(excluding those exporting more than 90%).
- Internal Courier Service.
- Atomic Energy.
- Tourist Lodging.
- Poultry Farming.
- Consultancy Services such as Management,
Accounting, Engineering and Legal Services.
of Industries, Commerce and Suppies, Export Promotion Board