Amending a Few Acts of Nepal to

Facilitate Investment Act of 2080

Prepared by Umesh Rijal, CA

Land Act of 2021 (1964)

• Entities that failed to apply for the upper ceiling of land

(owning and using land exceeding the upper ceiling as
prescribed in the act) may apply to obtain the approval of
the government within 1 year of the commencement of
this act.
• New Provisions:
• The department shall have to maintain a record of the
land (within the ceiling/exceeding the ceiling).
• For one time, entities may sell the land within the
ceiling, if
• It is for the settlement of the loan from the BFIs
or any other liabilities, and
• It is ensured that the employment or production
shall not be reduced, and the operations of the
entity are ensured.
However, this doesn’t mean that, after selling the
land, the remaining land will be within the ceiling.
 Land Act of • Bank and Financial Institutions
(BFIs) and cooperative societies
2021 accepting the collateral in
consideration for the loan
(1964)
This ....cont
is a very welcomed provision,
settlement i.e., Non-Banking
Assets (NBA) shall sell such land
d. their NBAs. It will also
and BFIs will now have to expedite
selling
within 3 years from the date of
accepting the land as NBA. In case
discourage them to accept
collateral and book NBA.
land is not sold within 3 years, the
approval of the government of
Nepal must be obtained.
National Park and
Wildlife Conservation
Act of 2029

• New provision:
• The Government of Nepal may
designate any area of the national
park, or conservation area as a
highly sensitive area.
• The Government of Nepal may
provide approval in the area within
the national park or conservation
area to operate the national pride
projects, national priority projects,
and projects approved by the
Investment Board of Nepal.
It will expedite the
infrastructure development
projects
 • New provision
• Section 16 (3)
Land • Notwithstanding anything
contained in this section, while
Acquisitio determining the compensation
as per this section, the
n Act of maximum ceiling of
compensation shall be up to 3

2034 times the minimum rate

determined for registration.
Electronic
Transaction Act of
2063
• New provisions:
• Section 72 (Ka)
• When an investor requests for the approval of
payment of foreign currency while importing
hardware, software, or computer to be used in a
computer system or computer network, or any
other equipment or services related to the IT, the
IT Department shall recommend for the approval of
foreign exchange facility to NRB as per the
prevailing law.
• Section 72 (Kha)
• 1: the Ministry of IT and Communication shall
provide approval to open a branch office of a
Nepalese entity (IT-based entity) outside of Nepal
to establish business relationships and expansion.
• 2: NRB may, for one time, provide a foreign
exchange facility to the entity setting up a branch
office outside of Nepal based on the
recommendation of the Ministry of IT and
Communication.
Special Economic
Zone Act of 2073
• Section 7 has been replaced:
• The existing industry outside of SEZ may
commence the operation in SEZ by
transferring the plant and machinery already
used by such entity.
• Section 13 (1) has been replaced:
• Licensed entity in SEZ shall export at least
15% of the output (goods or service) for the
first 4 years from the date of
commencement of production, and 30%
afterward.
• Section 13 (2) has been amended:
• 1 year has been replaced by 3 years (i.e.,
entity may sell the output produced in SEZ
within Nepal for three years instead of 1 year
from the date of operation).
 • Section 27 (2) has been
Special amended:
• Entity transferred to SEZ from
Economic non-SEZ area shall not claim
benefits of income tax.
Zone Act
of 2073 …
contd.
Public-Private
Partnership and
Investment Act of
2075
• Section 9 (1) has been amended:
• In addition to the other
members of the Monitoring
and Facilitation Committee,
the Finance Secretary shall
also be a member.
• Section 10 (2) has been amended:
• The staffing of the Board
(IBN) shall be as decided by
the Government of Nepal
based on the
recommendation of the
Board.
• Section 10 (3) has been removed.
 • Section 2 (c) has been replaced as follows:
• “NRN” shall mean the person holding the NRN
citizenship or NRN identity card as per the prevailing
law.
• Section 2 (f) has been replaced as follows:

FITTA of
• “Technology Transfer” shall mean any transfer of
technology to be made under an agreement between
an industry and a foreign investor or entity operating
2075 in Nepal and an entity operating outside of
Nepal on the following matter:
• Patent, design, trademark, goodwill, technological
specificity, franchisee, formula, process,
• User’s license, technological know-how sharing
• Management and technical service
• Reverse engineering
FITTA of 2075 ….contd.
A new
• Technology may be transferred to a foreign country: a
Section 7 Nepalese entity may transfer technology to foreign entities
located outside of Nepal.
(Ka) has • Amount realized by transferring technology to a foreign
country shall be brought to Nepal obtaining approval of NRB.

been
• Such Nepalese entity transferring technology may open a
branch/unit in a foreign country to transfer the technology.

added:
Section 12 • Any industry having foreign investment may on with the
approval of the Nepal Rastra Bank, by the prevailing law,
has been borrow a project loan from, or a loan by entering into a project
financing agreement with, any foreign financial institution i.e.,

amended:
recommendation of Ministry is no longer required
 • Section 17 has been replaced:
• The department shall approve the foreign investment
as per this Act.
Now the approval of IBN is not required for any amount

FITTA of of foreign investment.

• Section 45 (1) has been replaced:

2075 • Any industry with foreign investment may produce

goods or services by a contract with another industry
with a similar objective.
….contd. Earlier sub-contracts were possible only for parts (except
the main production).
• The following new entry has been made in the Annexure:
• Ride-sharing services with more than 70% foreign
investment.
Forest Act of 2076
Section 2 (Da) (3) has been replaced:
• The watershed and water-cycle system has been replaced by rock, stone,
and soil.
Section 43 (2) has been replaced:
• If it is found from the exploration that the national forest contains any
mineral substance and excavation is to be made, the Government of Nepal
may provide approval to use the forest area for the excavation of such
mineral substance in case it is seen from the environmental examination
carried out under the prevailing law that such excavation does not cause
significant adverse impacts on the environment.
• However, no other mineral forest products may be excavated from the
forest area except for stone, rock, and soil for the use of raw materials to
be used in a development plan with national priority, a project approved by
IBN, or national pride projects, or national priority industry designated by
the Government of Nepal.
Industrial Enterprises Act of 2076
• Section 2 (Tha1) has been added:
• “Startup Industry or Business” shall mean startup industry or business as per section 4 (Ka).
• Section 4 (1) (Cha) has been added:
• Large industry
• Section 4 KA has been added:
• (1): A definition of the startup industry has been added, and to be considered as a startup the following
conditions must be met:
• New company/private firm/partnership firm,
• New innovative ideas or technology has been used to produce goods or services,
• Highly scalable,
• 10 years has not been expired from the date of registration,
• Annual turnover, after registration, has not exceeded Rs. 15 Crore in any financial year.
 (2): The three different levels of government in Nepal may
establish an Entrepreneurial Promotion center to promote
the startup industry.

Industrial (2): The regulation of the startup industry shall be from the
concerned registering authority.

Enterprises (4): The concerned registering authority shall maintain a

separate record of the startup industry.
Act of 2076
……contd. Section 9 (2) has been amended:
• The 30-day period (to apply for the renewal of the registration) has been
removed.

Section 9 (4) has been amended:

• (3) has been removed, and the prescribed fee has been added.

Sections 9 (3), (5), (6), and (7) have been removed.

 • The following new subsections have been
added in Section 29:
Industrial • (Da): the authority registering an industry
Enterprises may set the scrap ratio (or Standard Input
Output Ratio) of the raw materials in the
Act of 2076 concerned industry.
• (Dha): the Government of Nepal may
……contd. provide specified concessions and facilities
to the IT industry established with a capital
of Rs. 1 billion and more.
• (Kna): all three levels of government may
provide financial, non-financial facilities,
and other facilities and concessions to
startup industry.
Industrial Enterprises Act of 2076
……contd.
Section 32 (6) • An industry permitted to hold land exceeding the ceiling under the
prevailing law may pledge land up to 50% with any BFIs to obtain
has been borrowing and sell the land within the ceiling to expand the
capacity of the industry as per the DPR. However, this section
replaced: doesn’t restrict obtaining project financing.

Section 50 (1) • Any industry that is in operation upon registration under the
has been prevailing law may produce goods or services by making a
contract or subcontract with another similar industry.
replaced:
Section 60 has
been removed.
 Industrial Enterprises Act of 2076 ……contd.

Annexure-9 (17)
Section 68 (1) Section 68 (1)
has been added
(Kna1) has been (Kna2) has been
(national priority
added: added:
industry):
• Startup business • Business • National and
registration and incubation center international air
regulation establishment services, and
and regulation cable car.
THANK YOU!