Trade and Investment

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An Act Made to Provide for Matters Relating to Foreign Investment and Technology Transfer

Preamble:

Whereas, in the process of industrialization of the country, it is expedient to promote foreign investment and technology transfer for making the economy visible, 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.

1. Short title and Commencement:

1. This Act may be called " The Foreign Investment and Technology Transfer Act, 1992".
2. It shall come into force at once.

2. Definitions:

Unless the subject or context otherwise requires, in this Act:

1. "Industry" means any industry as referred to in Section 3 of the Industrial Enterprises Act, 1992
2. "Foreign Investment" means the following investment made by a foreign investor in any industry:
   
   1. Investment in share, (Equity)
   2. Reinvestment of the earnings derived form the investment as referred to in subsection (i) above,
   3. Investment made in the form of loan or loan facilities.
3. "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.
4. "Foreign Investor" means any foreign individual, firm, company or corporate body involved in foreign involved in foreign investment or technology transfer including foreign government or international agency.
5. "Board" means the Industrial Promotion Board constituted under Section 12 of the Industrial Enterprises Act, 1992.
6. "Department" means the Department of Industries or Department of Cottage and Small industries of His Majesty's Government or any other department, office or agency as specified by His Majesty's government.
7. "Prescribed" or "As Prescribed" means prescribed or as prescribed in rules made under this Act or in an order issued by His Majesty'' government by notification published in the Nepal Gazette.

3. Permission to be Obtained:

1. Permission of the Department shall be required to be obtained for foreign investment or technology transfer.
2. 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.
3. In an application is made pursuant to subsection (2) above, the Department shall, in accordance with the decision of the Board, grant permission within thirty days form the date of application. The Department shall communicate the decision so made by the Board to the applicant.
4. Notwithstanding anything contained in sub-sections (1) and (2) above, no permission shall be granted for making foreign investment in industries producing alcohol, cigarettes, or bidi, other than those alcohol, cigarettes or bidi industries which export cent percent of their products, and in industries manufacturing arms and ammunitions.

4. Technology to be Transferred:

1. Only the transfer of technology may be allowed in the cottage and small industries and the medium industries with a fixed asset of up to twenty million rupees.
2. Before entering into an agreement for the transfer of technology pursuant to subsection (1) above, it shall be necessary to obtain the permission of the Department in accordance with Section 3.

5. Facilities and Concession:

1. A foreign investor shall be levied tax at a rate of only 15 percent on the income received from the interest on foreign loan, royalty, technical and management service fees.
2. A foreign investor making investment in foreign currency shall be entitled to repatriate the following amount outside the Kingdom of Nepal:
   1. The amount receive by the sale of the share of foreign investment as a whole or any part thereof,
   2. The Amount receive as profit or dividend in lieu of the foreign investment,
   3. The amount received as the payment of the principal of, and interest on, any foreign loan.
3. 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.

6. Provision Relating to Visa:

1. 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.
2. A foreign investor and/or his dependents or his authorized representative shall be, for the purpose of stay in the Kingdom of Nepal, provided a non-tourist visa:
   Provided that a foreign investor, who at a time, makes convertible currency investment in an amount more than one million United States dollars and his dependents, shall be granted a residential visa until such investment is retained.

7. Settlement of Disputes:

1. 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 consultation in the presence of the Department.
2. If the dispute could not be settled in the manner as referred to in sub-section (a) above, it shall be settled by arbitration in accordance with the prevailing Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).
3. The Arbitration shall be held in Kathmandu. The laws of Nepal shall be applicable in the arbitration.

8. Power to Frame Rules:

His Majesty's Government may frame necessary rules for carrying out the objectives of this Act.

9. This Act to Prevail:

Notwithstanding anything contained in the existing laws, matters stipulated under this Act and rules made thereunder shall be dealt accordingly.

10. Repeal and Savings:

1. The Foreign Investment and Technology Act, 1981 is hereby repealed.

2. All acts performed or actions taken under the Foreign Investment and Technology Act, 1981 shall be deemed to have been taken under this Act.