AN ACT MADE TO PROVIDE FOR MATTERS RELATING TO FOREIGN INVESTMENT
AND TECHNOLOGY TRANSFER

Published in Nepal Gazette : 12 November 1992 (047/7/27)
First Amendment Published in Nepal Gazette: 24 January 1996 (052/10/10)

Preamble:

Whereas, in the process of industrialization of the country, 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.

(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,

(a) "Industry" means any industry as "Industry" means any industry as referred to in Section 3 of the Industrial
Enterprises Act, 1992.

(b) "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 from the investment as referred to in sub-section (1) above,

3. Investment made in the form of loan or loan facilities.

(c) "Technology Transfer" means any transfer of technology ao 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 howecialization, formula
process, patent or technical know how of foreign origin.

2. Use of any trademark of foreign ownership.

3. Acquiring any foreign technical, constancy, management and marketing service.

(d) "Foreign Investor" means any foreign individual, firm company or corporate body involved in foreign investment or
technology transfer including foreign government or international agency.

(e) "Board" means the Industrial Promotion constituted under Section 12 of the Industrial Enterprises Act, 1992.

(f) "Department" mean 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.
(g) "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 Gazette.

(3) Permission to be Obtain:

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. If an application is made pursuant to sub-section (2) above, the Department shall, in 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 thereof, in accordance with the decision of the Board, grant permission within thirty days from the
date of application. The Department shall communicate the decision made in regard to such permission to the
applicant.

4. Notwithstanding anything contained in ub-section (1) and (2) above, no permission ove, 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.

(5) Facilities and Concessions:

1. No income tax shall be imposed to a foreign investor on the interest income earned from foreign loan.

1a. A foreign in vector shall be levied income tax at a rate of fifteen percent only, on the income earned from foreign
technical as well as management ervice fees and royalty.

2. A foreign investor making investment in foreign currency shall be entitled to eign currency shall be entitled to
repatriate the following amount outside the Kingdom of Nepal:

a) The amount received by the sale of the share of foreign investment as a whole or any part thereof,

b) The amount received as profit or dividend in lieu of the foreign investment.

c) 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
agreeme received under an agreement for the transfer of technology in such currency as set forth in the concerned

agreement.

(6) Provisions 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 or dependent family or authorized representative of such a foreign investor, and dependent
family of such authorized representative shall foorized representative shall for the purpose of stay in the Kingdom of
Nepal be provided an business visa until the foreign investment is retained.

Provided that a foreign investor who, at a time, makes investment in an amount no less than one hundred thousand
United State dollar or in convertible foreign currency equivalent thereto, and his dependent family 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 consultations in the presence of the Department.

2. If the dispute could not be settled in the manner as referred to in sub-section (1) above, it shall be settled by
arbitration in accordance with the prevailing arbitration rules of the United Nations Commission on International
Trade International Trade Law (UNCITRAL).

3. The arbitration shall be held in Kathmandu. The laws of Nepal shall be applicable in the arbitration.

4. Notwithstanding anything contained in ub-section (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 agreement.

(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, mattes stipulated under this Act and
rules made thereunder shall be dealt accordingly.

(9A) Power to Make Alteration or Amendment in Annex: His Majesty's Government may, by notification in the Nepal
Gazette, make necessary alterations or amendments in Part (B) of the Annex.

10. Repeal and Saving :

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 performed or taken under this Act.