The Nepal Rastra Bank has amended foreign investment regulations, enabling IT companies to invest abroad up to USD 1 million or 50% of their average foreign earnings, whichever is lower.
Nepali information technology (IT) companies are now permitted to invest a maximum of 10 lakh (1 million) US dollars abroad. This change follows the Nepal Rastra Bank’s (NRB) fourth amendment on Wednesday to the “Foreign Investment and Foreign Loan Management Regulations, 2078.”
According to the new rule, an IT company can invest abroad up to 50 percent of the average foreign earnings earned through IT service exports in the last three fiscal years or 10 lakh USD, whichever amount is lower. Additionally, companies can obtain swap facilities from NRB to invest within the IT sector, provided the investment stays within the company’s paid-up capital.
The audit report of foreign investments must be prepared following the fiscal years of both the foreign country and Nepal and submitted within six months after the end of the fiscal year. However, if auditing is not mandatory by the foreign country’s laws, the company can submit unaudited financial statements along with proof of exemption.
When repatriating the investment, the amount received must be mandatorily brought into Nepal through the banking system. Any violation of these provisions will be subject to foreign exchange abuse penalties.
The government had announced in the current fiscal year’s budget (2082/83) its intention to encourage Nepali businesses and companies to expand internationally by opening the door for overseas investments. According to the budget, Nepali companies may open sales branches abroad or establish processing factories by exporting semi-processed goods. They are legally allowed to invest up to 25 percent of their annual export earnings abroad for such ventures.
The budget also mandates that at least 50 percent of the profits earned from these foreign businesses must be repatriated back to Nepal.
This article was originally published on bajarkochirfar.com. Translated with the help of AI and reviewed by our editorial team.
