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This article explains detail regarding the process of establishment of International non- governmental organization (INGOs) in Nepal.

The primary law governing the registration of INGOs in Nepal are as mentioned:
a. Social Welfare Act, 2049(1992) and
b. Social Welfare Council Rules, 2049 (1992).
Beside these laws, there are other guidelines adopted by social welfare council to regulate organizations.

Social Welfare Council  is the main regulating body for governing INGOs in Nepal.

INGO is not authorized to directly undertake project implementation. Rather, the execution of projects is to be carried out in collaboration with nonprofit organizations as mentioned:
a) Non-Governmental Organization,
b) Company not distributing profits or
c) Any legally registered entity that has been established with the fundamental objective of non-profit distribution.

The steps for the establishment of INGOs in Nepal are as follows;

The main agreements needed for the operation of INGOs include:
i. General Agreement and
ii. Project Agreement.

The agreement between INGO and SWC that establishes the foundation for INGO operations, known as the General Agreement, in Nepal. It provides the main basis for the operation of INGO in Nepal. This agreement is time-limited and includes key details like sector where INGO will work, area of implanting the project, amount of the project funds that will be provided, proposal submission dates, progress reports, and regulatory compliance for SWC submission.

To enter into the General Agreement, you need to submit an application along with the following documents:

A Project Agreement (PA) is a tripartite between an INGO, SWC, and local partners for Nepal-based project execution.
a. It specifies the supported activity areas where the INGO aids the local NGO.
b. Outlines the annual funding committed by the INGO for project implementation.
c. Designates the specific regions in Nepal for project execution.
d. Defines roles and responsibilities for each party within the agreement.

Yes, The Project Agreement application must be submitted within 3 months of signing the General Agreement before the SWC:
a. If this deadline is missed, the SWC grants an additional 3 months, but a fine is imposed if the submission is delayed further.
b. If the Project Agreement is established within the extended three-month period following the initial three months provided by the Council, it can result in both the nullification of the General Agreement and the potential revocation of work permits and visas for the INGOs representatives.

INGOs have the flexibility to establish multiple Project Agreements under a single General Agreement (GA).

Registration of INGOs in Nepal must be done within the 3(three) months after the council receive application from INGOs.

Service Charge by SWC for entering Project Agreement: USD 1,000/-.

In terms of the local office established by INGOs, local office operates as an integrated entity within the INGO, but it does not have independent legal status or distinct corporate identity under foreign jurisdiction laws.
Additionally, the local office is required to complete registration before tax authority and secure a Permanent Account Number (PAN) to fulfill local regulatory and taxation obligations effectively.

INGOs are mandated to contribute a minimum of USD 200,000 annually inside Nepal. It is important to note that the funding source for INGOs must originate from external sources outside of Nepal.

Failing to comply with these agreements can lead to:
i) Blacklisting of the INGO.
ii) A penalty of USD 1,000 for an INGO entering into a project agreement after missing the initial deadline.
iii) A penalty of USD 2,000 for an INGO entering into the General/Project Agreements after initially failing to fulfill their obligations.

The INGO needs to:
i) Provide an audit report to the Council within six months after the fiscal year ends, along with a comprehensive overview of their work and activities.
ii) Report its activities every six months.
iii) Submit an annual report detailing administrative and program expenses.

Date of Publication: 18 August 2023

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