Repatriation of foreign investment and returns In Nepal

Foreign Investor may repatriate its investment, dividends and royalties etc. upon obtaining the approval of (i) Investment Board of Nepal (“IBN”) or the Department of Industry (“DOI”) and (ii) approval of Nepal Rastra Bank (“NRB”) after the paying all the applicable taxes in accordance with the Prevailing law of Nepal. This article has outlined the requirements and procedures governing such repatriations.

 

 

The repatriation of the FDI in Nepal is primarily governed by the (i) Foreign Investment and Technology Transfer Act, 2019 (“FITTA”) and (ii) Foreign Exchange (Regulation) Act, 2019 (“FERA”).

 

 

Authority	Details
Investment Board of Nepal (“IBN”) or Department of Industry (“DOI”)	Provides the approval to repatriate
Nepal Rastra Bank (“NRB”)	Provides the final approval to repatriate

 

 

Foreign investors are permitted to repatriate the following:

S.N.	Repatriation
1.	Amount from the sale of shares
2.	Profit or dividend received from foreign investment
3.	Amount remaining after paying all liabilities following the liquidation or winding up
4.	Amount of royalty received under the technology transfer agreement
5.	Amount of lease rent under the lease investment
6.	Damages or compensation, received from the final settlement of a law suit, arbitration or any other legal process in Nepal
7.	Amount that can be repatriated in accordance with the prevailing laws

 

Kindly Note: 

Investors may repatriate funds at the prevailing exchange rate. Repatriation can occur in a) the same foreign currency originally invested, or b) in a different foreign currency, for which approval from NRB will be required.

 

Following steps are followed to repatriate the foreign investment and returns in Nepal.

 

 

Steps followed to repatriate the foreign investment and returns in Nepal: 

• STEP 1: Submission of Application at the approving authority

• STEP 2:  Obtaining an approval letter for the repatriation

• STEP 3: Submission of application to the NRB

• STEP 4:  Obtaining final Approval from the NRB for the Repatriation

 

It shall take tentative 1 to 2 months’ time to repatriate the amount from Nepal to foreign jurisdiction.

 

7.1 Documents required to obtain the approval from the approval authorities are as follows:

S.N.	Documents Details
1.	Application in the prescribed format
2.	Copy of Industry Registration Certificate and Industry Registration Certificate
3.	Copy of approval of foreign investment
4.	Copy of resolution of the Board of Directors
5.	Decision of Annual General Meeting (“AGM”) on paying dividend (in case of repatriation of dividend)
6.	Copy of current Audit Report, Tax Clearance Certificate and notarized copy of letter being not-blacklisted
7.	Letter of FDI recording in NRB
8.	Approved Share Purchase Agreement or Share Subscription Agreement (if any)
9.	Document showing the amount received from the sale of shares (in case of sale of shares)
10.	Copy of the document showing the amount paid as the principal or interest on foreign investment
11.	Copy of approved agreement of Technology Transfer and lease investment (in case of TT Agreement or lease investment)
12.	Royalty Calculation Certified by Chartered Accountant (in case of repatriation of royalty)
13.	Copy of the list of the promoters and shareholders verified by the OCR

 

7.2 Documents required to obtain the approval from the NRB are as follows:

S.N.	Documents Details
1.	Repatriation approval from DOI/IBN
2.	Copy of General meeting and board meeting regarding repatriation
3.	Copy of letter regarding recording the foreign investment at NRB
4.	Copy of latest audited financial statements and audit report
5.	Copy of latest tax clearance certificate
6.	Copy of the non-blacklist certificate issued from CIB
7.	Self-declaration by the foreign investor certifying that: They do not have matured credit in Nepalese BFIs, Shall not misuse foreign currency, Do not have outstanding tax liability, Shall comply with prevailing laws and domestic/international AML and anti-terrorism provisions
8.	In case of royalty, invoice raised by the foreign investor and royalty amount verified by certified auditor
9.	In case of share sale, due diligence audit report stating the rate of share price
10.	Copy of evidence of taxes paid on the repatriation amount

 

Foreign investors allowed to return the amount of their investment upon paying the following applicable taxes.

 

Applicable Tax
Category	Tax Rate
Aircraft Lease	10%
Dividends	5%
Share Sale Proceeds	5%
Service Fees	15%

 

In regards to Royalty Repatriation

The FITTR established specific repatriation limits for royalties under two categories: (a) technology transfer agreement that does not involve the use of a trademark, and (b) technology transfer agreements entered for usage of trademarks.

 

(i).Technology transfer agreement that does not involve the use of a trademark.

Royalty	For Local Sales	For Export
Lump sum or gross sales revenue	Up to 5% of gross sales revenue excluding taxes	Up to 10% of gross sales revenue excluding taxes
Net profit	Up to 15% of net profit	Up to 20% of net profit

 

(ii). Technology transfer agreements entered for usage of trademarks.

Industry	For Local Sales	For Export
Alcohol and tobacco industries	Up to 2% of gross sales revenue excluding taxes	Up to 5% of gross sales revenue excluding taxes
Other industries	Up to 3% of gross sales revenue excluding taxes	Up to 6% of gross sales revenue excluding taxes

 

 

 

Foreign investor are not allowed to repatriate there investment amount during the 1st year of investment. NRB sets out the condition at the of granting its approval. 

 

Date of Publication: 04 May 2025. 

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