KATHMANDU: Nepali information technology (IT) companies that earn foreign currency through service exports will now be allowed to invest a portion of their earnings abroad. Nepal Rastra Bank has made this provision by introducing the fourth amendment to the “Foreign Investment and Foreign Loan Management Regulations, 2021.”
According to the new rule, IT companies can invest up to 50% of the average foreign currency they earned by exporting IT-related services in the past three fiscal years, or up to USD 1 million (or its equivalent in foreign currency) — whichever is lower.
This move is aimed at promoting global expansion for Nepali IT firms. The government, in the budget for the upcoming fiscal year, has also offered additional incentives — including income tax exemptions and a 75% tax discount on income generated from IT service exports.
The budget has further allowed Nepali businesses and companies to open overseas sales branches or establish processing plants abroad, with the provision to invest up to 25% of their export earnings for such purposes.
Additionally, a recently passed ordinance on investment facilitation enables Nepali companies to transfer technology to foreign firms. The ordinance, approved by parliament, allows companies registered and operating in Nepal to transfer technology to foreign firms or businesses.
Nepal Rastra Bank has also amended its regulations regarding foreign investment inflow. Companies that have received approval for foreign investment but brought in funds without formal NRB approval will now be able to apply for regularization of the investment by submitting proper documentation before mid-January (end of Poush).
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