Business Environment Analysis

“Assignment on 100 Points”

Submitted By-

Santosh K.C
VI Trim, B

Submitted To-

Mr. Indra Dhoj K.C

Faculty Member
Ace Institute of Management

September, 2021
HUNDRED POINT ASSIGNMENT

Company Act

Following are some of Major provisions under company act relating to businesses in Nepal:

1. Incorporation of Company:
(1) Any person desirous of undertaking any enterprise with profit motive may, either singly or
jointly with others, incorporate a company for the attainment of one or more objectives set forth
in the memorandum of association.
(2) There shall be a minimum of seven promoters for the incorporation of a public company.

2. Application to be made for incorporation of company:

Any person desirous of incorporating a company pursuant to Section 3 shall make an application
to the Office, in such format and accompanied by such fees as prescribed, and along with the
following documents, as well:
(a) The memorandum of association of the proposed company
(b) The articles of association of the proposed company
(c) In the case of a public company, a copy of the agreement, if any, entered into between the
promoters prior to the incorporation of the company
(d) In the case of a private company, a copy of the consensus agreement, if any, entered into
(e) Where prior approval or license has to be obtained from anybody under the prevailing law
prior to the registration of a company carrying on any particular type of business or transaction
pursuant to the prevailing law, such approval or license
(f) Where the promoter is a Nepalese citizen, a certified copy of the citizenship certificate and
where a corporate body is a promoter, a certificate of registration of incorporation, decision of
the Board of directors, regulating the incorporation of the company and major documents
regarding incorporation.
(g) Where the promoter is a foreign person or company or body, permission obtained under the
prevailing law

3. Registration of company:
(1) Where an application is made for the incorporation of a company pursuant to Section 4, the
Office shall, after making necessary inquiries, register such company within 15 days after the
date of making of the application and grant the company registration certificate to the applicant,
in the format as prescribed.
(2) After a company has been registered pursuant to Sub-section (1), the company shall be
deemed incorporated.
(3) The office shall maintain company register in the format as prescribed, for purpose of Sub-
section (1).

4. Company to be a body corporate:

(1) Any company incorporated under this Act shall be an autonomous and corporate body with
perpetual succession. 10 (2) Subject to this Act, company like an individual, acquire, hold, sell,
dispose of or otherwise deal with, any movable or immovable property. (3) An company may sue
and be also sued by its own name. (4) An company may, like an individual, enter into a contract
and exercise the rights and perform the obligations as referred to in the contract.

5. Limited liability:

The liability of a shareholder of a company incorporated under this Act in respect of its
transactions shall be limited on to the maximum value of shares which he has subscribed or
undertaken to subscribe.

6. Number of shareholders:

(1) The number of shareholders of a private company shall not exceed fifty. (2) Subject to the
proviso to Sub-section (2) of section 3, the number of shareholders of a public company shall be
seven in minimum and a maximum of any number. (3) Notwithstanding anything contained in
Sub-section (1), any employee who has purchased a share of a company under scheme of selling
shares to employees or any employee who has already purchased a share under such scheme but
is not in service of the company for the time being shall not be counted as a shareholder.

7. Terms to be abided by company:

An company incorporated under this Act shall abide by the following terms, in addition to those
set forth in this Art, memorandum of association or articles of association: (a) The company shall
carry on all of its activities and transactions by its name. 11 (b) A private company shall add the
words “private limited’’ to its name as the last words and a public company shall add the word
“limited” to its name as the last word. Provided, however, that this provision shall not apply to a
company not distributing profit. (c) A private company shall not sell its shares and debentures
publicly. (d) A private company shall not pledge, or otherwise transfer title to, its securities to
any person other than its shareholder without fulfilling the procedures contained in the
memorandum of consensus agreement, (e) A company shall not open a partnership or private
firm. (f) Except as otherwise provided in this Act, a company not distributing profits shall not
distribute dividends among its members or pay, directly or indirectly, any amount to a member
or his/her close relative.

8. Paid up capital of public company:

(1) The paid up capital of a public company shall be a minimum of ten million rupees, except as
otherwise provided in the prevailing law or in a notification by the Government of Nepal in the
Nepal Gazette that the paid up capital of any particular company shall be in excess of the said
required minimum. (2) Notwithstanding anything contained in subsection (1), a public company
which does not have the paid up capital as mentioned in that subsection at the time of
commencement of this Act shall 12 maintain the capital referred to in subsection (1) no later than
22 Ashwin 2065 (8 December 2008).

9. To be incorporated as public company to carry on some specific transactions:

Notwithstanding anything contained elsewhere in this Act, a company carrying on the business
of banking, financial transactions, insurance business related transactions, stock exchange
business, pension fund or mutual fund or a company carrying on such other business or
transactions as may be prescribed shall be incorporated as a public company.

10. Face value of shares and application:

The face value of shares of a private company shall be as specified in its articles of association.
The face value of shares of a public company shall be fifty rupees per share or shall be
equivalent to such amount exceeding fifty rupees as is divisible by the figure ten as provided in
the memorandum of association and articles of association. In inviting an application by a public
company for the subscription of its shares, no amount exceeding fifty per cent of the face value
of each share shall be demanded with the application. A person who intends to subscribe the
shares of a public company has to make an application in the format as prescribed.

Labor Act

Labor act has following provisions created for safeguarding the interests of labors

1. To remain as minimum standards:

(1) This Act shall remain as minimum standards for labours and on matters relating to labours.
(2) Where an employment contract is entered into between an employer and a labour with
provisions to pay or receive remuneration or benefits lesser than the remuneration or benefits set
forth in this Act and the rules framed under this Act or in contravention of the conditions set
forth in this Act, such an employment contract shall be deemed to be contrary to this Act, and it
shall, to that extent, be void.

2. Prohibition on employing in forced labour:

(1) No person shall employ any labour in forced labour, directly or indirectly.
(2) Notwithstanding anything contained in sub-section (1), the following work or service
performed by a labour shall not be deemed to be forced labour:
(a) Any work or service required to be performed under the duties of citizens as and when the
nation so requires,
(b) Any work or service required to be performed by any person in consideration for the sentence
imposed by a decision or order of a court,
Any work or service required to be performed as a member of a community for the interest of
such a community.

3. Prohibition on discrimination:
(1) No employer shall discriminate any labour on the ground of religion, colour, sex, caste, tribe,
origin, language, ideological conviction or other similar ground.
(2) Notwithstanding anything contained in sub-section (1), the following act shall not be
considered as discrimination:
(a) To give preference to any person for employment on the basis of inherent requirement of a
work or service,
(b) To engage a female labour who is pregnant in any work or service which is easier and
suitable to her physical condition, without any reduction in the remuneration and benefits, or
(c) To give preference to a labour with physical disability for such job responsibility as is
suitable to his or her physical condition.

4. Right relating to trade union:

(1) Every labour shall, subject to this Act and other laws, have a right to form and operate a trade
union, acquire the membership of, or get affiliated with, such union or involve in other activities
relating to trade union. (2) While exercising the right relating to labour pursuant to this Act and
other laws, the labour shall be dutiful and responsible towards the employer.

5. Working hours:
(1) No employer shall employ labours to work more than eight hours a day and forty-eight hours
a week.
(2) The labours shall be provided with half an hour rest after five hours of continuous work. (3)
In the cases of work which is not to be stopped and is to be carried out continuously, labours
shall be provided with such a rest time turn by turn. (4) The rest time to be provided pursuant to
sub-sections (2) and (3) shall be counted in the working hours referred to in sub-section (1).

6. Not to compel to work overtime:

(1) No employer shall compel a labour to work more than the hours set forth in sub-section (1) of
Section 28.
(2) Notwithstanding anything contained in sub-section (1), if the non-performance of a work is
likely to cause an adverse effect on the life, safety and health of any person or a serious loss or
damage to the employer, the concerned labour may, subject to sub-section (1) of Section 30, be
caused to work overtime.

7. Payment of remuneration:
(1) In paying the remuneration to the labour, the employer shall make such payment in
accordance with the provision, if any, mentioned in the employment contract to that effect, and
failing such a provision, at such a time as determined by the employer.
Provided that the remuneration shall be paid as follows to the following labour:
(a) In the case of a labour working for a period of less than one month, within three days from
the date of completion of the work.
(b) In the case of a labour employed in a casual work, immediately after the completion of the
work.
(2) Notwithstanding anything contained in sub-section (1), the interval between the dates for
payment of remuneration shall not be more than one month.

8. Prohibition on employment of children:

No person shall so employ a child in any work as to be contrary to law.

9. Employment relationship to be established:

The employment relationship between the employer and the employee shall be established, from
the date or time when the labor is employed or he or she provides the service.

10. Provisions relating to labor to be applicable:

He or she shall not be engaged in work for more than eight hours a day and forty-eight hours a
week. The provisions relating to occupational health and safety shall apply to the apprentices as
if they were labors. Where an apprentice meets with an accident in the course of performing the
work of the enterprise, the enterprise shall, unless otherwise agreed between the enterprise and
the educational institute, have medical treatment of such an apprentice, and provide
compensation to him or her if he or she suffers grievous hurt as a labor.

Income Tax Act

Following are some major provisions under income tax act of Nepal.

1. Computation of income from business:

(1) The profits and benefits made by any person in any year from any business shall be computed
in the income of that business of that person in that income year.
(2) In computing the profits and benefits earned by any person from the business in any income
year, it shall be computed so as to include the following amounts received by that person within
that year:
(a) Service charge
(b) Amount obtained from the disposal of stock-in-trade
(c) Net profit derived from the business property or business liability of any person computed
pursuant to Chapter-8,
(d) Amount considered to have been derived pursuant to clause (a) of Sub-section (2) of Section
4 of Schedule-2 from the disposal of depreciable property of the business, (e) Gift received from
any person in respect of the business
(f) Amount received for having accepted any restriction in respect of the operation of the
business,

2. Computation of income earned from employment:

The following payments made by an employer to a natural person in any income year shall be
included in computing the remuneration earned by such natural person from employment in that
income year:
(a) Amount for wages, salary, and leave, amount for overtime work, fee, commission, prize, gift,
bonus, and payment for other facilities
(b) Payment for any personal allowance including amount for dear allowance, subsistence
allowance, entertainment and transport allowance
(c) Payment received for settlement of or reimbursement of expenses incurred by him/her or
his/her associated person for personal purpose
(d) Payment made for having given consent to any terms of employment
(e) Payment made for termination, loss of employment, or for compulsory retirement, (f)
Retirement payment and retirement contribution including the amount deposited by the employer
for that employee in the retirement fund
(g) Other payments made in respect of employment

3. Computation of income earned from investment:

The following amounts received by any person in any income year shall be included in
computing the profits and benefits derived by that person from investment in that income year:
(a) Dividend, interest derived from that investment, payment for natural resources, rent, royalty,
profit from investment insurance, profit from interest in a retirement fund which has not got
approval or retirement payment made from the approved retirement fund
(b) Net profits derived from the disposal of non business taxable property of the investment of
that person,
(c) If, in disposing the depreciable property of the investment made by that person, the
incomings to be received exceed the remaining value comprising the outgoings made for the
property of the group of depreciable property the excess amount,
(d) Gift received by that person in respect of investment
(e) Retirement payment made in respect of that investment and retirement contribution including
the amount deposited in the retirement fund for that person
(f) Amounts received for having accepted any restriction in respect of investment.

4. Exemptible amounts:
The following amounts shall be exempted from tax:
(a) Amount exempted from tax granted to any person entitled to tax exemption facility as
provided for in a bilateral or multilateral treaty concluded between Government of Nepal and any
foreign country or international organization
(b) Amount received by any natural person for doing employment in the governmental service of
a foreign country,
(c) Amount received by a natural person referred to in clause (b) who is not a citizen of Nepal or
by his/her nearest family member from the governmental fund of a foreign country
(d) Amount received by a non-Nepalese citizen appointed in the service of Government of Nepal
under a the term and condition of tax exemption
(e) Allowances provided by Government of Nepal to the widow, aged or disabled
(f) Amounts received as gift, inheritance or scholarship except the amounts required being
included in computing income
(g) Amounts received by an organization entitled to exemption

5. Donation, gift given to organizations entitled to tax exemption:

(1) In computing his taxable income in any income year, any person may make claim to subtract
the amount of donation, gift given to an organization entitled to tax exemption approved by the
Department for the purpose of this section.
(2) The expenditure deductible in any income year under that Sub-section shall not exceed One
Hundred Thousand Rupees or five percent of the taxable income assessed without making
deduction for the gift of that person in that year and without including in the computation the
limits, whichever is lesser.
(3) In any special situation, Government of Nepal may, by a notification in the Nepal Gazette, so
specify that any amount spent or donated by any person for any specified work may be deducted
fully or partly for expenditure, in determining the income of that person.

6. Interest deduction:
(1) Any person may, for the purpose of computing his income from any business or investment
in any income year, deduct all interests chargeable in that year under the following debt
liabilities of that person
(a) If the debt liability has created for having borrowed any amount, and that amount has been
used in that year or used to buy any property used in that year, or
(b) That debt liability has been created in any other circumstance. Provided that, such a debt
liability has to be created for the act in which income is earned from a business or investment.

7. Repair and maintenance expenses:

(1) In computing the income of any business or investment in any income year, a person may
deduct all expenses incurred in the repair and maintenance of the depreciable property owned
and used in that year to earn income from that business or investment.
(2) In deducting the expenses allowable under that Sub-section, it shall not exceed five percent of
the depreciation base amount of the group of property remaining at the end of that income year,
and in cases where expenses are incurred in excess thereof, such deduction can be made only as
per the order of such expenses incurred.

8. Pollution control expenses:

(1) For purposes of computing the income earned by any person from any business in any
income year, such person may deduct the pollution control expenses to the extent incurred in the
operation of that business in that year.
(2) Notwithstanding anything contained in Sub-section (1), in computing the limit of expenses
deductible under that Sub-section in any income year, it shall not exceed Fifty percent of the
taxable income computed without deducting pollution control expenses of all businesses
operated by that person and without including in computation the limits referred to in Sub-
section (2) of Section 12 and Sub-section (2) of Section 18.
(3) Any excess expense or part thereof which is not deductible in excess of the limit referred to
in Sub-section (2) may be capitalized and depreciated

9. Research and development expenses:

(1) For purposes of computing the income earned by any person from any business in any
income year, such person may deduct the research and development expenses to the extent
incurred in the operation of that business in that year.
(2) Notwithstanding anything contained in Sub-section (1), in computing the limit of expenses
deductible under that Sub-section in any income year, it shall not exceed Fifty percent of the
taxable income of that person computed without deducting research and development expenses
of all businesses operated by that person and without including in computation the limits.
(3) Any excess expense or part thereof which is not deductible in excess of the limit referred to
in Sub-section (2) may be capitalized and depreciated

10. Depreciation deduction expenses:

(1) For purposes of computing the income earned by any person from any business or investment
in any income year, such person may deduct depreciation in lieu of depreciation of the
depreciable properties owned and used by that person in that year in making income from that
business or investment.
(2) Notwithstanding anything contained in Sub-section (1), the following provisions shall be
applicable in respect of the deduction for depreciation of the devices, equipment and other
machineries installed by any entity in the projects which involve construction and operation of
public infrastructures and are transferred to Government of Nepal and in the projects on
construction of powerhouses and generation and transmission of electricity:
11. Expenses that may not be deducted:
(1) Notwithstanding anything contained elsewhere in this Act, for the purpose of computing the
income earned by any person from any business, employment or investment in any income year,
the following expenses or amounts shall not be deducted:-
(a) Expenses of domestic or personal nature
(b) Tax payable under this Act and a fine or similar other fee paid to the government of any
country or any local body thereof for a violation of any law or regulation, byelaw framed there
under
(c) Expenses to the extent of those spent by any person to obtain the amounts enjoying
exemption pursuant to section 10 or expenses made to obtain the amounts from which tax has
been deducted finally
(d) Expenses for the payments referred to in Subsection (2)
(e) Distribution of profits by any entity, or (f) Similar other amounts despite that they are not so
mentioned in clauses (a), (b), (c), (d) and (e) as not to be deductible, except those allowable
under this Chapter or Chapters-6, 7, 10, 12 or 13.
(2) If a person, whose annual turnover is more than two million rupees in any income year makes
cash payment of more than Fifty Thousand Rupees at a time in that income year

Industrial Enterprise Act

Following are the major provisions related to the industrial enterprise in Nepal

1. Provisions relating to registration of industries:

(1) A person, firm or company that intends to establish any of the following industries under this
Act shall make an application to the Department for registration in such a form and accompanied
by such documents as prescribed:
(a) An industry mentioned in Schedule-1 that requires permission
(b) An industry established with foreign investment
(c) An industry related to any matter set forth in Schedule-5 of the Constitution of Nepal; 5
(d) An industry that falls under the jurisdiction of two or more Provinces
(e) An industry related to academic consultancy services on diplomatic affairs.
(2) The concerned Provincial Government shall carry out acts relating to the administration of
industries including the registration, renewal and regulation of industries
2. Industry registration certificate to be given:
(1) If, when examining the application received under section 4, it appears that necessary details
or documents are submitted, the industry registration body shall register the industry applied for
by the applicant and give the industry registration certificate in the prescribed form within five
days of the receipt of such details or documents. 7 (2) When giving the industry registration
certificate under subsection (1), the following details, among other things, shall be set out in the
certificate: (a) the date of issue of the certificate; (b) the period for the commencement of
commercial production or transaction; (c) the terms to be complied with by the industry; (d) such
other terms as specified by the industry registration body by making a decision, according to the
nature. (3) Notwithstanding anything contained in subsection (1), in the case of a micro-industry,
application may be made to the industry registration body for the registration of industry within
one year after the date of operation of that industry.

3. Adverse effects on environment to be mitigated:

(1) If an industry registered under section 5 is required to carry out environmental impact
assessment or initial environmental examination under the prevailing law, it shall commence its
establishment, operation, commercial production and transaction only after the approval of a
report on such assessment or examination.
(2) Notwithstanding anything contained in subsection (1), environmental impact assessment or
initial environmental examination shall also be carried out if so required under the prevailing law
when an industry needs to increase its capital or capacity, add or change its objective, change its
location or transfer it to another place.
(3) The concerned industry shall be responsible for mitigating adverse environmental effects
caused or likely to be caused on the environment in the course of its operation.

4. Approval required for increasing capital, capacity and adding or changing objectives of
industry:
(1) If any industry intends to increase its existing capital or capacity or add, change or alter its
objectives, it shall make an application in such form as prescribed to the industry registration
body for approval thereof.
(2) If the contents appear to be reasonable upon examining an application received under
subsection (1), the industry registration body shall fulfill the procedures as prescribed and give
approval to increase the capital, capacity of, add, change or alter the objectives of such industry
within ninety days.
(3) Notwithstanding anything contained in subsections (1) and (2), approval of the industry
registration body is not required for a micro-enterprise or a cottage and small industry with a
fixed capital not exceeding ten million rupees which does not require permission, to increase its
capital or capacity.

5. Nationalization or expropriation not to be made:

(1) No industry registered under this Act may be nationalized.
(2) No industry may, except for a public purpose, be expropriated directly or indirectly. If it is
required to expropriate it for the public purpose, due process under the prevailing law shall be
fulfilled.

6. Provision relating to industrial security:

The Government of Nepal shall, as required, provide industrial security, as prescribed, to any
industry established under the prevailing law.

7. Prohibition on misusing incentives, exemptions, facilities or concessions:

(1) Any incentives, exemptions, facilities or concessions which an industry obtains under this
Act shall be used only for the same purpose for which they are provided. (2) If any industry does
any act contrary to this Act or the rules framed hereunder, no incentive, exemption, facility or
concession under this Chapter may be provided to that industry.

8. Punishment:
(1) If any person operates an industry without registration under section 3, the industry
registration body may require immediate closure of the industry and impose the following fine:
(a) five thousand rupees, if it is a micro-industry
(b) twenty five thousand rupees, if it is a cottage and small industry
(c) fifty thousand rupees, if it is a medium industry
(d) one hundred thousand rupees, if it is a large industry.
(2) If an industry acts contrary to its objective, the Ministry may, on the recommendation of the
industry registration body, impose the following fine on the industry:
(a) A fine not exceeding two thousand rupees, if it is a micro-enterprise
(b) A fine of fifty thousand rupees, if it is a cottage and small industry
(c) A fine not exceeding one hundred thousand rupees, if it is a medium industry
(d) A fine not exceeding five hundred thousand rupees, if it is a large industry.

9. Provisions relating to corporate social responsibility:

(1) A medium or large industry or cottage or small industry with annual turnover of more than
one hundred fifty million rupees shall set aside at least one percent of its annual net profits in
each fiscal year for the purpose of performing the corporate social responsibility.
(2) The amount set aside under subsection (1) shall be spent in such areas as prescribed, upon
making annual plans and programs.
10. Information of closure of industry to be given:

If the concerned entrepreneur closes an industry registered under this Act for any reason or
suspends commercial production or transaction of the industry, such entrepreneur shall give
information thereof, as prescribed, to the industry registration body, within thirty days after the
date of such closure or suspension.

FITTA
Following are the major provisions under the FITTA Act in Nepal

1. Investment may be made through technology transfer:

(1) A foreign investor may make foreign investment by making technology transfer in any
industry established in Nepal.
(2) The terms of technology transfer to be made pursuant to sub-section (1) shall be as specified
in the technology transfer agreement entered into between the concerned industry and the foreign
investor.

2. Application to be made for approval to make foreign investment:

(1) A foreign investor wishing to make foreign investment shall have make an application,
setting out the details, accompanied by a time schedule for bringing foreign investment into
Nepal and action plan on investment in the industry, to the Foreign Investment Approving Body
for approval, to make foreign investment, in such a form and setting out such details as
prescribed.
(2) If, in examining an application received pursuant to sub-section (1), it appears that such
documents as prescribed have been completed, the Foreign Investment Approving Body shall
give approval for foreign investment in such a form as prescribed within period of seven days of
the date of receipt of the application.

3. To give information to the Nepal Rastra Bank:

(1) Upon obtaining the approval for foreign investment in accordance with Section 15, the
foreign investor shall give information in writing, along with the self-declaration to the effect
that the amount of such investment has been earned from any legitimate source, to the Nepal
Rastra Bank. After giving such information, the foreign investor may bring the amount of such
investment into Nepal.
(2) A foreign investor shall bring the amount to be invested in convertible foreign currency
through the banking system upon completion of such procedures as determined by the Nepal
Rastra Bank.

4. Repatriation of investment and earnings:

(1) A foreign investor may, if it so wishes, repatriate its investment from Nepal by selling wholly
or partly of the shares or industry having its investment in accordance with the prevailing Nepal
law, after paying all such taxes as may be leviable in accordance with the prevailing Nepal law.
(2) A foreign investor may repatriate the following amount in the same foreign currency in
which the investment has been made or other convertible foreign currency with the approval of
the Nepal Rastra Bank, after paying the tax related liabilities under the prevailing law:
(a) Amount received from the sale of shares with foreign investment
(b) Amount of profit or dividend received from foreign investment
(c) In the case of liquidation or winding up of the industry or company, amount remaining after
paying all liabilities following the liquidation or winding up
(d) Amounts that can be repatriated in accordance with the prevailing law.

5. Facilities to be obtained by industries:

(1) In addition to the exemptions, facilities, concessions or protection referred to in this Act, be
provided to any industry with foreign investment, such exemptions, facilities or concessions as
may be available under the prevailing Industrial Enterprises Act and other prevailing law shall.
(2) Notwithstanding anything contained in sub-section (1), such facilities to which a sick
industry is entitled in accordance with the prevailing law shall not be available to any industry
with foreign investment.

6. Facility to deal with foreign currency:

(1) A foreign investor or industry with foreign investment may open an account in Nepali
currency with any commercial bank, infrastructure development bank or financial institution of
Nepal and in foreign currency with any bank or financial institution licensed to deal with
convertible foreign currency in accordance with the prevailing law and carry on transaction
accordingly.
(2) An industry with foreign investment may, in order to mitigate the foreign currency exchange
fluctuation risk, use any approved derivatives equipment through a bank or financial institution.

7. Grievance handling:
(1) If a foreign investor or industry has any grievance with respect to any act or action performed
by any authority that register, regulate or monitor industries in accordance with the prevailing
law or by any authority of the Single Stop Service Centre, such an investor or industry may make
an application, setting out that content, to the Department for its hearing.
(2) The Department shall address, as prescribed, the grievance received in accordance with sub-
section (1).

8. Monitoring and inspection of industries:

(1) The officer designated by the Department may, as required, make monitoring and inspection
of any industry with foreign investment.
(2) The officer who makes monitoring and inspection in accordance with sub-section (1) shall,
not later than three days after the date of completion of the monitoring and inspection, give a
report to the Department, setting out the details whether or not the foreign investor or industry
has done any act contrary to Section 36.

9. Maximum Ceiling threshold of foreign investment not to be prescribed:

(1) No maximum ceiling of the amount to be invested and the share of investment by a foreign
investor wishing to make investment in Nepal shall be prescribed.
(2) Notwithstanding anything contained in sub-section (1), in the case of service industry, the
maximum ceiling of equity foreign investment and ceiling of investment to be made in securities
pursuant to Section 10 may be so prescribed as not to be lesser than the commitment made by
Nepal in respect of the concerned sector or sub-sector at the time of obtaining membership of the
World Trade Organization.

10. Functions, duties and powers of the Department:

In addition to the functions, duties and powers referred to, elsewhere in this Act, other functions,
duties and powers of the Department shall be as follows:
(a) To create conducive environment for the establishment and operation of industries to be
established with foreign investment
(b) To facilitate foreign investors to obtain any approval or permission including initial
environmental assessment, environmental impact assessment in accordance with the prevailing
law
(c) To maintain updated records of foreign investments approved or permitted in accordance
with this Act or the prevailing law and of the technology transferred in Nepal, update such
records and make the same public periodically
(d) To give approval for foreign investors, and foreigner experts, technicians or managerial
employees who are engaged in the industries with foreign investment pursuant to Section 27 to
repatriate investment and remuneration
(e) To make and enforce Standard Operating Procedures in order to make foreign investment
transparent and to make procedural simplification
(f) To make recommendation for visas to the foreign investors and their authorized
representatives, and foreign experts, technical or managerial employees engaged in industries
with foreign investment in accordance with Section 27 and minor members of their family, and
make facilitation for that purpose.
(g) To make regular supervision and monitoring as to whether any industry with foreign
investment has misused any facility granted in accordance with this Act,
(h) To facilitate industries with foreign investment in establishing industries in an industrial zone
or special economic zone,
(i) To perform, or cause to be performed, such other functions as prescribed.

VAT Act
Following are the key provisions under VAT act in Nepal

1. Value Added Tax to be levied:

(1) Except otherwise provided in this Act, the value added tax shall be levied on the following
transactions: -
(a) On goods and services supplied within Nepal
(b) On goods and services imported into Nepal
(c) On goods and services exported outside of Nepal.
(2) The tax shall be levied on the value of each taxable transaction.

2. Rate of tax:
(1) The rate of tax to be levied under this Act shall be in single rate of thirteen percent.
(2) Notwithstanding anything contained in Sub-section (1), in the transaction of goods and
services as mentioned in Schedule-2, the tax rate shall be zero.

3. Cancellation of Registration:
(1) The Tax Officer shall cancel the registration of a registered person in any of the following
circumstances:
(a) In the case of body corporate, if the body corporate is closed down, sold or transferred or if
the body corporate in any manner ceases to exist
(b) In the case of an individual ownership, if the owner dies
(c) In the case of a partnership firm, if it is dissolved or the partner dies
(d) If a registered person ceases to be engaged in taxable transactions
(e) If the taxpayer files for zero return or does not file return at all within a consecutive period of
twelve months

4. Taxable value:
(1) Except otherwise provided in this Act, in cases where money is the only consideration, the
taxable value shall be the price which the supplier takes from the recipient.
(2) The following amounts shall also be included in a taxable value:
(a) The amount of expenditures relating to transportation and distribution which was borne by
the supplier in connection with the transactions, and the amount of profit
(b) Excise duty, ownership fee and all other tax amounts other than tax imposed under this Act.
(3) The taxable value of any goods or service exchanged or bartered shall be equal to the market
value of the goods or services so exchanged or bartered.
(4) If the value of any goods or services is found to be much lower than the prevailing market
value, the taxable value of such goods or services shall be equal to the market value.

5. Invoices to be issued:
(1) Every registered person is required to issue an invoice to the recipient, in supplying any
goods and services except in circumstances prescribed.
(2) The format of an invoice shall be as prescribed.
(3) It shall be the duty of the recipient to obtain an invoice.
(4) Invoice shall be kept by a person delivering taxable goods worth more than Ten Thousand
Rupees in places other than that prescribed by the Department.

6. Unregistered person not to collect tax:

(1) A person who is not registered shall not issue any kind of invoice or other document showing
the recovery of tax and shall not collect the tax.
(2) If a person who is not registered collects tax, the tax so collected shall be assessed and
recovered from him/her.

7. Tax deduction:
(1) A registered person may deduct the amount of tax which he/she has collected against the tax
he/she had paid or due in importing or receiving goods or services related with his/her own
taxable transactions.
(2) Notwithstanding anything contained in Sub-section (1), it may be provisioned that no
deduction or only a partial deduction may be allowed in the case of prescribed goods that can be
used for personal purposes or for business purposes.
(3) If the entire portions of goods or services transacted in a month were not used for taxable
transactions, the tax previously paid on the goods or services shall be deducted as prescribed for
the portion that was solely used for taxable transaction of the goods or services.
8. Tax payment:
(1) A taxpayer shall pay the tax for each tax period within Twenty-Five days of the completion
of that period.
(2) If a taxpayer does not pay the tax within the time period specified in Subsection (1), an
additional fee at the rate of Ten percent per annum shall be imposed on the amount of tax due.

9. Special provision relating to temporary registration:

(1) In the case of an exhibition, fair and similar other program to be organized temporarily, the
organizer and any entrepreneur who carries on the transaction of any taxable goods or services in
such an exhibition or fair and is not registered with the Value Added Tax shall have to be
temporarily registered with the Value Added Tax as prescribed.
(2) An entrepreneur who has been registered with the Value Added Tax pursuant to Sub- section
(1) may take back through stock transfer the goods exhibited in that program.
(3) A tax payer who has been registered only for the program as referred to in Subsection (1)
shall have to deregister the temporary registration by furnishing the details of transaction and
paying all the leviable tax within seven days after the completion of the exhibition or fair
organized.

10. Tax returns to be filed:

(1) Every taxpayer shall, upon making self-assessment of the tax payable by him/her in every
month, file the tax return, as prescribed, to the Tax Officer or by registered post or electronic
medium within Twenty-Five days of completion of that month. Such returns shall be filed
whether or not a taxable transaction was carried out in that month or not.

Consumer Protection Act

Following are the important provisions under consumer protection act in Nepal

1. Rights of the consumer:

(1) Every consumer shall have the right to obtain quality goods and services.
(2) Without prejudice to the generality of sub-section (1), for the purpose of protecting the rights,
interests and concern of the consumers, every consumer shall have the following rights:
(a) Right of easy access to goods or services,
(b) Right to choose quality goods or services at the fair competitive price,
(c) Right to be informed of the price, quantity, purity, quality etc. of the goods or services,
(d) Right to obtain information from the producer, importer or seller regarding the quantity,
ingredient or percentage of the substances contained in the goods made of or produced with the
mixture of two or more than two substances,
(e) Right to be safe from the sale and distribution of the goods and services that inflicts harm to
the human body, life, health and property,
(f) Right to get appropriate legal action taken against the unfair trade and business activities,
(g) Right to obtain compensation against harm and injury caused with the use of goods or
services,
(h) Right to receive remedy or hearing from the competent authority or entity on the protection
of the rights and interests of the consumers,
(i) Right to get consumer education.

2. Regulation of goods or services:

(1) The Government of Nepal shall regulate the supplies, price, quality, measurement, label,
advertisement of the goods and services regularly in order to protect the rights of the consumers.
(2) The Ministry shall perform the following functions in conducting regulation pursuant to sub-
section (1):
(a) To implement the policy relating to quality, price determination and supply system of goods
or services,
(b) To prevent or control monopoly or unfair trade activities that cause or possibly cause adverse
impact upon the rights and 5 interests of the consumers, or to formulate and implement a plan of
action in this regard,
(c) To maintain fair market by continuously analyzing and reviewing the condition of demand
and supply of the goods or services used within the country,
(d) To make necessary provisions to prevent and control the price determined or increased in an
undesired manner by the producer, seller or distributor of the goods or services,
(e) To facilitate the supply system through the institutions or private firms or companies having
full or partial ownership of the Government of Nepal in order to ensure the supplies of the food
and other goods for the consumers at a fair price and easy manner,
(f) To fix the maximum quantity of the storage of the goods in any special circumstance, or at
any particular place, for the period prescribed,
(g) To receive foods from the producers at the prescribed price and sell them to the general
people with determining certain quantity of such foods in case there is a shortage of any foods
produced within Nepal

3. Liability of producer:
(1) While producing goods or services, the producer shall have to fulfill the following liabilities,
in addition to the liabilities to be fulfilled under the prevailing laws:
(a) To produce quality goods or services,
(b) To determine the label of the goods,
(c) To specify the matters referred to in Section 6 on the label,
(d) Not to produce defective product,
(e) To collect and destroy the goods produced by him or her if it is informed that such goods
remain in the market upon having been defectively produced

4. Liability of seller:
The seller who sells the goods shall have to fulfill the following liabilities, in addition to the
liabilities to be fulfilled under the law:
(a) To sell the goods to the consumers without discrimination,
(b) To safely keep and safely sell the goods as per the type or nature by preventing degradation,
(c) To keep price list of the goods so that it is clearly seen and understood by general people,
(d) To provide storage or details of the goods remained with him or her when the concerned
agency or official so demands,
(e) To abide by the provision of guarantee or warranty, if any, in the goods,
(f) To sell the goods to the customers on a first-come-first-served basis,
(g) To give the bill or receipt on selling the goods,
(h) To fulfill other liabilities as prescribed.

5. Liability of service provider:

The service provider providing service to the consumer shall have to fulfill the following
liabilities, in addition to the liabilities to be fulfilled under the law:
(a) To provide the consumer with the service without discrimination,
(b) To keep nature of the service to be provided and the list of the price to be paid by the
consumers for such service received, at the place visible to everyone, so that it is clearly
understood by the general people,
(c) To provide the details and documents related to the service to be provided when the
concerned agency or official so demands,
(d) To provide the service to the customer on a first-come-firstserved basis,
(e) To give the bill or receipt after receiving the amount for the service provided to the consumer,
(f) To fulfill such other liabilities as prescribed

6. To return goods:
(1) If anyone wishes to return, being dissatisfied with, any goods purchased from the seller, he or
she may return it to the seller within seven days or take other similar goods equal to that price or
the payment of the amount which was paid while purchasing such goods.
(2) While returning the goods pursuant to sub-section (1), the seller shall not be allowed to make
deduction in the price or take any kind of additional charge.
(3) While returning the goods pursuant to sub-section (1), the bill or receipt given by the seller at
the time of purchasing such goods shall have to be produced.

7. Not to conduct unfair trade and business activities:

(1) No one shall conduct or cause to conduct unfair trade and business activities.
(2) For the purpose of sub-section (1), if any of the following activities is conducted, an unfair
trade and business activity shall be deemed to have been taken place:
(a) Selling or providing the goods or services by lying, concealing, hiding or misleading the
actual quality, quantity, price, measurement, format or composition etc. of such goods or
services,
(b) Releasing false or misleading advertisement, or selling the goods by making misleading
advertisement,
(c) Doing any of the following acts through oral, written or visual means in the case of goods or
services:
(1) Selling sub-standard goods by showing standard, quality, quantity, class, composition, design
as if having specialty or quality,
(2) Selling re-produced or old goods showing or misrepresenting that they are new one,
(3) Advertising or notifying and disseminating, in false and misleading manner, while selling the
goods or services even when no benefit is obtained as declared

8. Not to cause adverse impact on demand, supply or price:

(1) No one shall sell, distribute or transport or hinder the sale and distribution of any goods by
taking profit higher than that prescribed and over the cost invested in the production, import,
transport, hoarding or sale and distribution of that goods.
(2) No one shall cause adverse impact on the demand, supply or price of any goods or service by
doing any of the following acts, in association with any person, institution or anyone else:
(a) Determining quota of the raw materials required for the manufacture of any goods, or
reducing the production of any goods or doing any other such work,
(b) Creating artificial shortage by hoarding any goods or service or by any other manner,
(c) Selling the goods or service at the determined time or place only or doing other acts of similar
nature.

9. To keep price list and registration certificate:

(1) Price list shall have to be kept by clearly specifying the factory price of each of the goods by
the producer, wholesale or retail price of goods to be sold and distributed by the seller, and price
of the service to be provided by the service provider.
(2) If it is an industry to produce the goods, the industry registration certificate, and in the case of
business, business registration, license shall have to be displayed at the place of sale in a way
visible to the general people.
(3) The Government of Nepal may, by a notification in the Nepal Gazette, establish a price
information center as prescribed.

10. To confiscate or destroy sub-standard goods:

(1) If the goods are not found to have the quality as prescribed while testing the samples of such
goods forwarded to the laboratory for testing pursuant to Section 34, such goods shall be
confiscated and shall, as required, be destroyed as prescribed.
(2) When the goods are confiscated and destroyed pursuant to subsection (1), the producer,
importer or seller shall have to bear the expenses for confiscating or destroying such goods.
COPYRIGHT ACT

1. Protection of copyright:
Copyright protection shall be extended to any work. Any translation, arrangement, sequential
arrangement of work or collection of works presented as original from viewpoint of
presentation, collection or expression, data or database readable with or without support
of machine, any proverb, folktale, folk song falling under folk expression or any other derivate
works based on folk expression shall be protected as original work, without prejudice to the
copyright of the original work.

2. Non-availability of copyright protection:

Copyright protection under this Act shall not be extended to any thought, religion, news, method
of operation, concept, principle, court judgment, administrative decision, folksong, folktale,
proverb and general data despite the fact that such matters are expressed or explained
or interpreted or included in any work.

3. Registration not compulsory:

This like registration of a work, sound recording, performance or broadcasting shall not be
required to acquire the right under this Act. In cases where any person intends to get any work,
sound recording, performance or broadcasting registered voluntarily, that person may make an
application to the registrar and get the same registered and the procedures on registration shall be
as prescribed.

4. Economic Right:
Subject to provisions only the author or the owner of copyright shall have the exclusive right to
carry out the following acts in respect of the work:
 To reproduce the work,
 To translate the work,
 To revise or amend the work,
 To make arrangement and other transformation in the work,
  To sell, distribute or rent the original and copy of the work for the general public, and
import copies of the work,
 To have public exhibition of the original or copy of the work,
 To perform the work in public, and broadcast the work,
 To communicate the work to the general public.

5. Rights of performer :
The performer shall have the right to perform the following acts:-
 To take one’s performance to the general public through broadcasting or communication,
 To determine modality or medium of making one’s performance and reproduce it,
 To take one’s performance to the general public for the first time by making performance
or selling or transferring copies thereof or changing ownership,
 To rent copies of one’s performance,
 To take the performance produced through the determined modality or medium to the
general public in an easily available manner, through wire or wireless equipment,
 To amend or revise one’s performance.

6. Term of protection of copyright:

The economic and moral rights available to the author under this Act shall be protected
throughout the life of the author and in the case of his/her death until fifty years computed from
the year of his death. The economic and moral rights over the work prepared jointly shall be
protected for fifty years computed from the year of death of the last surviving author. The
economic and moral right of the work prepared shall be protected until fifty years from the date
of first publication of such work or the date on which the work is made public, whichever is
earlier. The economic and moral right of the work published anonymously or with pseudonym
name shall be protected until fifty years from the date of first publication of such work or the
date on which the work is made public, whichever is earlier.

7. Term of protection of work published after the death of author:

The work published after the death of the author where there is only one author of such work and
after the death of one of the authors where there are two or more authors shall be protected until
fifty years from the year of publication of that work.
8. Reproduction allowed for personal purpose:
No authorization shall be required from the author or the copyright owner to reproduce some
portions of any published work for personal use. Notwithstanding anything contained in Sub-
section no reproduction of an architectural design erected as a building and other construction
related design or a significant portion of any book or of a musical work as notation of all or
significant portion of a database through digital transmission shall be allowed in a manner to be
prejudicial to the economic right of the author or the copyright owner.

9. Reproduction, broadcast and other communication allowed for purposes of information

to the general public:
The following acts can be done, by mentioning the sources and name of the author of any
work, without authorization of the author or the copyright owner of such work.
 To print in any newspaper or journal or to make broadcast or other communication to
public of any article, article under political or religious topics or similar other broadcasts
published in any newspaper or journal.
 To reproduce, broadcast or otherwise communicate or justify any event with a view to
informing the general public about any current event.
 To reproduce, broadcast or to make communication to public some portions of any
regular newspaper or journal regularly publishing information for communication to the
general public

10. Transfer of copyright:

The copyright owner may transfer all or any of the economic rights conferred on him/her to any
one by making a written agreement or authorize any one to use the same with or without
specifying any terms. The person entitled to moral rights may, for the protection of moral rights,
transfer his moral rights to any one, with effect after his/her death, by making a written
agreement, with the terms and conditions that his/her name shall not be removed from the work.
The person to whom the rights are transferred by the copyright owner pursuant to this Section
shall not carry out any other activities except the rights
so transferred
Mines and Minerals Act

1. Property of Government of Nepal:

All minerals lying or discovered on the surface or underground in any land belonging to an
individual or the government within Nepal shall be the property of the Government of Nepal

2. Power to carry out the Mining Operations:

(1) Government of Nepal shall have the exclusive power (authority) to carryout mining
operations.
(2) The Department may undertake mining operations by itself or it may cause to undertake by
any person having issued a license, subject to this Act.
(3) Government of Nepal shall have the power (authority) to be a partner in mining operations by
investing capital there for or otherwise.

3. License for the Mining Operations:

(1) Any person desirous to undertake mining operations, subject to this Act and the Rules framed
hereunder, shall submit an application in the prescribed format to the Department for obtaining a
license for prospecting operations at first, in the case of minerals where quality and quantity
thereof have not yet been determined, and for excavation in the case of minerals where quality
and quantity thereof have already been determined along with the proposed scheme of
excavation.
(2) The Department shall, after receiving an application under Subsection (1), make necessary
inquiries and may grant a license for mining operations in the format and charging fees as
prescribed, if it is found that the applicant has financial and technical capacity as well as
qualifications required for undertaking mining operations.

4. Right to Undertake Excavation:

(1) A licensee for prospecting operations of any mineral in any area shall have the right to obtain
a license for excavation for the same mineral in the same area.
(2) While undertaking prospecting operation by a licensee for prospecting operations, if he/she
prospects the minerals other than those referred to in his/her license, he/she shall be required to
submit a notice to the Department within a period of Thirty days and priority shall be given
to such a person to undertake mining operations of such minerals.
5. Renewal of the License:
The licensee shall be required to renew the license for mining operations every year having paid
the prescribed fees within the prescribed time limit.

6. No Significant Adverse Effect shall be Caused on Environment While Undertaking

Mining Operations:
(1) The person undertaking mining operations shall, in undertaking mining operations, have to
undertake it without causing significant adverse effect on environment.
Likewise, a person undertaking such operations shall have to adopt protective measures as
prescribed on environmental protection.
(2) The Department shall, in case the person undertaking mining operation is found to have
caused significant adverse effect on environment, issue necessary directives to the concerned
person for correction in such operations.

7. Special Provisions:
(1) The Department may, with a view to national security, public interest or historical
importance, declare any area as prohibited for mining operations or grant a license for mining
operations in any area having specified special conditions.
(2) The Department may undertake mining operations by itself in an area for which a license has
already been issued for the minerals other than those covered by such a license in such a way so
that such operations do not hamper the mining operations of the licensee, or may cause to any
other person undertake such operations having issued a license.

8. Export of Minerals:
(1) Government of Nepal may, with a view to national security or ensure supply to meet the
internal demand, impose necessary restrictions having issued an order for prohibiting the export
of any minerals in aboard.
(2) The licensee may export the minerals excavation by him/her to the foreign countries as
prescribed except in circumstances where necessary restrictions have been imposed under Sub-
section (1)

9. Power to Keep Weapons for Security:

The licensee may, in order to safeguard life and property in the course of mining operations,
keep necessary weapons as decided by Government of Nepal and subject to the laws in force.

10. Use of Explosives: The licensee may import, store, transport and use explosives required for
mining operations subject to the laws in force and conditions as decided by Government of
Nepal from time to time.

Patent, Design and Trademark Act

1. Acquisition of Patent Rights:

(1) A person desirous of obtaining right over any patent shall register such patent in his/her name
under this Act.
(2) No one shall copy or use or cause to use in the name of the others without transforming the
ownership or written permission pursuant to Section 21d, the patent registered in the name of any
person pursuant to this Act.

2. Application for Acquiring Right over Patent:

(1) A person desirous of having any patent registered in his/her name shall submit to the
Department an application as specified in Schedules 1 (a), containing the
particulars mentioned hereunder, along with all available evidence in his/her possession:
(a) Name address and occupation of the parson inventing the patent.
(b) If the applicant him/herself is not the inventors, how and in what manner he/she acquired title
thereto from the inventor.
(c) Process of manufacturing, operating or using the patent.

3. Circumstances In Which Patents Cannot Be Registered:

(1) The Department shall not register any patent under this Act in the following
circumstances:-
(a) In case the patent is already registered in the name of any
other person, or
(b) In case the applicant him/herself is not the inventor of the patent sought to be so registered
nor has acquired rights over it from the original inventor, or
(c) In case the patent sought to be registered is likely to adversely affect the public health,
conduct or morality or the national interest, or
(d) In case it is contradictory to the prevailing laws (the registration of the patent) will constitute
a contravention of existing Nepal law.

4. Term of Patent:
(1) The title of the patentee to the patent shall be
valid only for a period of seven years from the date of registration
thereof under Section 7, except when it is renewed under Section 23 B. Notwithstanding,
anything contained in Sub-Section (1),in the case
of patent registered before the commencement of this Section, the term
fixed according to the provision in force at the time of registration thereof shall
be valid After the expiry of that term

5. Submission of Design or Model of Patent to Government Archives:

The patentee shall submit to the National
Archive also a copy of the design or model of the article manufactured
according to the patent registered under this Act.

6. Application for Registration of Design:

(1) A person desirous to register the design of any article manufactured or caused to
be manufactured under Section 14, shall submit to the Department, an application in a formals as
specified in Schedule 1 (b), together with four copies of such design and maps, and drawings and
particulars thereof.
(2) The person submitting an application under Sub-Section (1) shall pay, along with the
application, the application fee to the department specified in Schedule 3 (2) (a)

7. Registration of Design:
(1) On receipt of the application filed by any person under Section 13, the Department shall
register the design in the name of the applicant and issue a certificate as mentioned in Schedule
2(b). Provided that in case such design hurts the prestige of any individual or institution or
adversely affects the public conduct or morality, or undermines the national interest, or in case
such design has already been registered in the name of any other person, it shall not be registered
under this-Section.
(2) For obtaining the certificate mentioned in Sub-Section (1), the applicant shall pay a design
registration fee as prescribed in Schedule 3 (2) (b), to the department.

8. Punishment for Contravention:

In case a person, contravenes the provisions or Sub-Section (2) of Section 12, or operates a
design invalidated the Department, may be punished with a fine not
exceeding Fifty thousand Rupees, and articles and goods connected with such offense shall be
confiscated on the order of the Department, as per the gravity of offense.

9. Registration of Trademark:
(1) In case any person files an application under Section 17 for registration of trademark, the
department shall register such trademark in the name of the applicant the specimen form
indicated in Schedule 2 (c), shall conduct necessary investigation and provide sufficient
opportunity to defend him/herself and also conduct further inquiry based on the cense made and
if finds it appropriate to register it.
Provided that in case it is felt such trade-mark may hurt the prestige of any individual or
institution or adversely affect the public conduct or morality or undermine the national interest or
the reputation of the trade-mark of any
other person, or in case such trade-mark is found to have already been registered in the name of
another person, it shall not be registered

10. Punishment for Illegal Use of Trademark:

In case anyone who, violates Sub-Section (2) of Section 16, or brings into use a trade- mark
which has been cancelled under Sub-section (3) of Section 18, or
violates Section 18B, may be punished with a fine not exceeding is One Hundred Thousand
Rupees and articles and goods connected with such offense confiscated on the orders of the
Department as per the gravity of offense