Nepal Rastra Bank has amended its regulations to allow information technology (IT) companies to use foreign currency for investing abroad. This change supports IT firms that have earned foreign currency by exporting services over the past three years, enabling them to expand globally within limits tied to their paid-up capital.
The new rule follows a government budget announcement for fiscal year 2025-26, which permits Nepali companies to invest overseas. Finance Minister Bishnu Paudel said companies can now set up sales offices and processing units abroad for semi-processed goods. However, only up to 25% of annual export earnings can be reinvested, and half of the profits from such investments must be sent back to Nepal.
The amended bylaw sets a cap on foreign currency for investment at either 50% of the average foreign earnings from IT exports or $1 million, whichever is lower. IT firms must apply with documents like company registration, tax certificates, audited financial statements, and board approval. The central bank will respond within 15 working days.
The bylaw also requires companies to submit audited financial reports of their foreign investments annually. If audits are not mandatory in the host country, unaudited reports are accepted. All repatriation of profits and investments must go through official banking channels. Misuse of foreign currency will lead to legal action.
Additionally, the bylaw redefines “technology transfer” to include agreements between Nepali investors and foreign firms covering patents, trademarks, technical knowledge, and services such as marketing, finance, engineering outsourcing, and digital data processing. This legal recognition also extends to sweat equity arrangements, allowing Nepali professionals to gain shares in foreign companies in exchange for their expertise.
Officials say these changes aim to help Nepal’s growing IT sector tap into global markets and leverage the country’s talent internationally.
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