Repatriation of investment and profits from Nepal is governed by the Foreign Investment and Technology Transfer Act (FITTA), 2019 and administered by the Nepal Rastra Bank (NRB) and Department of Industry (DOI). In a landmark regulatory reform effective December 30, 2025, NRB decentralized repatriation approvals to commercial banks, eliminating prior central bank approval requirements for most transactions. Foreign investors now benefit from streamlined procedures, faster processing timelines, and reduced administrative burdens while maintaining full compliance with tax and foreign exchange regulations.
The Foreign Investment and Technology Transfer Act, 2019 establishes the foundational right of foreign investors to repatriate investment and earnings. Section 20 explicitly guarantees repatriation of:
The Foreign Exchange (Regulation) Act, 2019 provides the procedural framework for foreign currency transactions, while the Income Tax Act, 2058 (2002) governs tax obligations on repatriable amounts.
| Authority | Repatriation Function | Post-December 2025 Role |
|---|---|---|
| Department of Industry (DOI) | Foreign investment approval and repatriation authorization | Issues approval letter for repatriation within 15 days |
| Investment Board Nepal (IBN) | Large project investment approval | Parallel approval authority for large investments |
| Nepal Rastra Bank (NRB) | Foreign exchange regulation and approval | Supervisory role only; direct approval only for third-country repatriation |
| A-Class Commercial Banks | Foreign exchange transaction execution | Primary approval authority for standard repatriation |
| Inland Revenue Department (IRD) | Tax assessment and clearance | Tax clearance certificate issuance mandatory |
The Fifth Amendment to the Foreign Loan and Investment Management Bylaws, 2078 (2021), effective December 30, 2025, fundamentally transformed Nepal's repatriation framework:
| Aspect | Previous System | New System (Post-December 2025) |
|---|---|---|
| Primary approval authority | Nepal Rastra Bank Foreign Exchange Department | Head Offices of A-Class Commercial Banks |
| NRB role | Direct approval required for all repatriations | Supervisory and regulatory only; approval only for non-standard cases |
| Processing timeline | Variable, often delayed due to centralization | 15 days mandatory bank processing |
| Third-country repatriation | Not specifically regulated | NRB approval required if repatriating to country other than investment source |
| Documentation verification | NRB centralized review | Bank-level verification with NRB guidelines |
The reform addresses longstanding foreign investor complaints regarding:
| Category | Description | Tax Treatment |
|---|---|---|
| Share sale proceeds | Capital from sale of foreign-invested shares | Capital gains tax (5-25% depending on holding period and entity type) |
| Liquidation proceeds | Remaining assets after company winding-up | Corporate tax settlement, then capital treatment |
| Buy-back proceeds | Amounts from company share repurchase | Dividend/capital characterization per tax law |
| Category | Description | Withholding Tax |
|---|---|---|
| Dividends | Profit distributions to foreign shareholders | 5% final withholding tax (residential companies) |
| Technical service fees | Payments for technical/managerial services | 15% (may be reduced under DTAA) |
| Royalties | Technology transfer, trademark, patent fees | 15% (may be reduced under DTAA) |
| Interest | Loan interest payments to foreign lenders | 15% (may be reduced under DTAA) |
| Lease rentals | Equipment/property lease payments | As per agreement, subject to withholding |
| Category | Conditions |
|---|---|
| Damages/compensation | Final court judgment, arbitration award, or legal settlement |
| Specialized Investment Fund units | As prescribed by NRB regulations |
| Liquor industry royalties | Capped at 5% of selling price (excluding tax); prohibited for non-100% export-oriented liquor industries |
Step 1: Tax Clearance and Obligation Settlement
Step 2: DOI/IBN Repatriation Approval
Submit application to foreign investment approving body (DOI for standard investments, IBN for large projects):
| Document | Purpose |
|---|---|
| Repatriation application form | Formal request |
| Board resolution | Corporate authorization for distribution/exit |
| Audited financial statements | Profit availability verification |
| Tax clearance certificate | Compliance confirmation |
| Share register/ownership proof | Investment verification |
| Original investment approval | FITTA registration confirmation |
| Bank statements | Fund availability evidence |
DOI Timeline: 15 days from complete application to approval decision
Step 3: Documentation Compilation for Bank
Prepare comprehensive package for commercial bank submission:
Step 4: Bank Application Submission
Submit to A-Class Commercial Bank where company maintains account:
Step 5: Bank Verification and Approval (15 Days)
Bank Head Office verifies:
Standard Repatriation: Bank approves and processes within 15 working days
Third-Country Repatriation: Bank forwards to NRB for additional approval if repatriating to country other than original investment source
Step 6: Foreign Exchange Execution
Step 7: Post-Transaction Reporting
| Category | Specific Documents |
|---|---|
| Corporate | Company registration, MOA, AOA, PAN certificate, share register |
| Investment | Original FITTA approval, foreign investment registration, share certificates |
| Financial | Audited financial statements (3 years), dividend calculation, bank statements |
| Tax | Tax clearance certificate, withholding tax deposit receipts, tax returns |
| Governance | Board resolution, shareholder resolution (if required), authorized signatory proof |
| Banking | SWIFT codes, overseas account details, beneficiary information |
| Approval | DOI/IBN repatriation approval letter |
| Repatriation Type | Additional Documents |
|---|---|
| Share sale | Share transfer agreement, buyer due diligence, valuation report, OCR registration of transfer |
| Liquidation | Liquidation completion certificate, creditor settlement proof, remaining asset calculation |
| Royalty | Technology transfer agreement, DOI technology approval, royalty calculation basis |
| Damages | Court judgment/arbitration award, legal settlement documentation |
| Tax Type | Rate | Applicability |
|---|---|---|
| Corporate income tax | 25% | Taxable business profits before distribution |
| Capital gains tax (listed shares, >365 days) | 5% | Final withholding on long-term gains |
| Capital gains tax (listed shares, <365 days) | 7.5% | Final withholding on short-term gains |
| Capital gains tax (unlisted, individual) | 10% | Final withholding |
| Capital gains tax (unlisted, company) | 15% | Business income inclusion |
| Non-resident capital gains | 25% | May be reduced under DTAA |
| Payment Type | Standard Rate | DTAA Reduced Rate |
|---|---|---|
| Dividends | 5% | 5-10% (varies by treaty) |
| Interest | 15% | 10-15% (varies by treaty) |
| Royalties | 15% | 10-15% (varies by treaty) |
| Technical fees | 15% | 10-15% (varies by treaty) |
Nepal has DTAAs with 11 countries providing reduced withholding rates:
DTAA Benefits Application:
Process:
Key Consideration: Recent regulatory changes may require prior DOI approval for transfers to domestic parties, adding procedural step and timeline.
Process:
Timing: Liquidation process typically requires 6-12 months depending on complexity and creditor claims.
Special Restrictions:
| Issue | Cause | Mitigation |
|---|---|---|
| Tax clearance delays | Outstanding filings, disputes, assessments | Maintain current compliance, engage tax professional early |
| DOI approval delays | Incomplete documentation, eligibility questions | Prepare comprehensive application, allow 15+ days |
| Bank documentation rejection | Missing documents, authenticity concerns | Use checklist, obtain certified copies, verify SWIFT details |
| Foreign currency unavailability | Market conditions, NRB reserves | Plan timing, maintain banking relationship, consider forward contracts |
| Third-country repatriation complexity | Additional NRB approval requirement | Apply early, provide enhanced documentation, justify destination |
Investors must maintain for minimum 5 years:
The repatriation process Nepal was fundamentally reformed in December 2025. Foreign investors now obtain approval from A-Class Commercial Banks (not NRB directly) for standard repatriation, with 15-day processing timelines. NRB retains supervisory role and approves only third-country repatriation.
Profit repatriation Nepal now requires 2-4 weeks: 5-7 days for tax clearance, 15 days for DOI approval, 15 days for bank approval (post-December 2025 reform), and 2-3 days for fund transfer. Previously, NRB central processing often extended timelines unpredictably.
Repatriation taxation Nepal includes: 25% corporate income tax on profits, 5% withholding on dividends, 15% withholding on interest/royalties/technical fees (reduced under DTAAs), and capital gains tax (5-25% depending on holding period and asset type). All taxes must be cleared before repatriation.
Third-country repatriation Nepal requires prior NRB approval even under the December 2025 reforms. Standard repatriation to the original investment source country is processed by commercial banks without NRB involvement.
Essential repatriation documents Nepal include: DOI/IBN approval letter, tax clearance certificate, audited financial statements, board resolution, share certificates/ownership proof, foreign investment registration, bank statements, and SWIFT details for overseas account.
No statutory limit exists on repatriation amount. Foreign investors may repatriate entire legitimate profits and investment proceeds after tax compliance and regulatory approvals. However, large transactions may attract enhanced scrutiny and documentation requirements.
Yes, dividend repatriation Nepal can occur annually or at any interval subject to: company profit availability, dividend declaration compliance, tax withholding and clearance, and regulatory approval for each repatriation transaction.
Repatriation rejection may result from incomplete documentation, tax non-compliance, regulatory violations, or foreign exchange constraints. Investors may: correct deficiencies and reapply, appeal to Ministry of Industry (30-day review), or seek legal recourse for unjustified rejection.
Sectoral repatriation restrictions Nepal apply primarily to negative list industries where foreign investment is prohibited (real estate trading, arms, certain services). Strategic sectors may have additional monitoring but generally permit repatriation after compliance.
The December 2025 NRB reform applies to all repatriation applications submitted after the effective date, regardless of investment vintage. Existing investments benefit from streamlined bank-level processing for standard repatriation, reducing delays and administrative burdens.
Attorney Nepal Pvt. Ltd. provides comprehensive repatriation of investment and profits services from Nepal, including:
Contact Attorney Nepal Pvt. Ltd. to navigate the repatriation of investment and profits from Nepal under the new decentralized framework and ensure efficient, compliant capital return.
Disclaimer: This blog provides general information about repatriation of investment and profits from Nepal and does not constitute legal, tax, or financial advice. The December 2025 regulatory reforms represent significant changes subject to evolving administrative practice. Specific circumstances vary significantly, and professional consultation is essential for particular repatriation situations. Attorney Nepal Pvt. Ltd. assumes no liability for actions taken based on this information.
Last Updated: March 3, 2026
March 03, 2026 - BY Admin