Nepali IT Companies Allowed to Invest Abroad: New Government Ordinance Opens Doors for Global Expansion
Nepali IT companies will now be able to invest abroad. The government has made a new decision to make Nepali companies in the information technology (IT) sector competitive in the international market.
The new ordinance, passed by the Council of Ministers meeting on 2081 Poush 26, has created a legal basis for Nepali IT companies to establish branch offices abroad, make investments, and legally repatriate their income. Experts in the sector have reacted to the government's efforts to address one of the significant demands of long-time entrepreneurs in Nepal's IT sector.
Prime Minister KP Sharma Oli said in a Facebook post on Saturday, 'There were some legal difficulties for those working in the IT sector in Nepal. Nepali IT companies can invest abroad, open branch offices abroad, earn money, and legally repatriate the money earned in this way.'
The ordinance includes provisions allowing information technology-based companies to obtain foreign exchange facilities from Nepal Rastra Bank.
The concerned company must apply to the Ministry of Communications and Information Technology for this. The ordinance allows the Nepal Rastra Bank to provide one-time exchange facilities after the ministry reviews the company's business capacity and grants approval. The new ordinance also includes provisions encouraging the establishment of IT service industries within special economic zones.
It has arranged to provide concessions, such as tax exemptions, in special economic zones. Similarly, the government has committed to removing other legal obstacles to Nepali IT companies' international competition.
A report published by the Institute for Integrated Development Studies on the current state of Nepal's IT sector and its challenges stated that the total value of Nepal's IT service export industry reached about US $515 million in 2022. More than 106 IT service export companies and 14,728 independent professionals (freelancers) were active in the software development and technology sector.
Similarly, the report pointed out that IT service exports contributed 1.4% to Nepal's gross domestic product (GDP) and 5.5% to foreign exchange reserves, indicating that the growth of the IT sector is positive for Nepal.
Prime Minister Oli said that cabinet meetings recommended a law to facilitate the repatriation of IT earnings through an ordinance to the Honorable President. We believe this will develop IT as a foreign exchange-earning industry.
