Foreign Investment & Technology Transfer Act, 2075 (FITTA)

Disclaimer:

Unofficial translation and educational summary. This publication is intended to reflect the relevant Nepali legislation and regulatory framework, including amendments and materials reviewed up to 1 September 2026. It is not a certified consolidated translation. If the English wording, section reference or summary differs from the official Nepali text or Nepal Gazette, the official Nepali text prevails.

At a Glance

FITTA 2075 establishes Nepal’s legal framework for foreign investment and technology transfer. For employers and HR teams, understanding its requirements helps support compliant investment operations, expatriate workforce planning and coordination with labour, immigration, tax and foreign-exchange rules. 

Why This Matters

Foreign investment decisions can have implications beyond ownership and capital. Employers may need to coordinate investment approvals, foreign-expert recruitment, work authorization, tax compliance and supporting documentation under the relevant laws. 

Major Provisions / Issues to Understand

1. Foreign investment approval and permitted investment structure (Section 13)

Section 3 sets a minimum foreign-investment threshold — reduced from NPR 50 million to NPR 20 million by amendment. This is primarily a Legal/Finance gate, but HR should know it exists because it determines whether an entity is legally an “industry with foreign investment” at all, which in turn determines whether the Section 27 expatriate-employment provisions (below) apply to that entity.

2. Employment of expatriates/technical personnel (Section 27(1))

Section 27(1) requires an industry with foreign investment to fill top-level management, high-level technical and managerial positions from Nepali citizens where they are available and qualified Notwithstanding anything contained in Sub-section (1), if positions for specialists, high-level technical personnel, managerial employees, or technical staff in the high management of an industry cannot be fulfilled by Nepalese citizens, and if technical knowledge or skills need to be transferred to such industry through technicians or experts from other countries, foreign nationals may be employed in accordance with prevailing laws The concerned industry shall submit the details of any foreign national employed pursuant to Sub-section (2) to the Department of Industry. Upon receiving such details, the Department shall forward them to the Ministry of Finance, the Ministry of Home Affairs, and the Ministry of Labour, Employment and Social Security. HR should treat this as a localisation-and-approval gate that sits in front of any expatriate hiring decision at a foreign-invested entity, not an afterthought once the candidate is selected.

3. Technology-transfer arrangements (Section 7)

Section 7 treats technology transfer — licensing of foreign IP, franchising, and management/advisory/market-services agreements — as a form of foreign investment in its own right, with a prescribed ceiling on royalty repatriation (e.g. a specific cap on royalty as a percentage of net selling price for certain sectors such as liquor). Where an expatriate’s role is tied to a technology-transfer or management-services agreement rather than a direct equity investment, HR should confirm which approval track applies, since the documentation and repatriation rules differ from a straightforward equity-investment hire.

4. Repatriation and foreign-currency considerations (Sections 20, 26(3)–(4))

Section 20 governs repatriation of the investor’s capital, profit, dividend and royalty; separately, Section 26(3)–(4) allows a foreign expert or technical/managerial employee engaged under Section 27 to repatriate savings out of their own remuneration in convertible foreign currency, at the open market exchange rate, after paying Nepal income tax. HR should keep these two repatriation channels distinct in any expatriate-package documentation — the individual employee’s salary-repatriation right under Section 27 is separate from, and does not depend on, the investor entity’s profit-repatriation approval under Section 20.

5. Interface with Labour Act work authorization

DOI approval of a foreign expert under FITTA Section 27 is not itself a work permit — the Labour Act, 2074’s foreign-employee work-permit process (see Week 11) is a separate approval that still has to be obtained. HR should run the FITTA approval and the Labour/Immigration work-authorisation process as parallel, coordinated tracks rather than assuming the FITTA approval covers the labour-law requirement.

6. Immigration and tax alignment

DOI is empowered to recommend visas for the foreign investor, authorised representatives, and Section 27 foreign experts/technicians/managerial employees and their minor family members — but the actual visa is issued by the Department of Immigration (see Week 12), and the individual’s Nepal income-tax position is a separate analysis under the Income Tax Act (Week 06). HR should map all three approvals — FITTA/DOI, immigration, tax — on one timeline for an incoming expatriate rather than sequencing them reactively.

7. Industry/DOI approvals and reporting

The Department of Industry is required to maintain and periodically publish updated records of approved foreign investments and technology transfers; an entity should expect its foreign-investment approval, and any Section 27 foreign-employee approvals tied to it, to sit in a record the DOI can be asked to produce or update. HR should keep its own mirror file of every DOI approval, expiry and renewal obligation rather than relying on being able to retrieve it from the DOI on demand.

Employer Should Know

• Verify that the investment structure and business activity meet applicable requirements.

• Confirm the approvals and authorizations required before engaging foreign personnel.

• Check applicable labour, immigration, tax and foreign-exchange obligations separately.

• Maintain approval documents, agreements, employee records and evidence of required filings.

• Monitor changes in the law and applicable approval conditions.

Employee Should Know

Foreign employees should understand their employment terms, remuneration, tax obligations, work authorization and any applicable restrictions on remitting income abroad. They should retain their employment agreement, payslips, tax records and relevant authorization documents. 

International Employer Alert

Foreign investment approval does not, by itself, resolve every employment, immigration, tax or foreign-exchange requirement. Before deploying foreign personnel to Nepal, employers should verify the applicable authorization process, employment conditions, tax treatment and reporting obligations. Cross-border arrangements should be reviewed under the relevant laws and current procedures. 

HR Check — Evidence to Maintain

☐ Foreign investment approval and relevant amendments.

☐ Approved technology-transfer or other relevant agreements.

☐ Employment agreements and job descriptions for foreign personnel.

☐ Applicable work permits, visas and renewal records.

☐ Payroll, withholding-tax and remuneration records.

☐ Required regulatory filings and correspondence.

☐ A compliance calendar with assigned owners and deadlines.

Common Mistakes

• Assuming that foreign investment approval automatically authorizes a foreign employee to work.

• Applying the general investment threshold without checking applicable exemptions.

• Treating investor profit repatriation and employee salary remittance as the same process.

• Overlooking sector-specific restrictions or approval conditions.

• Failing to track authorization expiry dates and reporting obligations.

• Relying on outdated guidance instead of checking current legislation and official procedures.

Myth vs Law

MYTH: Once a company receives foreign investment approval, it can hire foreign employees without further checks.

REALITY: Investment approval and authorization to employ foreign nationals are separate compliance questions. Employers must verify the applicable requirements under FITTA, labour legislation and immigration rules before proceeding.

Practical Example

An HR team is reviewing foreign-invested employer compliance. Instead of checking only the policy wording, it maps the legal requirement, responsible owner, employee population, payroll/HRIS impact, supporting evidence and any cross-border or sector overlay. The result becomes an auditable compliance control rather than a one-time legal note.

FAQs

1. Does FITTA 2075 apply to every company operating in Nepal?

No. Its application depends on the nature and structure of the investment and the relevant statutory provisions. Employers should verify whether their entity and investment fall within the Act’s scope.

2. Can a foreign-invested company hire foreign experts for any position?

Not automatically. The employer must assess the applicable statutory conditions, availability of qualified Nepali personnel where relevant, and required approvals or authorizations.

3. Does FITTA replace Nepal’s Labour Act and Income Tax Act?

No. Foreign-invested employers must comply with applicable employment, payroll taxation, social-security and immigration requirements alongside FITTA.

4. Are investor profit repatriation and employee salary remittance the same?

No. They are distinct matters and may be subject to different statutory provisions, documentation and foreign-exchange requirements.

Continue the Conversation

READ the full Highlight • EXPLORE definitions • ASK your practical question • JOIN the HRInsights Community
HRInsights.global