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The Act is a principal legislation for registration, establishment, and pre/post operational compliances of industry. No person (either natural or legal) is permitted to operate its business without establishing industry under this Act. Company registered under the Companies Act at the Office of Company Registrar (the “OCR”) is not allowed to operate business transaction without registering its industry under the Act.
Some of the key provisions of the Act has been set out below:
1.1. Continuing the legacy of the Previous Act, the Act explicitly restricts to establish or operate industry without registering an industry undergoing through the procedure as provided in the Act. The Act tries to shift the concept of branch industries and emphasizes on the conversion of branch industries into unit industry. The Act requires the existing branch industries to either; (a) register itself as a separate industry within a year from the date of enactment of the Act or (b) establish it as a unit of the main industry. Further, such unit are required to keep a separate record of the production and transactions. Such record has to be circulated to the main office of the industry.
2.1. The Act continues the general classification of industries the based on; (a) size of investment on the fixed assets, and (b) nature/sector of business. However, there have been changes in terms of threshold of fixed assets which have been detailed in ANNEX- I. Similarly, there are some changes in relation to nature and sector of business, which have been detailed in ANNEX- II.
2.2. In the Previous Act, industries provided in the Schedule 1 requiring approval were excluded from the
category of ‘Micro Industry’ the exclusion of which has been removed by the new Act.
2.3. The present Act has replaced the term ‘Construction Industry’ with the term ‘Infrastructure Industry’ and has covered wider areas of infrastructure industries including industries related to construction, arrangement, and operation of installation of pipelines for fuel and gas supply, energy house and energy transmission line. Further, the Act has broadened the scope of Information, Broadcasting and Communication Technology based industry to also cover the ‘Information Technology’ based industry, which includes knowledge process outsourcing, data centers, internet service provider, industry related to web portal, web design service, web hosting to name a few. The scope of service industry has been broadened to cover among other the e-commerce, industry business providing services to the general people using the electronic medium (online or software or apps or other similar previous Act, the Act has not classified “investment business” as any industry within the list. Excluding such business under the list would create question on the permissibility of foreign investment in investment business, unless the same is notified by the Government.
The Act moves towards regulating the industries in line with the existing three-tires of the federal structure (Federal, Provincial and Local government) (the “Registering Authority”) and also segregates powers and authorities of each of them. There are certain changes in terms of industry registration process and registering authorities, in comparison to the Previous Act. The Act provides different jurisdiction to following government authorities for registration of industry:
3.1. Department of Industry
Previously, the Department of Industry (“DOI”) was the primary government agency for registration of industry. However, in current administrative set up DOI would be undertaking registration of following industries:
3.2. Provincial Government
The registration, renewal and regulation of all industries which do not fall under the jurisdiction of DOI would fall under the jurisdiction of Provincial Government. However, industries subjected to obtain prior approval are not excluded from obtaining the required approval. Provided, that DOI as a central authority would be responsible to register, renewal, and regulation of such industry until the provincial laws are not formed.
3.3. Government of Nepal
The Act mandates certain industries (such as industry based on atomic energy, industries producing radioactive material, atomic energy, and uranium energy related industries) which can only be established and operated by the Government of Nepal.
3.4. Local Authorities
After enactment of local, federal, and provincial laws micro entrepreneurship, cottage and small-scale industry having fixed capital as prescribed under the respective provincial law shall be regulated by the respective local authorities. Until formulation and enactment of separate local laws all industries shall be regulated by the DOI.
3.5. Timeline of Industry Registration
The timeline of the industry registration is stated as 5 days in the Act. Previously, the timeline of registration was 15 (fifteen) days. In past instances, some cases of industry registration have taken more than 15 days. In this context, 5 days’ timeline for registration of industry seems attractive to the investors; however, it may take longer period of time in case-to-case basis.
The Act mandates numerous approval requirements. Some major approval and compliance requirements are highlighted as follows:
4.1. Prior Approval for Industry Registration
The Act requires prior approval to be obtained from Industrial and Investment Promotion Board
(“IIPB”) for industry registration. Section 8 of the Act provides specific list of industries which require prior approval. The list has been attached in ANNEX IV.
4.2. Notification Requirement for Industry Operation and Extension of Industry Operation
The industry registration authority provides specific timeline for each industry to commence its Operation, Commercial Production or Transaction (the “Operation”). The Act requires industries to inform the industry Registration Authority about the Operation within 30 days from the date of such Operation. In case industries fail to operate within the given timeline, it shall obtain industry operation extension 30 days before the expiry of the given timeline for industry operation.
Previously, failure of filing an application for industry operation extension would have resulted in immediate cancellation of industry. There was no provision of delay payment and extension of industry operation after expiry of the given timeline. However, the Act has currently provided additional 6 months period to obtain industry operation extension and provides provision in relation to delay fee submission for delay application for industry operation extension. The industry operation extension can be provided based on the progress of construction work on the site and nature of the industry. However, approval from IIPB is required to be obtained in case industry operation extension is required for more than 3 times.
As per the previous Act, failure of obtaining timely extension of industry operation would result in cancellations of industry registration but under the new Act instead of industry cancellation it would be automatically inactive.
Principally, obtaining extension of industry operation is merely a technical matter; default in obtaining industry registration extension would not cancel the entire business vehicle as such. In this context, the current Act provides more flexible approach to obtain industry operation extension. For instance, a business vehicle undertaking hydropower project cannot be technically cancelled from its real existence only because of failure of industry operation extension.
4.3. Approval for changes in capital structure, capacity, and objective of industry
The Act mandates prior approval to be taken from the Registering Authority by the industry, which is intending to increase the existing capital, capacity, adding additional objectives, and changing the existing objectives. However, such approval is not required to be obtained by the micro industry or cottage and small-scale industry with fixed capital of NPR. 10,000,000 (Ten Million) which are not required to obtain prior approval for industry registration. The Act envisages that increase in production rate by merely enhancing the capacity without altering installed machinery, equipment shall not be considered as increase in capacity.
4.4. Requirement to submit “ZERO” details
The industry should forward zero details (Shuunya Biwaran) of production and business transaction of the industry to the Registering Authority if the industry is closed for more than a year or has no production or transaction throughout the year.
4.5. Submission of Progress report and other details
The Act requires industry to submit annual progress report, plans and activities in relation to industry in compliance with corporate social responsibility requirement within the end of 6 months of every financial year to the Registering Authority.
4.6. Submission of details as prescribed at the time of industry registration
Each industry is required to notify certain details as prescribed in the registration certificate to the Regulating Authorities within the end of 6 months of every financial year to the Registering Authority.
4.7. Prior approval for transfer of Location of Industry
The Act requires approval from province or local level if the industry is being transferred within the province. However, if industry is being transferred from one province to another province, approval from DOI must be obtained.
4.8. Notification in relation to closure of industry
Industry shall notify Registering Authority about the closure of industry within 30 days from the date of closer of commercial production or transaction.
5.1. Pursuant to the Act, industry should commence activity related to establishment and operation only after completion of applicable environment studies such as Initial Environmental Examination (IEE) and Environmental Impact Assessment (EIA). The Act further mandates to carry out such environment studies in the events where the industry increases capital, enhances capacity, adds, or changes objective or shifts or changes location of the industry.
5.2. The industry which does not require IEE and EIA should, during registration, disclose grounds and reasons for the same along with the self-declaration that the industry will take appropriate measures to mitigate adverse impact on the environment.
6.1. There have been some major changes in the Act in terms of incentives and facilities to the industries.
A significant change to note in the new Act is the removal of exemption of the Value Added Tax
(“VAT”) on production cost of the exported goods on the basis of export quantity.
6.2. The other remarkable changes include 100% income tax exemption to the Micro Industries being in operation at the time of commencement of this Act; 50% income tax exemption to the Cottage and Small Scale Industries with at least 10 Million (Nepalese Rupees Ten Million) being in operation by the time of commencement of this Act and coming into operation pursuant to this Act; 50% exemption on the rate of the income tax levied on the income from the sale of production by Local tea producing and processing industries, dairy industries and clothes producing industries.
6.3. The new Act has brought changes in exemption, facilities and concession on income tax, custom duty, and various other charges on various nature of production. The major changes brought about in the new Act have been detailed in ANNEX-III.
6.4. The Act provides statutory protection for changes in law regarding benefits and exemption provided under the Act and other applicable laws. The stabilization provision states that no provisions shall be made limiting the benefits and exemptions prescribed under the Act and other applicable laws. The difference with the Act and the Previous Act is that the current law only guarantees non-limitation of the incentives, concessions, facilities, or subsidies guaranteed under the current Act, whereas the previous EA had the same provision extending to the scope of concessions, facilities or subsidies provided by, both, the then IEA and the then prevailing laws.
7.1. The industry which requires a land area more than the land ceiling prescribed as per the prevailing laws of Nepal should apply to the Registering Authority for the exemption on land. The industry should use the exempted land as obtained only for the purpose for which the land is taken. The Act provides restrictive regime in use of land obtained beyond ceiling. The Act explicitly restricts exempted land from being sold, transferred, or used as collateral in consideration of obtaining loan from the banks or financial institutions. This provision is a hindrance to projects that operate with loan investment because the land acquired by industries beyond ceiling cannot be mortgaged.
8.1. The Act provides explicit provision to allocate at least 1% of the annual net profit (which was unclear in the Previous Act) to be utilized towards Corporate Social Responsibility (the “CSR Requirement”). The CSR Requirement is applicable to all (i) medium industries and large industries and (ii) cottage industries and small industries having annual turnover more than NPR 150,000,000.
8.2. The fund allocated for CSR shall be utilized in the specific sector as provided under Rule 37 of the Industrial Enterprise Regulation, 2019 (2076) (the “Regulation“) by formulating annual plan and program. The Rule 37 of the Regulation provides number of sectors/areas or/and activities where the amount allocated for CSR shall be spent in specific sectors including (a) Natural Calamities, (b) Community Health Centers, (c) Preservation of Nepalese Architect, (d) Culture Socially Backward Communities,(e) Community Schools, (f) pollution Control, (g) Waste Management, Reforestation, (h) Preservation of Water Resource, (i) Promotion of Alternative Energy & Environment Protection, (j) Campaign for the preparation & Broadcasting of Documentary against Smoking, Alcohol use. (k) Rural Drinking Water, road, sewage & corresponding physical infrastructure for the social benefit.
8.3. The Act further provides that the amount spent under CSR requirement can be deducted for the purpose of income tax. The plans and programs related to CSR shall be submitted within the end of
6 months of every financial year to the DOI. The plans formulated plans and programs for CSR shall
be implemented in co-ordination with local authorities.
9.1. The content of the contract manufacturing has been updated in the Act in line with the Foreign Investment and Technology Transfer Act, 2019. Previously contract manufacturing arrangement was permissible for production of goods and services by the domestic industry. The Act there explicitly restricts production of main goods of the industry through contract manufacturing. However, the Act permits contract manufacturing arrangement in case of production of auxiliary products. The concept also extends to supply of services but has not prescribed in detail.
9.2. The Act does not provide specific criteria to distinguish between main products and auxiliary products. This provision provides much needed regulatory clarity on the regulation of contract manufacturing arrangement. The Act does not mandate prior approval from the DOI to enter into a contract manufacturing arrangement. The Act also entails provision of exemptions and benefits for industry based on the contract manufacturing. Government is yet to issue notification relating to such benefits and exemptions.
10.1. In comparison to the Previous Act, the Act provides more comprehensive offenses and punishment for various non-compliances. The offences under the Act includes; (a) operation of industry without registration, (b) performance of activities against objectives of an industry, (c) failure of notifying about industry operation, commercial production or commencement of transaction of an industry within given time period as provided by the Act, (d) transfer of an industry without obtaining prior approval, (e) increment of capital, enhancement of capacity, addition or alteration of objectives without obtaining prior approval, (f) failure to comply with the reporting/filing requirement as set out under the Act, (g) misuse of incentives, exemptions, facilities and concessions as made available under the Act, (h) non-fulfillment of the CSR Requirement in compliance with the Act, (i) non- compliance conditions provided under the Act as well as breach of conditions or any directives issued by the Ministry of Industry (“Ministry”) and (j) any other non-compliances as stated in the Act and Regulation formulated under the Act.
10.2. The Act provides offence specific punishment based on the nature and scale of the industry in more extensive manner which is categorically presented as follows. Additional 50% fine in addition to the fines stated below is applicable for industries which are subject to obtain approval from IIPB prior registration.
| S.N. | Offences | Scale of Industry | Punishment (Amount in NPR) |
| 1 | Operation of Industry without registration | Micro industry | 5,000/- |
| Small and Cottage | 25,000/- | ||
| Medium | 50,000/- | ||
| Large | 100,000/- | ||
| Immediate closure of an industry along with above mention fine. | |||
| 2 | Performance of activities against objectives of the industry | Micro industry | Up to 2,000/- |
| Small and Cottage | Up to 50,000/- | ||
| Medium | Up to 100,000/- | ||
| Large | Up to 500,000/- | ||
| 3 | Failure to notify about industry operation, commercial production, or commencement of transaction of an industry within given time-period as provided by the Act. | Micro industry | 2,000/- for each 6 months period |
| Small and Cottage | 10,000/- for each 6 months period | ||
| Medium and Large | 25,000/- for each 6 months period | ||
| 4 | Transfer of an industry without obtaining prior approval and increment of capital, enhancement of capacity, add or alter objectives without obtaining prior approval | Micro industry | 5,000/-
|
| Small and Cottage
|
25,000/- to 50,000/- (Notes: Additional 100% fine for industry which are subject to receive approval for industry registration) | ||
| Medium and Large | 100,000/- to 300,00/- (Notes: Additional 100% fine for industry which are subject to receive approval for industry registration) | ||
| 5 | Failure of submission of annual
detail within stipulated timeframe as provided by the Act. |
Micro industry | 1,000/- |
| Small and Cottage | 5,000/- | ||
| Medium | 10,000/- | ||
| Large | 25,000/- | ||
| 6 | Misuse of incentives, exemptions, facilities and concessions as made available under the Act | For all types of industries | Confiscation of available incentives, exemptions, facilities, and concession (“Benefits”), recovery of amount equivalent to such benefits or levy fine equivalent to such Benefits. |
| 7 | Non- compliance of CSR responsibility | For all types of industries | Fine equivalent to 0.5% of gross profit. |
| 8 | Non-compliance of any conditions or directives provided by the Ministry | Micro industry | 5,000/- |
| Small and Cottage | 50,000/- to 100,000/- | ||
| Medium | 150,000/- to 300,000/- | ||
| Large | 250,000/- to 300,000/- | ||
| 9 | Any other non-compliances provided under the Act and Regulation framed pursuant to the Act | Micro industry | Up to 15,000/- |
| Small and Cottage | Up to 15,000/- to 30,000/- | ||
| Medium | Up to 30,000/- to 50,000/- | ||
| Large | Up to 50,000/- to 100,000/- | ||
ANNEX- I
| Industry | Fixed Capital (NRS) |
|
| Previous Act | Act
|
|
| Micro | Up to 500,000 (Five Hundred Thousand) | Up to 2,000,000 (Two Million)
[annual transaction increased to less than 10,000,000 (Ten Million) from less than 5,000,000 (Five Million)] |
| Cottage | There has been no Change.
|
|
| Small-scale | Up to 100,000,000 (One Hundred
Million) |
Up to 150,000,000 (One Fifty Million)
|
| Medium- scale | From more than 100,00,000 (One Hundred Million) to 250,000,000 (Two Fifty Million) | From 150,000,000 (One Fifty Million) to
500,000,000 (Five Hundred Million)
|
| Large-scale | From 150,000,000 (One Fifty Million) to
500,000,000 (Five Hundred Million) |
More than 500,000,000 (Five Hundred
Million)
|
ANNEX-II
| Schedule | New Sectors introduced by the Act | Remarks
|
| 1. Approval requiring Industries | · Related to Microbrewery
· Related to LPG Refilling · Related to manufacturing drone or providing services through drones |
|
| 2. Cottage Industries | There has been no change. | |
| 3. Energy-oriented industries | · Related to biogas energy
· Related to electricity energy to be produced as a co-production of sugar industry · Related to energy potentiality study |
|
| 4. Agriculture and Forest Product based Industries | · Related
· to production and storage of food products · Related to Challa Kadne business · Related to milk production and processing of dairy products · Related to protection of botanical garden · Related to operation and management of agriculture market and Sheet Bhandar · Related to establishment and management of agriculture forest · Related to seed conservation of cash crops · Related to production of natural Reshajanya products · Related to wood industry including shaw-mill and furniture · Related to wood industry like parqueting, seasoning, treatment plant, plywood, composite, board · Related to non-woodforest products including paper, resin · Related to the production of mushroom, tissue culture, agroforest · Related to cotton farming, production and processing of cotton and cotton seeds. |
|
| 5. Infrastructure Industry | · Related to polluted water purification
· Related to private warehouse · Related to infrastructure construction, arrangement, and operation of installation of pipelines for fuel and gas supply · Related to infrastructure construction, arrangement and operation of energy house and energy house and energy transmission line |
· The current Act has replaced ‘Construction Industry’ with ‘Instructure Industry’.
· The following industries have been removed from the Schedule 5. a) Related to assembly and convention centers b) Related to swage and sewage passage |
| 6. Tourism Industry | · Related to bar
· Related to trekking, zip flyer, ultra-light, sky walking, sky diving and other similar types of excursion activities · Related to construction and operation of cable cars. · Related to agriculture tourism · Related to water park |
The Act has been removed industries related to operation of mountain flight from Schedule 6 |
| 7. Information technology, communication technology and information dissemination-based industry | Part (A) | |
| · Related to Knowledge Process Outsourcing
· Related to data centers · Digital signature certifying agency · Related to web portal, web design service, web hosting |
||
| Part (B) | ||
| · Internet Service Provider
· Related to satellite phone operator service · Related to VSAT Service · Related to social networking, online message, video call, conference |
In relation to VSAT,
the Previous Act had not included the VSAT as service, but merely provided ‘VSAT’. This Act has covered VSAT Services. |
|
| Part (C) | ||
| · Related to Digital Television Network
· Related to the production of ‘BrittaChittra’ |
||
| 8. Service-oriented
Industry |
· Related to clinic, polyclinic, operation of rehabilitation centre, physiotherapy clinic, aayurved or other alternative hospitals.
· Related to physical training, operation of Yog-Dhyan or trainings centre · Related to swimming pool · Related to operation of Sheet Bhandar · Related to transport and cargo business or service · Related to Custom Agent (Bhansar Agent) service · Related to news dissemination service · Related to water purification service · Related to Cinema Hall (including multiplex) · Related theatre (including multiplex) · Related to e-commerce, industry business providing services to the general people using the electronic medium (online or software or apps or other similar nature of medium). · Related to services providing machinery equipment in lease · Related to service businesses such as purification or processing cut to length sheet, photo film slitting, photo, paper slitting, tissue paper slitting, ball wiring assembly and importing finished goods in bulk and repacking having uncountable processing and procedure · Business related to clothing and Yarn dying, Yarn sizing and printing on clothes (except for weaving industry doing such for its own purpose) · Related to Veterinary services · Related to service apartment · Related to food court, catering, and street food stalls · Related to equipment repair and installation, ready mix concrete, export house, technology and innovation center and service of providing facilitated workspace |
· The current Act tries to cover operation of all kinds of Sheet Bhandar removing the previous limitation of only the non-agriculture Sheet Bhandar.
· The Previous Act had covered only the ‘cargo businesses’. The cargo as a service and transport business or service has also been covered under this Act. · The industry related to mass communication service has been removed from the Schedule 8. · The Previous Act only covered the ‘water transport and distribution service’. The new Act added ‘water purification’ also under the scope of Schedule 8. · The Act has covered ‘Cinema Hall’ along with ‘multiplex’, which was previously not covered. Similarly, the present Act has also covered all kinds of theatre including multiplex theatre. |
| 9. Industries with National priority
|
· Infrastructure industry
· Shoes sandals manufacturing industry, thread manufacturing industry, livestock farming, fish farming, chicken farming, bee farming, horticulture, preliminary processing of rubber based on local raw materials and manufacturing of rubber products, industry preparing medicines battling snakebite, artificial eye lens manufacturing industry · Information technology industry · Industries established inside the Industrial Area, Special Economic Zone and Industry Gram built and operated by the private sector · Goods production industry with high price low weight/volume as identified and prescribed by the Government of Nepal publishing the notice in the Gazette after making required standards. · Goods and Services production industry specified by Nepal Trade Integration Strategy as approved by the Government of Nepal · Related to making movie |
|
ANNEX-III
| Industry | Previous Act | Act
|
| A. Income Tax Concession | ||
| Manufacturing industries
producing fruit-based cider, brandy or wine established in any Undeveloped Region |
Not Provided | 25% exemption on the rate of income tax for up to 10 years from the date of commencement of business
|
| Local tea producing and
processing industries, dairy industries and clothes producing industries |
Not Provided | 50% exemption on the rate of the income tax levied on the income from the sale of such products |
| Manufacturing Industries set up with the investment of at least 1 billion rupees and providing direct employment to more than 500 individuals throughout the year | 100% income tax exemption for first five years from the date of commencement of business
50% exemption on the income tax for next 3 years.
Industries already in operation are entitled to the above stated exemption in case such industries enhance their installed capacity by at least 25%, increase investment to 1 bn. (Nepalese Rupees One Billion) and provide direct employment to 500 (five hundred) individuals throughout the year. |
100% income tax exemption for first five years from the date of commencement of business.
50% exemption on the income tax for next 3 years Industries already in operation are entitled to the above stated exemption in case such industries enhance their installed capacity by at least 25%, increase investment to 2 bn. (Nepalese Rupees Two Billion) and provide direct employment to 300 (thee hundred) individuals throughout the year. |
| Industries conducting research and excavation of minerals (except white rock (Chundhunga)) petroleum, natural gas and fuel. | 100% Income tax exemption for first 7 years from the date of commencement of transaction.
50% exemption on the income tax for next 3 years.
Previously the white rock was not covered.
Further, the timeline of commencement of commercial transaction was mid-April 2019 A.D. (Chaitra 2075 B.S.). |
100% Income tax exemption for first 7 years from the date of commencement of transaction; 50% exemption on the income tax for next 3 years.
The timeline of commencement of commercial transaction has been extended up to mid-April 2024 A.D. (Chaitra 2080 B.S.) |
| Industries related to the operation of zoological, geological and bio-tech park, and software development, data processing, cybercafé and digital mapping established inside the technology park and information technology park specified by Nepal Government by publishing notice in Nepal Gazette. | 50% exemption on tax imposed on income of such industries
Industries related to the operation of zoological, geological park was not covered by the Previous Act. |
50% exemption on tax imposed on income of such industries |
| Manufacturing industry having interns equivalent to at least 10% of the total human resource | Not Provided | Such industries are entitled to deduct for the purpose of income tax any such cost incurred in providing subsistence expenses, internship expenses and expenses incurred in enhancing the production capacity of human resource working in the industry. |
| Industry registering the intellectual property in foreign country for its protection | Reimbursement of cost was available from the Government of Nepal | Such industries are entitled to deduct such cost for the purpose of income tax |
| Industries, other than tobacco and liquor industries and Casinos, utilizing the accrued proceeds in capitalization in shares for expansion of the capacity of the same or for other production or energy-oriented industries or for the industries relating to agriculture and forest products | Not Provided. | 100% exemption on dividend tax levied as a dividend distribution on such capitalization |
| Cottage and Small-Scale Industries with at least 10 million (Nepalese Rupees Ten Million) which are already in operation by the time of commencement of this Act and coming into operation pursuant to this Act | Not provided | 50% exemption on the income tax as applicable |
| B. VAT Exemption
|
||
| The arrangement of VAT refund has been removed by the new Act. Previously, there was the arrangement of providing refund of the VAT to the industries exporting goods manufactured in Nepal. | ||
| C. Custom Duty Exemption
|
||
| Industries not having
Bonded Warehouse or Passbook facility |
The Government of Nepal may refund the amount of Duty Draw Back in export of goods after determining the aggregate of costs incurred in import (Samadar) as prescribed in Nepal Gazette. | The Government of Nepal Ministry of Finance shall determine the rate of Duty Draw Back in export of goods by such industries and then, through the One Stop Service Centre, shall refund the amount of Duty Draw Back as per the determined rate. |
| For all industries | Custom duty is levied at the minimum rate on import of machinery, transformers, generators having a capacity of 10 Kilowatt and other industrial devices imported by an industry for commercial purpose. | Custom duty is levied at the minimum rate on import of machinery, generators or industrial equipment with 10 Kilowatt capacity imported by an industry for commercial purpose. [Import of Transformer has been removed from this category.] |
| Industries producing intermediate goods used in the industrial goods being imported | Not provided | Such industries are entitled to refund of the custom duty on the produced goods based on the quantity of export |
| D. Duty Exemption
|
||
| Micro Industries already under operation at the time of commencement of this Act are entitled to 100% income tax exemption. Previously, the exemption was available only for up to 5 years from the date of commencement of business or transaction. | ||
| E. Additional benefits for Female Entrepreneurs
|
||
| There has been no significant change in relation to the benefits available to the industries registered under the ownership of female entrepreneurs. In terms of availing export finance, such can be made through banking channel from the Financing Female Entrepreneurs Fund. Previously, there was no clarity as to the means and source of financing | ||
| F. Additional Exemptions and benefits | ||
| The new Act has also covered female entrepreneurs and industries operating inside the industrial zone to become entitled of the additional exemptions and benefits. In addition to the previously available exemptions and benefits, following benefits have been added by the new Act:
1. Government of Nepal may provide incentives, exemptions, benefits or concessions to the production-oriented industries, industries related to agriculture and forest products and minerals industry. 2. The exemption may be provided on the custom duty to be levied to the micro and cottage and small- scale industries while importing novel technologies including machineries, tools and equipment as required for enhancing capacity of such industries. 3. The Government of Nepal may make special arrangement in relation to providing incentives, exemptions, benefits, or concessions to the industries operating inside industrial zone, product specific zone and industrial cluster. 4. The Government of Nepal may provide incentives, exemptions, benefits, or concessions to the industries established in the under-developed, undeveloped and least developed regions. |
||
ANNEX IV: List of Industry Requiring Prior Approval before Registration
ANNEX V: Industries falling under Schedule 5 of the Constitution of Nepal
| S.No. | MATTERS |
| 1. | Relating to defense and military (a) Protection of national unity and territorial integrity (b) Relating to national security |
| 2.
3. |
War and defense
Arms and ammunitions factories and production thereof |
| 4. | Central Police, Armed Police Force, national intelligence and investigation, peace, security |
| 5. | Central planning, central bank, finance policies, monetary and banking, monetary policies, foreign grants, aid and loans |
| 6. | Foreign and diplomatic affairs, international relations and United Nations related matters |
| 7. | International treaties or agreements, extradition, mutual legal assistance and international borders, international boundary rivers |
| 8. | Telecommunications, allocation of radio frequency, radio, television and postal matters |
| 9. | Customs, excise-duty, value-added tax, corporate income tax, individual income tax, remuneration tax, passport fee, visa fee, tourism fee, service charge and fee, penalty |
| 10. | Federal civil service, judicial service and other government services |
| 11. | Policies relating to conservation and multiple uses of water resources |
| 12. | Inland and inter-State electricity transmission lines |
| 13. | Central statistics (national and international standards and quality) |
| 14. | Central level large electricity, irrigation and other projects |
| 15. | Central universities, central level academies, universities standards and regulation, central libraries |
| 16. | Health policies, health services, health standards, quality and monitoring, national or specialized service providing hospitals, traditional treatment services and communicable disease control |
| 17. | Federal Parliament, Federal Executive, Local level related affairs, special structure |
| 18. | International trade, exchange, port, quarantine |
| 19. | Civil aviation, international airports |
| 20. | National transportation policies, management of railways and national highways |
| 21. | Laws relating to the Supreme Court, High Courts, District Courts, and administration of justice |
| 22. | Citizenship, passport, visa, immigration |
| 23. | Atomic energy, air space and astronomy |
| 24. | Intellectual property (including patents, designs, trademarks and copyrights) |
| 25. | Measurement |
| 26. | Mines excavation |
| 27. | National and international environment management, national parks, wildlife reserves and wetlands, national forest policies, carbon services |
| 28. | Insurance policies, securities, cooperatives regulation |
| 29. | Land use policies, human settlement development policies, tourism policies, environment adaptation |
| 30. | Criminal and civil laws making |
| 31. | Security printing |
| 32. | Social security and poverty alleviation |
| 33. | Constitutional Bodies, commissions of national importance |
| 34. | Sites of archaeological importance and ancient monuments |
| 35. | Any matter not enumerated in the Lists of Federal Powers, State Powers and Local level Powers or in the Concurrent List and any matter not specified in this Constitution and in the Federal law |
**DISCLAIMER: This document is prepared for general understanding and should not be taken for any legal purpose without consulting legal professionals. ** The copyright of the document is vested with PLA. **
