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Nepali IT companies are now allowed to invest abroad. The government of Nepal has brought forward a new decision with the aim of making Nepali companies working in the information technology (IT) sector competitive in the international market.
The new ordinance brought by the meeting of the Council of Ministers on January 26 has prepared a legal basis for Nepali IT companies to establish branch offices abroad, invest, and repatriate the earned income legally.
This is the reaction of the experts in the field that the government has tried to address one of the major demands raised by entrepreneurs active in the IT sector of Nepal for a long time.
Prime Minister KP Sharma Oli said about this in a Facebook post on Saturday, 'There were some legal difficulties for those working in the field of IT in Nepal . Now Nepali IT companies will be able to invest abroad, earn money by opening branch offices abroad and bring in the money earned legally.' According to the arrangements contained in the
ordinance, companies based on information technology will be able to receive foreign exchange facilities from Nepal Rastra Bank.
For this, the concerned company will have to apply to the Ministry of Communication and Information Technology, and after the Ministry reviews the company's commercial capacity and grants approval, the ordinance provides that Nepal Rastra Bank will provide the same facility for one time.
Besides, the new Ordinance also has a provision to encourage the establishment of IT service industries within the Special Economic Zone.
It provides concessions like tax breaks in special economic zones. Similarly, on behalf of the government, a commitment has been expressed to remove other existing legal difficulties for Nepali IT companies to compete internationally.
A report published by the Institute for Integrated Development Studies on the current state of Nepal's IT sector and its challenges shows that the total value of Nepal's IT service export industry in 2022 reached about US$ 515 million, with more than 106 IT service export companies and 14,728 software companies. It was mentioned that independent professionals (freelancers) involved in the development and technology sector are active.
Similarly, IT service exports contributed 1.4% to Nepal's gross domestic product (GDP) and 5.5% to foreign exchange reserves, and the report pointed out that the growth of IT sector is positive for Nepal.
Prime Minister Oli has further said, 'Yesterday's cabinet meeting has recommended to the honorable president a law to facilitate repatriation of IT earnings through an ordinance. We believe this will develop IT as a foreign exchange earning industry.'
