KATHMANDU, Nov 27: A total of 32 companies operating under foreign direct investment have forwarded applications at the One-Stop Service Center under the Department of Industry seeking repatriation of the dividend amounts.
The government has recently allowed the department to permit foreign companies to repatriate dividends, implementing the provision of the Foreign Investment and Transfer of Technology Act (FITTA). Earlier, the companies were needed to visit Nepal Rastra Bank to receive approval for the repatriation.
The center that houses 14 government agencies under single roof provides services ranging from registration of firms, repatriation, visa recommendation, land acquisition process, providing Exim Code and initial environmental examination to the procedures of exit if they wish to close their business in Nepal.
Dividend repatriation refers to the return of earnings from foreign subsidiaries to their parent companies back in the home country. The law has asked the department to provide approval within 15 days of receiving application, provided the companies fulfill all the legal procedures in the line.
According to the department, it has recently issued permission to three joint venture companies to take away the dividend amounts. These include Surya Nepal, Hulas Steel, and SRL Diagnostic Pvt Ltd. Of these, Surya Nepal has sought to repatriate Rs 900 million and Hulas Steel has started process to repatriate Rs 50 million out of the profits of Fiscal Year 2017/18.
Jeevan Prakash Sitaula, director-general of the department, told Republica that they allowed repatriation to the applicants that fulfilled the necessary legal procedures. According to him, the center can permit foreign firms to repatriate dividends of up to US$ 100,000.
The government has targeted to invite a large chunk of foreign investment to plug the resource gap in order to meet development goals. The minimum threshold for foreign direct investment has been maintained at Rs 50 million. To facilitate the foreign investors, the government has set up the One Stop Service Center under the provision of the FITTA that come online last March. However, the related regulation has yet to be enforced.
In the first four months of the current fiscal year, the center received applications from 104 foreign firms that have pledged foreign direct investment worth Rs 82.57 billion.
Sitaula said except the desk of the Finance Ministry, rest of the units of the prescribed government agencies have now been providing their service from the center. “We will be installing new software to introduce full-fledged automation system coordinating these government agencies in order to reduce the hassles of the excess paper works,” he said.