Breaking: Nepali IT Companies Can Now Open Offices Abroad (FITTA Amendment 2025)

For decades, the Act Restricting Investment Abroad, 1964 (2021 BS) made it illegal for Nepali companies to invest even a single rupee outside Nepal. This “closed border” policy was a massive bottleneck for Nepal’s booming IT sector.

That changed in 2025.

On January 10, 2025, an Ordinance amending the Foreign Investment and Technology Transfer Act (FITTA) and approved by Parliament in March, famously opened the door for Nepali industries to go global.

Key Changes for IT & Tech Companies

The amendments specifically target the information technology and manufacturing sectors, acknowledging that software businesses need a global footprint.

1. Opening Branch Offices Abroad

• The Old Rule: You could export software code, but you couldn’t pay for a sales office in New York or Sydney. You had to rely on foreign agents.
• The New Law (2025): Nepali IT companies are now authorized to establish branch offices in foreign countries.
• Why it matters: This allows Nepali tech firms to bill clients directly in USD/EUR, have a legal face in client markets, and build trust with Enterprise customers who prefer local contracts.

2. Technology Transfer & Export

The law now explicitly permits “Technology Transfer” from Nepal to foreign entities.

• This covers selling IP, licensing software, and franchising Nepali brands abroad.
• The Nepal Rastra Bank (NRB) is tasked with creating the forex facility framework to allow specific capital outflows (e.g., paying for office rent or legal fees abroad) from the company’s foreign earnings.

3. ESOP (Employee Stock Ownership Plans)

A game-changer for startups. The amendment introduces flexibility for ESOPs.

• Previously, issuing stock options to foreign advisors or employees was legally grey.
• The new rules clarify that Nepali companies—especially those with foreign investment—can participate in ESOP mechanisms/vesting more easily, aligning with global startup standards.

The Fine Print: What is Still Restricted?

While this is a breakthrough, it is not a blanket permission for capital flight.

1. Restricted Sectors Only: Real estate developers or trading traders still cannot invest abroad. This privilege is limited to industries exporting technology or goods that require a foreign presence for marketing.
2. Earnings-Based Cap: Typically, the NRB allows investment only from a percentage of the foreign currency earnings of the company. You cannot convert your NPR domestic profits to buy a house in Dubai.
3. Reporting: Strict audit requirements are in place. Profits generated by the foreign branch must be repatriated to Nepal eventually.

Conclusion

The 2025 FITTA Amendment is the most progressive step for the Nepali digital economy in history. For software houses, it means the ability to compete on a level playing field with Indian and Vietnamese dev shops.

Next Steps for Founders:

• Consult a corporate lawyer to update your company charter.
• Wait for the specific Nepal Rastra Bank (NRB) by-laws (Circular) to know the exact dollar limits for opening your first office covering rent and payroll.