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Automobile Industry Registration in Nepal

The automobile industry is an emerging sector in Nepal with growing demand for vehicles, spare parts, and automobile-related services. Investors and entrepreneurs intending to establish automobile manufacturing, assembling, or trading industries must register their enterprise under the legal framework of Nepal. Registration requires compliance with the Company Act 2063 (2006), Industrial Enterprises Act 2076 (2019), Foreign Investment and Technology Transfer Act (FITTA) 2019, and tax registration laws such as the Income Tax Act 2058 (2002) and Value Added Tax Act 2052 (1996).

This article prepared by Medha Law and Partners – a leading corporate and best law firm in Nepal explains the entire process of automobile industry registration in Nepal, including laws, authorities, required documents, procedural steps, costs, timelines, compliance obligations, and post-registration responsibilities.

Introduction

Automobile industry registration in Nepal allows investors to establish units for vehicle assembly, automobile manufacturing, or spare parts production. The industry is classified as a special manufacturing sector under the Industrial Enterprises Act 2076. Investors must incorporate a company with the Office of the Company Registrar (OCR) and register the industry with the Department of Industry (DOI). For foreign investors, approval from the Department of Foreign Investment and Technology Transfer (DoFIT) is required under FITTA 2019. Environmental approvals, tax registration, and labor compliance are mandatory for the operation of the automobile sector. Medha Law and Partners Is a leading law firm in Nepal.

Legal Framework for Automobile Industry in Nepal

The automobile industry is regulated under several acts, including:

  • Company Act 2063 (2006) – governs incorporation of companies.

  • Industrial Enterprises Act 2076 (2019) – governs registration and operation of industries.

  • Foreign Investment and Technology Transfer Act (FITTA) 2019 – governs foreign investment.

  • Environment Protection Act 2076 (2019) and Regulation 2077 (2020) – require IEE/EIA.

  • Labor Act 2074 (2017) – governs employment, workplace safety, and benefits.

  • Income Tax Act 2058 (2002) – regulates corporate income tax.

  • Value Added Tax Act 2052 (1996) – mandates VAT registration.

  • Customs Act 2064 (2007) – regulates import of automobile components and spare parts.

Authorities Involved

  • Office of the Company Registrar (OCR) – for company incorporation.

  • Department of Industry (DOI) – for industrial registration.

  • Department of Foreign Investment and Technology Transfer (DoFIT) – for foreign investment approval.

  • Inland Revenue Department (IRD) – for PAN and VAT registration.

  • Ministry of Forest and Environment (MoFE) – for IEE/EIA approval.

  • Social Security Fund (SSF) – for employee social security registration.

  • Department of Customs – for automobile imports and clearance.

  • Local Municipality/Ward Office – for business operation permits.

Documents Required for Automobile Industry Registration in Nepal

The following documents are required to register an automobile industry:

  • Application form prescribed under Industrial Enterprises Act 2076.

  • Memorandum of Association (MOA) and Articles of Association (AOA).

  • Citizenship certificates of promoters or passport copies (for foreign investors).

  • Company Registration Certificate from OCR.

  • Tax clearance certificate of promoters.

  • Feasibility study report of automobile industry project.

  • Land ownership certificate or lease agreement.

  • Building permit approval from local authority.

  • Environmental clearance (IEE/EIA) from MoFE.

  • List of machinery, equipment, and spare parts to be imported.

  • Employment plan and labor compliance details.

  • Bank statement or proof of financial capability.

  • PAN and VAT registration documents.

  • Power of Attorney (if applicable).

Step-by-Step Process of Automobile Industry Registration

1: Company Incorporation

  • Register the company with OCR under Company Act 2063.

  • Submit MOA, AOA, and necessary documents.

2: Industry Registration at DOI

  • Submit application form and feasibility report.

  • Obtain industry registration certificate under Industrial Enterprises Act 2076.

3: Foreign Investment Approval (if applicable)

  • Submit proposal to DoFIT under FITTA 2019.

  • Provide investment plan, capital transfer details, and technology agreements.

4: PAN and VAT Registration

  • Register with IRD for PAN.

  • Obtain VAT certificate under Value Added Tax Act 2052.

5: Environmental Compliance

  • Conduct IEE for small-scale units.

  • Conduct EIA for large-scale automobile factories.

  • Obtain approval from MoFE.

6: Social Security Fund (SSF) Registration

  • Register employees under Labor Act 2074.

  • Contribute to SSF regularly.

7: Import Approval and Customs Clearance

  • Register with Department of Customs for automobile imports.

  • Submit list of parts and equipment for duty clearance.

8: Local Operation Permit

  • Obtain operating license from local municipality or ward office.

Cost of Automobile Industry Registration in Nepal

  • Company incorporation fee: NRs. 10,000 – 50,000 depending on authorized capital.

  • Industry registration fee at DOI: NRs. 15,000 – 100,000 depending on investment size.

  • Environmental approval cost: NRs. 200,000 – 1,500,000 depending on IEE or EIA.

  • Customs duty and excise: As prescribed under Customs Act 2064.

  • Professional service costs: Vary based on legal and consultancy requirements.

Timeline for Registration

  • Company registration: 7–10 days.

  • Industry registration: 15–30 days.

  • Foreign investment approval: 30–60 days.

  • Environmental approval: 3–6 months.

  • PAN/VAT registration: 3–7 days.

  • Customs clearance registration: 10–15 days.

Estimated timeline: 4–7 months depending on the investment structure.

Compliance Obligations After Registration

  • Renew company records annually at OCR.

  • Submit annual industry reports to DOI.

  • File tax returns with IRD and pay corporate taxes.

  • Contribute to Social Security Fund.

  • Renew VAT and PAN certificates as required.

  • Maintain labor safety standards under Labor Act 2074.

  • Conduct periodic environmental monitoring.

Advantages of Registering Automobile Industry in Nepal

  • Legal recognition for automobile operations.

  • Access to customs and import facilities.

  • Eligibility for tax incentives under Industrial Enterprises Act 2076.

  • Protection of investment under FITTA 2019.

  • Access to growing domestic automobile market.

  • Participation in regional trade agreements such as SAFTA.

Challenges in Registration

  • Lengthy environmental clearance process.

  • High customs duty on imports of parts and machinery.

  • Land acquisition issues.

  • Coordination with multiple authorities.

  • Compliance burden for foreign investors.

FAQs on Automobile Industry Registration in Nepal

Q1. Which authority registers automobile industries in Nepal?
The Department of Industry (DOI) registers automobile industries after company incorporation with OCR, as per Industrial Enterprises Act 2076.

Q2. Can foreign investors establish automobile factories in Nepal?
Yes, foreign investors can establish automobile factories in Nepal with approval from DoFIT under FITTA 2019.

Q3. Is environmental clearance required for automobile industries?
Yes, automobile industries require IEE or EIA approval under the Environment Protection Act 2076 before operation.

Q4. How long does registration take?
The overall registration process can take 4–7 months depending on environmental approval and investment scale.

Q5. What are the tax obligations for automobile industries?
Industries must register for PAN and VAT and comply with the Income Tax Act 2058 and VAT Act 2052 by filing regular returns.

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