Foreign non-governmental organizations cannot start work in Nepal simply by opening an office. They must first obtain permission from the Social Welfare Council and sign formal agreements with it. This article explains the INGO registration process in Nepal in plain terms, with reference to the Social Welfare Act, 2049 (1992), the Income Tax Act, 2058 (2002), the Labour Act, 2074 (2017) and current administrative practice of the Social Welfare Council.
1. What Is an INGO and Which Law Governs INGO Registration in Nepal?
An INGO, or international non-governmental organization, is a non-profit body registered outside Nepal that wishes to carry out social, humanitarian or development work inside Nepal. In Nepalese law, it is treated differently from a company, a foreign investor or a local NGO.
The main law is the Social Welfare Act, 2049 (1992). Section 12 of the Act requires any foreign non-governmental organization that wants to work in Nepal to apply to the Social Welfare Council (SWC) for permission. The same section requires the organization, once permitted, to enter into an agreement with the Council before starting work. This agreement is commonly called the General Agreement.
Two other provisions are relevant:
- Section 13 requires social organizations and institutions established in Nepal to be affiliated with the Council.
- Section 16 requires such organizations to obtain prior approval of the Council before receiving foreign assistance.
Together, these provisions create the framework under which an INGO enters Nepal, partners with a local NGO and channels its funds.
The official text of the Act is available from the Nepal Law Commission at https://www.lawcommission.gov.np/. The Social Welfare Council publishes its procedures, formats and notices at https://www.swc.org.np/.
1.1. Is an INGO Registered Under the Companies Act or FITTA?
No. The Companies Act, 2063 (2006) governs companies, including the registration of a branch or liaison office of a foreign company under Section 154. The Foreign Investment and Technology Transfer Act, 2075 (2019) governs profit-oriented foreign investment in industries. An INGO is a non-profit body and does not fall under either regime. Its permission, agreement and supervision all sit with the Social Welfare Council, not the Office of the Company Registrar or the Department of Industry.
This distinction matters. Applying to the wrong authority wastes time and may create tax and immigration complications later.
2. What Are the Requirements for INGO Registration in Nepal?
The Social Welfare Act sets the legal basis. The Council then applies detailed administrative conditions through its directives, application formats and notices. These conditions change from time to time, so they should be checked with the Council at the time of filing. Current practice requires the following.
- Legal existence abroad. The INGO must be validly registered as a non-profit organization in its home country.
- Minimum funding commitment. The Council currently expects a committed annual funding of at least USD 200,000, supported by a clear donor commitment letter.
- General Agreement. The INGO must sign a General Agreement with the Council. In practice, this agreement runs for a fixed term, commonly between three and five years.
- Project Agreement. After the General Agreement, the INGO must submit and sign a Project Agreement. Current practice requires this within three months of the General Agreement.
- Local NGO partner. Projects must be implemented through a local NGO registered in Nepal and affiliated with the Council. The INGO does not implement projects directly.
- Liaison office in Nepal. The INGO must maintain a local office and an authorized local representative.
- Embassy recommendation. For a new registration, the Council currently asks for a recommendation from the embassy of the INGO’s home country in Nepal.
- Ongoing compliance. Annual audit, progress reporting and renewal of the agreement are mandatory.
2.1. Why Does an INGO Need a Local NGO Partner in Nepal?
The requirement flows from the structure of the Social Welfare Act. Section 16 places the duty to obtain Council approval for foreign assistance on the Nepalese organization receiving it. The INGO provides funding and technical support; the local NGO delivers the project on the ground. The tripartite Project Agreement between the INGO, the local NGO and the Council records this arrangement and the approved budget.
The local NGO must itself be in good standing. It must be registered under the Association Registration Act, 2034 (1977) at the District Administration Office, affiliated with the Council under Section 13 of the Social Welfare Act, and current on its tax filings.
3. Which Documents Are Required for INGO Registration in Nepal?
The Council reviews documents from both the INGO and its Nepalese partner. Foreign-language documents must be translated into Nepali and notarized. The table below sets out the documents commonly required under current Council practice.
| Documents from the INGO | Documents from the Local NGO Partner |
|---|---|
| Covering or request letter addressed to the Council | Registration certificate from the District Administration Office |
| Certificate of registration in the home country | SWC affiliation certificate |
| By-laws or constitution with clear objectives (if objectives are not clear, an additional certified objectives document) | By-laws of the NGO |
| Donor commitment letter showing minimum annual commitment of USD 200,000 | PAN registration certificate |
| Draft General Agreement in the prescribed SWC format | Latest audit report |
| Concept note or project proposal in both Nepali and English | Latest tax clearance certificate |
| Authorization letter for the local representative | Progress report of the most recent fiscal year |
| Letter of partnership with the local NGO | |
| Details of previous projects, including thematic focus and geographical coverage | |
| Tax clearance certificate (if applicable) | |
| PAN certificate | |
| Bio-data and citizenship certificate of the authorized person | |
| Embassy recommendation (new registration) | |
| Monitoring and evaluation (M&E) report (if applicable) | |
| Implementation plan based on earlier M&E recommendations (renewal) |
Two points deserve attention. First, the General Agreement must follow the Council’s own template. A freely drafted agreement will be returned. Second, the concept note must be bilingual. A Nepali version prepared only by machine translation is often rejected for inaccuracy.
4. What Is the Step-by-Step INGO Registration Process in Nepal?
- Step 1: Prepare the Home Registration Certificate and Supporting Documents
- Step 2: Draft the General Agreement, Project Agreement and Concept Note
- Step 3: Apply to the Social Welfare Council and Execute the General Agreement
- Step 4: Obtain Approval for a Bank Account and Local Office
- Step 5: Execute the Tripartite Project Agreement
- Step 6: Register With the Local Ward Office and Tax Office
Step 1: Prepare the Home Registration Certificate and Supporting Documents
Collect the INGO’s registration certificate, by-laws, board resolution and donor commitment letter from the home country. Have them notarized and, where required, legalized. Translate every document into Nepali and notarize the translations. Collect the local NGO’s registration, affiliation, PAN, audit and tax clearance documents at the same time. This stage typically takes about seven days if the home-country documents are ready.
Step 2: Draft the General Agreement, Project Agreement and Concept Note
Prepare the General Agreement in the prescribed SWC format. Prepare the concept note in Nepali and English, setting out objectives, target districts, beneficiaries, budget and the role of the local NGO. Draft the Project Agreement in parallel so that it can be filed promptly after the General Agreement. Drafting normally takes about seven days.
Step 3: Apply to the Social Welfare Council and Execute the General Agreement
File the application under Section 12 of the Social Welfare Act with all documents. The Council reviews the file, may seek clarification and may consult the relevant line ministry. Once approved, the INGO and the Council sign the General Agreement. In current practice this stage takes around fifteen days after a complete filing, though the Council’s internal review period can be longer.
Step 4: Obtain Approval for a Bank Account and Local Office
With the General Agreement in hand, the INGO applies for the Council’s approval to open a bank account in Nepal and to establish its liaison office. Banks will require the Council’s letter, the General Agreement and identification of the authorized signatories. Foreign currency inflows are handled by the bank under the Foreign Exchange (Regulation) Act, 2019 (1962) and the directives of Nepal Rastra Bank, available at https://www.nrb.org.np/. This step usually takes about seven days.
Step 5: Execute the Tripartite Project Agreement
The INGO, the local NGO and the Council sign the Project Agreement. It sets out the project title, duration, budget, district coverage, reporting schedule and the local NGO’s implementation role. The Council may adjust the budget or coverage before signing. This stage commonly takes around twenty days.
Step 6: Register With the Local Ward Office and Tax Office
After the agreements are signed, the INGO registers its presence with the ward office of the municipality where the liaison office is located and obtains a Permanent Account Number (PAN) from the Inland Revenue Department under Section 78 of the Income Tax Act, 2058. PAN is needed for banking, payroll and withholding. This step generally takes about three days.
| Step | Activity |
|---|---|
| 1 | Document collection, notarization and translation |
| 2 | Drafting General Agreement, Project Agreement and concept note |
| 3 | Application to SWC and execution of General Agreement |
| 4 | Approval for bank account and liaison office |
| 5 | Execution of tripartite Project Agreement |
| 6 | Ward office and tax office registration |
Axion Partners assists INGOs with each of these stages, including agreement drafting in the Council’s format and coordination with the local NGO partner.
5. What Are the Social Welfare Council Fees for INGO Registration?
The Social Welfare Council charges a fee that is linked to the approved project budget. The Council also collects a flat fee at the time of affiliation. The current tiers applied by the Council are set out below. These amounts are fixed administratively and are revised by the Council from time to time. They should be confirmed with the Council before payment.
| Approved Project Budget (USD) | Council Fee (USD, indicative) |
|---|---|
| 75,000 to 750,000 | 4,511 |
| 750,000 to 1.5 million | 6,391 |
| 1.5 million to 2.25 million | 7,707 |
| 2.25 million to 3 million | 9,022 |
| 3 million to 3.75 million | 10,338 |
In addition to the tiered fee, a flat fee of USD 1,000 is currently payable.
Separate costs arise outside the Council. The ward office charges a local registration fee that varies by municipality. Translation and notarization are charged per page by the notary. These are not Council fees and are not fixed by the Social Welfare Act.
6. How Long Does INGO Registration Take in Nepal?
A complete INGO registration in Nepal often takes around three to nine months from the start of document preparation to the signing of the Project Agreement. This estimate assumes that the home-country documents are ready, the donor commitment is clear and the local NGO partner is compliant.
Delays usually arise from four sources:
- Incomplete or unlegalized home-country documents.
- A concept note that does not match the Council’s thematic or geographical priorities.
- A local NGO partner with an expired affiliation or missing tax clearance.
- Ministry-level consultation on sensitive sectors or districts.
The Social Welfare Act gives the Council a defined period to decide on an application under Section 12. In practice, the working timeline depends heavily on the completeness of the file. No authority guarantees a fixed date, and any such assurance should be treated with caution.
7. What Are the Compliance Obligations After INGO Registration in Nepal?
Registration is the beginning of a continuing relationship with the Council and other regulators. The main obligations are as follows.
7.1. Annual Audit and Progress Reporting
The General Agreement and Project Agreement require the INGO to submit annual progress reports and audited financial statements to the Council. The Council conducts monitoring and evaluation of projects and may issue recommendations. For renewal, the INGO must show how earlier M&E recommendations were implemented.
7.2. Renewal of the General Agreement
The General Agreement has a fixed term. Before it expires, the INGO must apply for renewal with updated documents, a fresh donor commitment and a renewal implementation plan. Working without a valid agreement is a breach of Section 12 of the Social Welfare Act.
8. Does an INGO Pay Tax in Nepal?
An INGO does not automatically become a taxpayer on its grant income. Section 2 of the Income Tax Act, 2058 defines an exempt organization to include social and charitable organizations of a public nature that are registered without a profit motive. Section 10 lists amounts that are exempt from tax. To benefit, the organization must apply to the Inland Revenue Department for an exempt organization certificate and keep its registration current.
Exemption from income tax does not remove withholding duties. When an INGO pays salaries, it must withhold tax under Section 87. Payments for services and contracts attract withholding under Sections 88 and 89. The withheld amounts must be deposited and reported through the tax office. Guidance is available from the Inland Revenue Department at https://ird.gov.np/.
8.1. Do Expatriate Staff of an INGO Need a Work Permit in Nepal?
Yes. Section 22 of the Labour Act, 2074 prohibits the employment of a foreign national in Nepal without a work permit from the Department of Labour. This applies to expatriate staff and international consultants of an INGO. In practice, the process involves approval from the Department of Labour, a recommendation through the Ministry of Home Affairs and a non-tourist visa from the Department of Immigration under the Immigration Act, 2049 (1992). A tourist visa does not permit work.
READ MORE: OBTAINING BUSINESS VISA IN NEPAL
9. How Is an INGO Different From an NGO or a Foreign Company in Nepal?
Foreign organizations sometimes choose the wrong structure for Nepal. A brief comparison helps.
A local NGO is a Nepalese body registered under the Association Registration Act, 2034 at the District Administration Office and affiliated with the Council under Section 13 of the Social Welfare Act. Its members are Nepali citizens. It can receive foreign assistance only with the Council’s prior approval under Section 16.
An INGO is a foreign body that obtains permission under Section 12 of the Social Welfare Act and works through a local NGO. It does not register with the Office of the Company Registrar. It does not hold a foreign investment approval.
A foreign company registers a branch or liaison office under Section 154 of the Companies Act, 2063 with the Office of the Company Registrar. If it invests in an industry, it needs approval under FITTA from the Department of Industry. A foreign company is a profit-seeking entity and is taxed accordingly.
An organization that wants to run a social project without profit should follow the INGO route. An organization that wants to sell services or earn income in Nepal should follow the company and FITTA route. Mixing the two, for example by running commercial activities through an INGO, breaches both the Social Welfare Act and the tax law.
Axion Partners advises organizations on selecting the correct structure at the outset and on managing the resulting compliance.
Can an INGO Implement Projects Directly Without a Local NGO in Nepal?
No. Under current Social Welfare Council practice and the framework of Sections 12 and 16 of the Social Welfare Act, an INGO funds and supports projects, but implementation must be carried out by a Council-affiliated Nepalese NGO under a tripartite Project Agreement.
Can an INGO Open a Bank Account in Nepal Before Signing the General Agreement?
No. Banks require the Council’s approval letter and the signed General Agreement before opening an account for an INGO. Foreign currency transactions are then processed by the bank under the Foreign Exchange (Regulation) Act, 2019 and Nepal Rastra Bank directives.
What Happens If an INGO Works in Nepal Without Social Welfare Council Permission?
Working without permission breaches Section 12 of the Social Welfare Act, 2049. The Council may refuse future applications, direct partner NGOs to stop the project, and refer the matter for action under the Act and immigration and tax laws.
Is the USD 200,000 Minimum Funding a Legal Requirement Under the Social Welfare Act?
No. The Social Welfare Act does not fix a minimum amount. The USD 200,000 annual commitment is an administrative threshold currently applied by the Social Welfare Council through its procedures, and the Council may revise it by notice.
Does an INGO Need to Renew Its PAN or Tax Exemption Certificate Each Year?
The PAN itself does not expire. However, the exempt organization certificate issued by the Inland Revenue Department is subject to renewal, and the INGO must file annual returns and withholding statements to keep its tax status and Council affiliation in good standing.
