Introduction to International Non-Governmental Organizations in Nepal
International Non-Governmental Organizations (INGOs) play a crucial role in Nepal’s development landscape. These organizations contribute significantly to various sectors, including education, health, poverty alleviation, and disaster relief. The Government of Nepal recognizes the importance of INGOs and has established a comprehensive legal framework to regulate their operations within the country.
INGOs in Nepal operate under the supervision of the Social Welfare Council (SWC), which is the primary regulatory body for non-governmental organizations. The SWC is responsible for overseeing the registration, monitoring, and coordination of INGOs’ activities in Nepal. As of 2021, there are over 250 registered INGOs working in various development sectors across the country.
To operate legally in Nepal, INGOs must undergo a rigorous registration process and comply with various legal requirements. This article provides a comprehensive guide to INGO registration in Nepal, covering the legal framework, essential requirements, documentation, and compliance obligations.
Legal Framework for INGO Registration Process Nepal
The legal framework governing INGOs in Nepal is primarily based on the following laws and regulations:
- Social Welfare Act, 2049 (1992)
- Social Welfare Rules, 2049 (1992)
- Association Registration Act, 2034 (1977)
- National Directive Act, 2018
These laws provide the foundation for INGO registration and operation in Nepal. The Social Welfare Act and Rules outline the registration process, while the Association Registration Act governs the formation and management of non-profit organizations. The National Directive Act ensures that INGOs align their activities with national priorities and development goals.
Under this legal framework, INGOs are required to:
- Register with the Social Welfare Council
- Obtain approval for their projects from relevant government agencies
- Comply with reporting and financial requirements
- Adhere to local laws and regulations
It is essential for INGOs to familiarize themselves with these laws and regulations to ensure smooth operation and compliance in Nepal.
Essential Requirements for INGO Registration in Nepal
To register an INGO in Nepal, organizations must meet several essential requirements:
- Legal Status: The INGO must be legally registered in its home country and provide proof of registration.
- Objectives: The organization’s objectives must align with Nepal’s development priorities and not conflict with national interests.
- Local Representation: INGOs are required to have a local representative or liaison office in Nepal.
- Board of Directors: A board of directors or executive committee must be established, with at least one Nepali citizen as a member.
- Financial Capacity: The INGO must demonstrate sufficient financial capacity to implement its proposed projects in Nepal.
- Memorandum of Association: A comprehensive memorandum of association outlining the organization’s structure, objectives, and operational procedures is required.
- Country Agreement: INGOs must sign a general agreement with the Social Welfare Council, outlining their commitment to work in Nepal.
Meeting these requirements is crucial for successful INGO registration in Nepal. Organizations should carefully review and prepare all necessary documents and information before initiating the registration process.
Documentation Requirements for INGO Registration Application Nepal
The INGO registration application in Nepal requires a comprehensive set of documents. Here’s a list of the essential documentation:
- Application Form: A completed INGO registration application form obtained from the Social Welfare Council.
- Registration Certificate: A notarized copy of the organization’s registration certificate from its home country.
- Constitution/Bylaws: A copy of the organization’s constitution or bylaws, translated into Nepali if in a foreign language.
- Financial Statements: Audited financial statements for the past three years, demonstrating the organization’s financial capacity.
- Project Proposal: A detailed project proposal outlining the organization’s planned activities in Nepal.
- Recommendation Letters: Letters of recommendation from relevant government agencies or diplomatic missions.
- Tax Clearance: Proof of tax clearance from the organization’s home country.
- Board Resolution: A board resolution authorizing the registration process in Nepal.
- Commitment Letter: A letter committing to comply with Nepali laws and regulations.
- Local Representative: Documentation appointing a local representative in Nepal.
All documents must be submitted in both English and Nepali languages, with official translations where necessary. Ensuring all required documentation is complete and accurate will help expedite the registration process.
Step by Step Process for INGO Registration Nepal
The INGO registration process in Nepal involves several steps:
- Preliminary Consultation: Schedule a meeting with the Social Welfare Council to discuss the registration process and requirements.
- Document Preparation: Gather and prepare all necessary documents as outlined in the previous section.
- Application Submission: Submit the completed application form along with all required documents to the Social Welfare Council.
- Initial Review: The SWC conducts an initial review of the application and may request additional information or clarifications.
- Inter-Ministerial Evaluation: The application is forwarded to relevant ministries for evaluation and recommendations.
- SWC Board Approval: Upon positive recommendations, the SWC board reviews and approves the application.
- General Agreement Signing: Once approved, the INGO signs a general agreement with the SWC, outlining terms of operation in Nepal.
- Registration Certificate Issuance: The SWC issues an official registration certificate to the INGO.
This process typically takes several months to complete, depending on the complexity of the application and the responsiveness of various government agencies involved.
Financial Requirements for INGO Operation in Nepal
INGOs operating in Nepal must adhere to specific financial requirements:
- Minimum Budget: INGOs are required to have a minimum annual budget of NPR 20 million (approximately USD 170,000) for their operations in Nepal.
- Local Expenditure: At least 80% of the INGO’s budget must be spent on direct project implementation in Nepal.
- Administrative Costs: Administrative expenses should not exceed 20% of the total project budget.
- Bank Account: INGOs must maintain a separate bank account in Nepal for all financial transactions related to their projects.
- Financial Reporting: Regular financial reports must be submitted to the Social Welfare Council and relevant government agencies.
- Audit Requirements: Annual audits must be conducted by a registered auditor in Nepal, with reports submitted to the SWC.
- Fund Transfer: All funds for INGO operations must be channeled through official banking systems.
Compliance with these financial requirements is crucial for maintaining good standing with Nepali authorities and ensuring transparency in INGO operations.
Government Fees Structure for INGO Registration Nepal
The government of Nepal has established a fee structure for INGO registration and renewal:
- Initial Registration Fee: NPR 50,000 (approximately USD 425)
- Annual Renewal Fee: NPR 25,000 (approximately USD 212)
- Project Agreement Fee: 0.5% of the total project budget, with a minimum of NPR 10,000 (USD 85)
- Document Certification Fee: NPR 500 (USD 4.25) per document
These fees are subject to change, and INGOs should verify the current fee structure with the Social Welfare Council at the time of application or renewal.
Timeline Requirements for INGO Registration Process Nepal
The INGO registration process in Nepal typically follows these timeline requirements:
- Application Processing: The Social Welfare Council aims to process applications within 90 days of submission.
- Inter-Ministerial Review: Relevant ministries are given 30 days to provide their recommendations.
- Additional Information Requests: INGOs must respond to requests for additional information within 15 days.
- General Agreement Signing: Once approved, the general agreement should be signed within 30 days.
- Project Agreement: After registration, INGOs must sign project agreements within 6 months.
- Annual Renewal: INGO registrations must be renewed annually, with applications submitted at least 30 days before expiration.
While these are the standard timelines, actual processing times may vary depending on the complexity of the application and the current workload of government agencies.
Compliance Requirements for INGOs Operating in Nepal
INGOs operating in Nepal must adhere to various compliance requirements:
- Project Alignment: All projects must align with Nepal’s national development priorities.
- Local Partnerships: INGOs are encouraged to partner with local organizations for project implementation.
- Employment Practices: INGOs must prioritize hiring Nepali nationals for their operations.
- Reporting: Regular progress reports must be submitted to the Social Welfare Council and relevant ministries.
- Monitoring and Evaluation: INGOs must allow government agencies to monitor and evaluate their projects.
- Financial Transparency: All financial transactions must be transparent and properly documented.
- Code of Conduct: INGOs must adhere to the Code of Conduct for Social Organizations issued by the SWC.
- Legal Compliance: INGOs must comply with all relevant Nepali laws and regulations.
Failure to meet these compliance requirements may result in penalties, suspension, or cancellation of the INGO’s registration in Nepal.
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Role of Social Welfare Council in Nepal
The Social Welfare Council (SWC) plays a central role in regulating INGOs in Nepal:
- Registration: The SWC is responsible for processing INGO registration applications.
- Coordination: It coordinates between INGOs and various government agencies.
- Monitoring: The SWC monitors INGO activities to ensure compliance with laws and agreements.
- Policy Formulation: It contributes to policy formulation regarding NGO and INGO operations in Nepal.
- Capacity Building: The SWC provides capacity-building support to NGOs and INGOs.
- Information Dissemination: It maintains a database of NGOs and INGOs and disseminates information about their activities.
- Conflict Resolution: The SWC helps resolve conflicts between INGOs and government agencies.
INGOs must maintain a good working relationship with the SWC to ensure smooth operations in Nepal.
Project Agreement Process for INGOs in Nepal
After registration, INGOs must sign project agreements for each project they implement:
- Project Proposal Submission: Submit a detailed project proposal to the SWC.
- Line Ministry Approval: Obtain approval from the relevant line ministry.
- SWC Review: The SWC reviews the proposal and ministry recommendations.
- Agreement Negotiation: Negotiate the terms of the project agreement with the SWC.
- Agreement Signing: Sign the project agreement, which outlines project details, budget, and timeline.
Project agreements are typically valid for up to five years and must be renewed or renegotiated upon expiration.
Tax Obligations for INGOs Operating in Nepal
INGOs in Nepal have specific tax obligations:
- Income Tax: INGOs are generally exempt from income tax, but must obtain an exemption certificate.
- Value Added Tax (VAT): INGOs must pay VAT on goods and services, but can apply for reimbursement.
- Customs Duty: Exemptions may be available for imported goods used in project implementation.
- Employee Taxes: INGOs must withhold and remit income tax for their employees.
- Social Security Fund: Contributions to the Social Security Fund are mandatory for Nepali employees.
INGOs should consult with local tax experts to ensure full compliance with Nepali tax laws.
Annual Reporting Requirements for INGOs in Nepal
INGOs must submit annual reports to the Social Welfare Council, including:
- Progress Report: Detailing activities, achievements, and challenges faced during the year.
- Financial Report: Audited financial statements and details of fund utilization.
- Work Plan: Proposed activities and budget for the coming year.
- Human Resource Report: Information on staff, including expatriates and local employees.
- Asset Register: List of assets acquired during the year.
These reports must be submitted within three months of the end of the Nepali fiscal year (mid-July).
Renewal Process for INGO Registration in Nepal
INGO registrations in Nepal must be renewed annually:
- Renewal Application: Submit a renewal application to the SWC at least 30 days before expiration.
- Progress Report: Provide a comprehensive report of activities and achievements.
- Audit Report: Submit audited financial statements for the previous year.
- Tax Clearance: Provide proof of tax clearance from Nepali authorities.
- Renewal Fee: Pay the annual renewal fee of NPR 25,000.
Timely renewal is crucial to maintain legal status and continue operations in Nepal.
Legal Restrictions for INGOs Operating in Nepal
INGOs in Nepal face certain legal restrictions:
- Political Activities: INGOs are prohibited from engaging in political activities or supporting political parties.
- Religious Proselytization: Activities aimed at religious conversion are not allowed.
- Profit-Making: INGOs cannot engage in profit-making activities.
- Fund Raising: Local fund-raising is restricted without specific government approval.
- Restricted Areas: Work in certain geographically restricted areas requires special permission.
- Expatriate Staff: The number of expatriate staff is limited and requires government approval.
INGOs must carefully navigate these restrictions to maintain their legal status in Nepal.
FAQs:
1. How long does it take to register an INGO in Nepal?
The INGO registration process typically takes 3-6 months, depending on the completeness of the application and the responsiveness of government agencies.
2. What is the minimum budget requirement for INGO registration?
INGOs are required to have a minimum annual budget of NPR 20 million (approximately USD 170,000) for their operations in Nepal.
3. Can foreigners be board members of INGOs?
Yes, foreigners can be board members, but at least one Nepali citizen must be included on the board of directors or executive committee.
4. Is local partnership mandatory for INGOs in Nepal?
While not strictly mandatory, INGOs are strongly encouraged to partner with local organizations for project implementation.
5. What are the annual reporting requirements for INGOs?
INGOs must submit annual progress reports, financial statements, work plans, and human resource reports to the Social Welfare Council within three months of the fiscal year-end.
6. How often must INGOs renew their registration?
INGO registrations must be renewed annually, with applications submitted at least 30 days before the expiration date.
7. What are the tax obligations for INGOs?
INGOs are generally exempt from income tax but must pay VAT and employee-related taxes. They may also be eligible for customs duty exemptions on imported goods for project use.
Table of Contents
- 1 Introduction to International Non-Governmental Organizations in Nepal
- 2 Legal Framework for INGO Registration Process Nepal
- 3 Essential Requirements for INGO Registration in Nepal
- 4 Documentation Requirements for INGO Registration Application Nepal
- 5 Step by Step Process for INGO Registration Nepal
- 6 Financial Requirements for INGO Operation in Nepal
- 7 Government Fees Structure for INGO Registration Nepal
- 8 Timeline Requirements for INGO Registration Process Nepal
- 9 Compliance Requirements for INGOs Operating in Nepal
- 10 Role of Social Welfare Council in Nepal
- 11 Project Agreement Process for INGOs in Nepal
- 12 Tax Obligations for INGOs Operating in Nepal
- 13 Annual Reporting Requirements for INGOs in Nepal
- 14 Renewal Process for INGO Registration in Nepal
- 15 Legal Restrictions for INGOs Operating in Nepal
- 16 FAQs:
- 16.1 1. How long does it take to register an INGO in Nepal?
- 16.2 2. What is the minimum budget requirement for INGO registration?
- 16.3 3. Can foreigners be board members of INGOs?
- 16.4 4. Is local partnership mandatory for INGOs in Nepal?
- 16.5 5. What are the annual reporting requirements for INGOs?
- 16.6 6. How often must INGOs renew their registration?
- 16.7 7. What are the tax obligations for INGOs?