Nepal Economy Profile - Doing Business 2020
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Doing Business 2020 Nepal
Economy Profile
Nepal
Page 1
Doing Business 2020 Nepal
Economy Profile of Nepal
Doing Business 2020 Indicators
(in order of appearance in the document)
Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company
Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety
mechanisms in the construction permitting system
Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the
transparency of tariffs
Registering property Procedures, time and cost to transfer a property and the quality of the land administration system
Getting credit Movable collateral laws and credit information systems
Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance
Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling
processes
Trading across borders Time and cost to export the product of comparative advantage and import auto parts
Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes
Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for
insolvency
Employing workers Flexibility in employment regulation and redundancy cost
Page 2Doing Business 2020 Nepal
About Doing Business
The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and
regional level.
The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life
cycle.
Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for
starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across
borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings
of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does
present the data for these indicators.
By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages
economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector
researchers and others interested in the business climate of each economy.
In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation.
These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected
cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked.
The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most
indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013
(Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data
for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from
feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the
regulatory environment for business around the world.
To learn more about Doing Business please visit doingbusiness.org
Page 3Doing Business 2020 Nepal
Ease of Doing Business in DB RANK DB SCORE
Region South Asia
Nepal
Income Category Low income
Population 28,087,871
94 63.2
City Covered Kathmandu
Rankings on Doing Business topics - Nepal
37
60
79
87
97
107
135 135
151
175
Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving
a with Electricity Property Credit Minority Taxes across Contracts Insolvency
Business Construction Investors Borders
Permits
Topic Scores
81.7 67.3 60.9 63.6 75.0 58.0 47.1 85.1 46.0 47.2
Starting a Business (rank) 135 Getting Credit (rank) 37 Trading across Borders (rank) 60
Score of starting a business (0-100) 81.7 Score of getting credit (0-100) 75.0 Score of trading across borders (0-100) 85.1
Procedures (number) 8 Strength of legal rights index (0-12) 10 Time to export
Time (days) 22.5 Depth of credit information index (0-8) 5 Documentary compliance (hours) 43
Cost (number) 20.2 Credit registry coverage (% of adults) 0.0 Border compliance (hours) 11
Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 7.3 Cost to export
Documentary compliance (USD) 110
Dealing with Construction Permits (rank) 107 Protecting Minority Investors (rank) 79 Border compliance (USD) 103
Score of dealing with construction permits (0-100) 67.3 Score of protecting minority investors (0-100) 58.0 Time to export
Procedures (number) 12 Extent of disclosure index (0-10) 6.0 Documentary compliance (hours) 48
Time (days) 118 Extent of director liability index (0-10) 1.0 Border compliance (hours) 11
Cost (% of warehouse value) 8.6 Ease of shareholder suits index (0-10) 9.0 Cost to export
Building quality control index (0-15) 10.0 Extent of shareholder rights index (0-6) 5.0 Documentary compliance (USD) 80
Extent of ownership and control index (0-7) 4.0 Border compliance (USD) 190
Getting Electricity (rank) 135 Extent of corporate transparency index (0-7) 4.0
Score of getting electricity (0-100) 60.9 Enforcing Contracts (rank) 151
Procedures (number) 5 Paying Taxes (rank) 175 Score of enforcing contracts (0-100) 46.0
Time (days) 49 Score of paying taxes (0-100) 47.1 Time (days) 910
Cost (% of income per capita) 785.8 Payments (number per year) 46 Cost (% of claim value) 27.3
Reliability of supply and transparency of tariff index (0-8) 0 Time (hours per year) 377 Quality of judicial processes index (0-18) 6.0
Total tax and contribution rate (% of profit) 41.8
Registering Property (rank) 97 Postfiling index (0-100) 33.3 Resolving Insolvency (rank) 87
Score of registering property (0-100) 63.6 Score of resolving insolvency (0-100) 47.2
Procedures (number) 4 Recovery rate (cents on the dollar) 41.2
Time (days) 6 Time (years) 2.0
Cost (% of property value) 5.8 Cost (% of estate) 9.0
Quality of the land administration index (0-30) 6.0 Outcome (0 as piecemeal sale and 1 as going 0
concern)
Strength of insolvency framework index (0-16) 8.0
Page 4Doing Business 2020 Nepal
Starting a Business
This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and
formally operate in each economy’s largest business city.
To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to
10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of
operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one
company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their
scores for starting a business. These scores are the simple average of the scores for each of the component indicators.
The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure Case study assumptions
Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the
(number) procedures are used. It is assumed that any required information is readily available and that the
entrepreneur will pay no bribes.
• Preregistration (for example, name verification or reservation,
notarization)
The business:
• Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited
• Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is
company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the
statistical office.
• Obtaining approval from spouse to start a business or to leave
-Operates in the economy’s largest business city. For 11 economies the data are also collected for
the home to register the company
the second largest business city.
• Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of
registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle
products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily
Time required to complete each procedure (calendar days)
polluting production processes.
• Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits.
-Is 100% domestically owned.
• Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the
start on the same day)
company shares, two owners have 20% of shares each, and two owners have 15% of shares
• Procedures fully completed online are recorded as ½ day each.
-Is managed by one local director.
• Procedure is considered completed once final document is
received -Has between 10 and 50 employees one month after the commencement of operations, all of them
domestic nationals.
• No prior contact with officials -Has start-up capital of 10 times income per capita.
-Has an estimated turnover of at least 100 times income per capita.
Cost required to complete each procedure (% of income per
-Leases the commercial plant or offices and is not a proprietor of real estate.
capita)
-Has an annual lease for the office space equivalent to one income per capita.
• Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet).
-Has a company deed that is 10 pages long.
• No professional fees unless services required by law or
commonly used in practice
The owners:
Paid-in minimum capital (% of income per capita)
-Have reached the legal age of majority and are capable of making decisions as an adult. If there
• Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old.
or up to 3 months after incorporation -Are in good health and have no criminal record.
-Are married, the marriage is monogamous and registered with the authorities.
-Where the answer differs according to the legal system applicable to the woman or man in
question (as may be the case in economies where there is legal plurality), the answer used will be
the one that applies to the majority of the population.
Page 5Doing Business 2020 Nepal
Starting a Business - Nepal
Standardized Company
Legal form Private Limited Liability Company
Paid-in minimum capital requirement No minimum
City Covered Kathmandu
Indicator Nepal South Asia OECD high Best Regulatory
income Performance
Procedure – Men (number) 8 7.1 4.9 1 (2 Economies)
Time – Men (days) 22.5 14.5 9.2 0.5 (New Zealand)
Cost – Men (% of income per capita) 20.2 8.3 3.0 0.0 (2 Economies)
Procedure – Women (number) 8 7.3 4.9 1 (2 Economies)
Time – Women (days) 22.5 14.6 9.2 0.5 (New Zealand)
Cost – Women (% of income per capita) 20.2 8.3 3.0 0.0 (2 Economies)
Paid-in min. capital (% of income per capita) 0.0 0.2 7.6 0.0 (120 Economies)
Figure – Starting a Business in Nepal – Score
58.8 77.9 89.9 100.0
Procedures Time Cost Paid-in min. capital
Figure – Starting a Business in Nepal and comparator economies – Ranking and Score
DB 2020 Starting a Business Score
0 100
94.1: China (Rank: 27)
88.2: Sri Lanka (Rank: 85)
86.4: Bhutan (Rank: 103)
86.3: Regional Average (South Asia)
81.7: Nepal (Rank: 135)
81.6: India (Rank: 136)
Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of
the scores for each of the component indicators.
Page 6Doing Business 2020 Nepal
Figure – Starting a Business in Nepal – Procedure, Time and Cost
Time (days) Cost (% of income per capita)
10
20
Cost (% of income per capita)
8
15
Time (days)
6
10
4
5
2
0 0
1 2 3 4 5 6 7 8
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.
Page 7Doing Business 2020 Nepal
Details – Starting a Business in Nepal – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Verify the uniqueness of the proposed company name and reserve it online Less than a day (online no charge
Agency : Office of the Company Registrar ("OCR") procedure)
Verification of the uniqueness of a company name and name reservation can be done free of
charge online at http://www.ocr.gov.np/index.php/en/. After the request for unique name
reservation is submitted online, the founder(s) will receive email and notification on approval or
rejection for the request from the Office of Company Registrar.
2 A professional verifies and certifies the memorandum and articles of association 5 days NPR 10,000
Agency : Professional Agency (lawyers, CA and legal practitioners)
Although professional verification or certification prior to submission to the official agency is no
longer mandatory, entrepreneurs continue to use the services of legal professionals for verifying
and drafting the memorandum and articles of association in practice. Although templates are
available on the OCR website, entrepreneurs still prefer to use services of legal professionals
because the templates provide basic guidelines and require technical expertise for preparation.
3 Buy a stamp to be attached to registration form 1 day NPR 5
Agency : Post Office
Company founders can buy a stamp to be attached to the registration form for NPR 5 at the Post
Office. The stamp must be provided to the Office of the Company Registrar .
4 Register at the Office of the Company Registrar, Department of Industry 1 week NPR 9,500
Agency : Office of the Company Registrar
To register a company, the promoter must submit an application as prescribed by the Ministry of
Industry, Commerce, and Supplies. Online filing of the required documents has been introduced
and made mandatory. After the online filing, entrepreneurs are required to visit the Office of
Company Registrar and submit all the original documents for further verification. The following
documents must be submitted:
- An application in the format as per the ‘ANUSUCHI 1’ along with a 5 rupees stamp attached to it.
- Two copies of ‘PRABANDHA PATRA’ (Article of Association) in the format as per ‘ANUSUCHI 2’.
- Two copies of ‘NIYAMAWALI’ (Article of Memorandum) in the format as per ‘ANUSUCHI 3’.
- Attested copies of the citizenship certificates of the founder shareholders.
- In case of a public company, a copy of the agreement made among the founder members before
the establishment of the company.
- In case of a private company, a copy of the mutual agreement (if any).
- If the founder company is a Nepali registered company, a copy of the company registration
certificate, and a copy of the decision of the managing committee regarding details of the
investment to be made upon the aspiring company, as well as the name and a copy of the
citizenship certificate of the person representing the founding company.
The registration fee is based on the company’s registered capital (according to the index 21):
- Up to NPR 100,000 (authorized capital): NPR 1,000.
- NPR 100,001 to NPR 500,000: NPR 4,500.
- NPR 500,001 to NPR 2,500,000: NPR 9,500.
- NPR 2,500,001 to NPR 10,000,000: NPR 16,000.
- NPR 10,000,001 to NPR 20,000,000: NPR 19,000.
- NPR 20,000,001 to NPR 30,000,000: NPR 22,000.
- NPR 30,000,001 to NPR 40,000,000: NPR 25,000.
- NPR 40,000,001 to NPR 50,000,000: NPR 28,000.
- NPR 50,000,001 to NPR 60,000,000: NPR 31,000.
- NPR 60,000,001 to NPR 70,000,000: NPR 34,000.
- NPR 70,000,001 to NPR 80,000,000: NPR 37,000.
- NPR 80,000,001 to NPR 90,000,000: NPR 40,000.
- NPR 90,000,001 to NPR 100,000,000: NPR 43,000.
- More than NPR 100,000,000: NPR 43,000 plus NPR 30 for each additional NPR 100,000.
5 Make a company rubber stamp 1 day NPR 275
Agency : Sealmaker
Entrepreneurs obtain a company rubber stamp in practice for the following purposes:
1) Reports and records to be submitted on company's behalf and business letters to be used in its
name
2) Statements of accounts, bills, invoices, requisition order forms
3) Notices and official publications
4) Negotiable instruments, bills of exchange, promissory notes
5) Official documents signed or issued on its behalf.
Company founders can make a company rubber stamp at the Seal maker for approximately NPR
275-300.
Page 8Doing Business 2020 Nepal
6 Register at the Local Ward and pay business registration tax 2 days on average NPR 2,000
Agency : Local Ward Office
Section 3(19) of Schedule 1 of the Local Governance Ordinance 2017 issued by Ministry of
Federal Affairs and General Administration mandates business registration at the local ward.
During business registration at the Local Ward an entrepreneur needs to bring the following
documents: registration certificate from OCR, memorandum of association, articles of association,
shareholder’s agreement, application form, lease agreement, and details of the property. There
are 741 local units in Nepal, and around 30 local units in Kathmandu. The business registration
time depends on the local ward and varies between 1 to 5 days.
The amount of the business registration tax depends on the nature of the business and its size.
The business tax for a general retail business varies between NPR 1,000 - 3,000 in Kathmandu.
Under the Inter-governmental Fiscal Management Act 2017 and Notice of Ministry of Finance
published in the Nepal Gazette dated 23 April 2018, Nepali businesses also are required to pay
the rental tax withholding at the local ward instead of the Inland Revenue Service (IRD). However,
the rental tax can be paid at the IRD if the lessor is a corporate body. Nevertheless, the business
is required to be registered with the Local Ward and pay the business registration tax to the Local
Ward office before registering for VAT tax at the IRD.
7 Register for VAT and Income Tax, and Withhold Rental Tax at the Inland Revenue Office 1 day no charge
Agency : Inland Revenue Office
As per Income Tax Act, 2058 (2002), Section 78, each company should be registered for Income
Tax purpose in the Inland Revenue Office and get a Permanent Account Number (PAN) before
starting any business. If the company's objectives include goods or services subject to VAT, both
registration (VAT and Income Tax) should be obtained simultaneously.
According to the Value Added Tax Act 2052, of 1996, the company must disclose the office
address and withhold 10% tax of the rent for at least 3 months and deposit it to the tax office.
Advance rental tax can be paid at the Tax Office itself if the lessor is a corporate body and
advance rental tax should be paid at the Ward Office if the lessor is a natural person.
8 Enroll the employees in the Social Security Fund 5 days on average no charge
Agency : Social Security Fund
According to the Labor Act 2017 and Social Security regulations (November 19,2018) companies
are required to deduct every month 10% from the basic salary of each employee, matched by a
contribution from the employer. The contribution is made to the Social Security Fund. The
employer further needs to pay gratuity amount at the rate of 8.33 percent of basic remuneration
and deposit at social security fund at the time of payment of services may it be daily or monthly.
The application in the prescribed format must be submitted to the SSF along with the following
documents for listing with the SSF:
a) Employer's firm, organization or company registration certificate
b) Employer's PAN Certificate or VAT certificate
c) Board of Director's Decision on listing with the Fund
d) Contributor's (employee) detail
The registration of employee by the employer at SSF must be done within 3 months of entering
into an employment agreement with such employee. (Section 20(1), Contribution Based Social
Security Act 2017). Registration needs to be done online, where number of details of the employer
need to be provided. The Social Security Fund will provide verification to the entity that registers
itself via phone or email after the completion of online registration. Applicant must then go to the
Social Security Fund office to receive the Certificate of Registration for completion of the
registration process.
Takes place simultaneously with previous procedure.
Page 9Doing Business 2020 Nepal
Dealing with Construction Permits
This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications,
requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building
quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional
certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information
What the indicators measure Case study assumptions
Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction
company, the warehouse project and the utility connections are used.
• Submitting all relevant documents and obtaining all necessary
clearances, licenses, permits and certificates
The construction company (BuildCo):
• Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest
inspections
business city. For 11 economies the data are also collected for the second largest business city.
• Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a
licensed architect and a licensed engineer, both registered with the local association of architects
• Registering and selling the warehouse after its completion
or engineers. BuildCo is not assumed to have any other employees who are technical or licensed
Time required to complete each procedure (calendar days) experts, such as geological or topographical experts.
- Owns the land on which the warehouse will be built and will sell the warehouse upon its
• Does not include time spent gathering information completion.
• Each procedure starts on a separate day—though procedures
that can be fully completed online are an exception to this rule The warehouse:
• Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery.
received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6
square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be
• No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100%
owned by BuildCo, and the warehouse is valued at 50 times income per capita.
Cost required to complete each procedure (% of income per
- Will have complete architectural and technical plans prepared by a licensed architect. If
capita)
preparation of the plans requires such steps as obtaining further documentation or getting prior
• Official costs only, no bribes approvals from external agencies, these are counted as procedures.
- Will take 30 weeks to construct (excluding all delays due to administrative and regulatory
Building quality control index (0-15) requirements).
• Quality of building regulations (0-2)
The water and sewerage connections:
• Quality control before construction (0-1)
- Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water
• Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage
• Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built.
- Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow
• Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and
• Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day.
- Will have a constant level of water demand and wastewater flow throughout the year; will be 1
inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.
Page 10Doing Business 2020 Nepal
Dealing with Construction Permits - Nepal
Standardized Warehouse
Estimated value of warehouse NPR 5,398,916.40
City Covered Kathmandu
Indicator Nepal South Asia OECD high Best Regulatory
income Performance
Procedures (number) 12 14.6 12.7 None in 2018/19
Time (days) 118 149.7 152.3 None in 2018/19
Cost (% of warehouse value) 8.6 12.5 1.5 None in 2018/19
Building quality control index (0-15) 10.0 9.4 11.6 15.0 (6 Economies)
Figure – Dealing with Construction Permits in Nepal – Score
72.0 73.5 57.1 66.7
Procedures Time Cost Building quality control index
Figure – Dealing with Construction Permits in Nepal and comparator economies – Ranking and Score
DB 2020 Dealing with Construction Permits Score
0 100
78.7: India (Rank: 27)
77.3: China (Rank: 33)
72.3: Sri Lanka (Rank: 66)
68.9: Bhutan (Rank: 91)
67.3: Nepal (Rank: 107)
65.3: Regional Average (South Asia)
Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores
are the simple average of the scores for each of the component indicators.
Page 11Doing Business 2020 Nepal
Figure – Dealing with Construction Permits in Nepal – Procedure, Time and Cost
Time (days) Cost (% of warehouse value)
6
100 5
Cost (% of warehouse value)
80 4
Time (days)
60 3
40 2
20 1
0 0
1 *2 *3 4 5 6 7 8 9 * 10 11 12
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.
Page 12Doing Business 2020 Nepal
Figure – Dealing with Construction Permits in Nepal and comparator economies – Measure of Quality
16 15.0 14.5
14
12.0
12
Index score
10.0
10 9.4
8
6.0
6
4
2
0
Nepal Bhutan China India Sri South
Lanka Asia
Details – Dealing with Construction Permits in Nepal – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Obtain a soil study report 32 days NPR 137,500
Agency : Private Engineering Firm
The Village Development, Urban Planning & Building Relating Fundamental Construction
Standards 2015 provides that building falling under category A and B are required to conduct soil
test as per the Soil Test Directive of the Ministry of Urban Development.
Sub-section 8(b) of the Building Act 1998 provides that Buildings with plinth area of more than
One Thousand square feet, with more than Three floors including the ground floor or with
structural span of more than 4.5 meters falls under Category B. The warehouse in the case study
has only two levels but since the total surface area of the same is approximately 1,300.6 square
meters which is more than One thousand Square feet so it is necessary to carry out soil test for
building such warehouse.
2 Obtain a topographical map 5 days NPR 20,500
Agency : Private Engineering Consultancies
Topographic Surveys are used to identify and map the contours of the land plot. Its purpose is to
serve as a base map for the design of a building. It also shows the boundary lines and is used by
designers to accurately show the required setbacks. The new bylaws state that buildings up to
10m high have to leave a minimum of 1.5m setback from the border of the land plot.
The Department of Surveys makes topographical maps available to the public for a fee for Rs. 150
per sheet. Construction companies however often need to hire a private engineering consulting
firm for a more detailed map to show setbacks and boundary lines.
3 Obtain a cadastral extract from the Survey Office 1 day NPR 100
Agency : Survey Office
The cadastral extract is obtained at the Land Revenue Office prior to applying for the building
permit.
4 Request and obtain temporary building permit 30 days NPR 282,000
Agency : Kathmandu Metropolitan City (KMC)
The Kathmandu Metropolitan City (KMC) has implemented an online system the Electronic -
Building Permit System (E-BPS), allowing for building permit and all design plans and relevant
documents to be submitted online. The applicant has the option of tracking the status of their
application online.
Nepal has a 3 level building permit
• First is the permit up to the plinth level
• Second is the permit to complete the structure of the building
• Third is the completion level
BuildCo must submit the following documents along with the building permit application:
• Identity document of the owner (or company registration certificate)
• Certification by a registered architect or engineer
• Cadastral extract
• Proof of land ownership/lease
• Building plans
• Location plan
• Site plan
• Proof of tax payment
• Structural plans (not required for buildings with ground coverage area of less than 1,000 sq. ft.
and less than 3 stories)
In addition to the building permit fee, the Urban Development Department also charges a designer
fee of NPR 2,000.00. The project designer must be licensed by the Department. The license is
called Certificate of Designer and is renewed every year at the Municipality. The annual fee is
NPR 3,000.00. The Municipality charges an additional NPR 2,000.00 for each building design.
Page 13Doing Business 2020 Nepal
5 Receive on-site inspection 1 day no charge
Agency : Ward Office
The Ward Office visits the site and distributes a notice to neighbors.
6 Conduct plinth level inspection 4 days no charge
Agency : Municipality or Town Development Committee
Before issuance of the construction permit, an on-site inspection is conducted by an official from
the Municipality or the Town Development Committee to ensure that the construction (up to plinth
level) conforms to the approved drawings. BuildCo's engineer or architect must be present during
the inspection.
7 Request and obtain the permanent construction permit 21 days no charge
Agency : Municipality or Town Development Committee
After inspecting the construction site, the Municipality's engineer writes a "site report" and issues a
permit for construction above the plinth level.
8 Request and receive final inspection from the Municipality 5 days no charge
Agency : Kathmandu Metropolitan City (KMC)
Before issuance of the completion certificate, the Municipality conducts an on-site inspection to
check if the construction conforms to the approved drawings. An inspector visits the site in 2 -- 3
days after the request for completion certificate and writes a report to the more senior engineer.
9 Obtain completion certificate 10 days no charge
Agency : Kathmandu Metropolitan City (KMC)
Four signatures are required on the completion certificate:
• Junior engineer
• Senior engineer
• Chief engineer of Kathmandu Metropolitan City
• Departmental engineer
Request water and sewage connection 1 day no charge
10 Agency : Kathmandu Upatyaka Khanepani Limited (KUKL)
The application for water supply connection is submitted to Kathmandu Upatyaka Khanepani
Limited (KUKL) with all the required documentation. For sewerage there is no need to submit an
application to KUKL. KUKL will review the documentation and provide a recommendation letter
allowing road cutting to the Division of the Department of Roads (DoR) for a sewerage connection.
11 Receive inspection from the Drinking Water and Sewerage Offices 1 day no charge
Agency : Kathmandu Upatyaka Khanepani Limited (KUKL)
After receiving the application for water connection, KUKL sends a technical team for site
inspection and prepares the cost estimate for the connection.
12 Obtain water and sewage connection 14 days NPR 23,549
Agency : Kathmandu Upatyaka Khanepani Limited (KUKL)
The customer is expected to acquire all pipes and materials for the water and sewerage
connection. A technical team will make the connection to the distribution line and install the water
meter one to two weeks after the inspection is conducted.
Takes place simultaneously with previous procedure.
Page 14Doing Business 2020 Nepal
Details – Dealing with Construction Permits in Nepal – Measure of Quality
Answer Score
Building quality control index (0-15) 10.0
Quality of building regulations index (0-2) 2.0
How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0
of charge.
Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0
accessible website, brochure or pamphlet? (0-1) documents; Fees to
be paid; Required
preapprovals.
Quality control before construction index (0-1) 1.0
Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0
building regulations? (0-1) Licensed engineer;
Private firm.
Quality control during construction index (0-3) 2.0
What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0
house engineer;
Inspections at various
phases.
Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0
inspections are
always done in
practice.
Quality control after construction index (0-3) 3.0
Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0
plans and regulations? (0-2) is done by
government agency.
Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0
always occurs in
practice.
Liability and insurance regimes index (0-2) 0.0
Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use No party is held liable 0.0
(Latent Defect Liability or Decennial Liability)? (0-1) under the law.
Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0
problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain
insurance .
Professional certifications index (0-4) 2.0
What are the qualification requirements for the professional responsible for verifying that the architectural plans University degree in 1.0
or drawings are in compliance with existing building regulations? (0-2) architecture or
engineering; Being a
registered architect or
engineer.
What are the qualification requirements for the professional who supervises the construction on the ground? (0- University degree in 1.0
2) engineering,
construction or
construction
management; Being
a registered architect
or engineer.
Page 15Doing Business 2020 Nepal
Getting Electricity
This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally,
the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data
collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure Case study assumptions
Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the
electricity connection and the monthly consumption are used.
• Submitting all relevant documents and obtaining all necessary
clearances and permits
The warehouse:
• Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods.
inspections
- Is located in the economy’s largest business city. For 11 economies the data are also collected for
• Obtaining external installation works and possibly purchasing the second largest business city.
material for these works - Is located in an area where similar warehouses are typically located and is in an area with no
physical constraints. For example, the property is not near a railway.
• Concluding any necessary supply contract and obtaining final
- Is a new construction and is being connected to electricity for the first time.
supply
- Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square
Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet).
• Is at least 1 calendar day The electricity connection:
• Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140-
• Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).
- Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution
• Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the
prior contact with officials
warehouse is located and requires works that involve the crossing of a 10-meter road (such as by
excavation or overhead lines) but are all carried out on public land. There is no crossing of other
Cost required to complete each procedure (% of income per
owners’ private property because the warehouse has access to a road.
capita)
- Does not require work to install the internal wiring of the warehouse. This has already been
• Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base.
• Value added tax excluded
The monthly consumption:
The reliability of supply and transparency of tariffs index (0-8)
- It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours
• Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts
• Tools to monitor power outages (0–1) (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours
(kWh); hourly consumption is 112 kWh.
• Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.
• Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for
the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.
• Financial deterrents limiting outages (0–1)
• Transparency and accessibility of tariffs (0–1)
Price of electricity (cents per kilowatt-hour)*
• Price based on monthly bill for commercial warehouse in case
study
*Note: Doing Business measures the price of electricity, but it is
not included in the ease of doing business score nor in the ranking
on the ease of getting electricity.
Page 16Doing Business 2020 Nepal
Getting Electricity - Nepal
Standardized Connection
Name of utility Nepal Electricity Authority
Price of electricity (US cents per kWh) 12.0
City Covered Kathmandu
Indicator Nepal South Asia OECD high Best Regulatory
income Performance
Procedures (number) 5 5.5 4.4 3 (28 Economies)
Time (days) 49 86.1 74.8 18 (3 Economies)
Cost (% of income per capita) 785.8 952.6 61.0 0.0 (3 Economies)
Reliability of supply and transparency of tariff index (0-8) 0 2.7 7.4 8 (26 Economies)
Figure – Getting Electricity in Nepal – Score
66.7 86.5 90.3 0.0
Reliability of supply and transparency of
Procedures Time Cost
tariff index
Figure – Getting Electricity in Nepal and comparator economies – Ranking and Score
DB 2020 Getting Electricity Score
0 100
95.4: China (Rank: 12)
89.4: India (Rank: 22)
77.5: Bhutan (Rank: 78)
74.5: Sri Lanka (Rank: 89)
62.6: Regional Average (South Asia)
60.9: Nepal (Rank: 135)
Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the
scores for all the component indicators except the price of electricity.
Figure – Getting Electricity in Nepal – Procedure, Time and Cost
Time (days) Cost (% of income per capita)
800
700
Cost (% of income per capita)
40
600
Time (days)
30 500
400
20
300
200
10
100
0 0
1 2 3 4 5
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
Page 17Doing Business 2020 Nepal
reflected here, see the summary below.
Figure – Getting Electricity in Nepal and comparator economies – Measure of Quality
8
7
7
6 6
6
Index score
5
4
4
3 2.7
2
1
0
0
Nepal Bhutan China India Sri South
Lanka Asia
Page 18Doing Business 2020 Nepal
Details – Getting Electricity in Nepal – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Submit application to Nepal Electricity Authority (NEA) and await site inspection 7 calendar days NPR 100
Agency : Nepal Electricity Authority
The photocopy of documents needed to be submitted along with application form mentioning the
load in kW / MW and type of voltage (low voltage/medium voltage/high voltage) are: citizenship of
owner, land deed, certificate issued from the commerce department to operate the warehouse, tax
registration certificate, construction approval certificate from the municipality, contract agreement
between land owner and warehouse runner, if the land is leased. No need of notarization, NEA
personnel will attest after verification with the original copies. Approval of load estimate from
distribution center chief.
2 Receive site inspection by NEA to verify load estimate and provide estimate 7 calendar days NPR 0
Agency : Nepal Electricity Authority
It is expected that someone from the owner’s side is present during the external site inspection to
answer any questions that NEA personnel might have. NEA personnel will make a site visit to
ascertain the appropriateness of the place where the energy meter is to be installed, and also they
check the transformer installed at the consumer's site (As per NEA rule, the consumer has to
install his own transformer for the load above 50kVA.). Approval of load estimate is needed to
decide how much of a supply is needed for the building from distribution center chief.
3 Purchase tested transformer and complete its installation 14 calendar days NPR 754,005
Agency : Private electrical contractor
The transformers are readily available in the market since new manufacturers have started
producing transformers at the local level. The installation of the transformer is done by a private
contractor.
4 Submit test report and request and receive site inspection 7 calendar days NPR 94,350
Agency : Nepal Electricity Authority
Customer makes payment and submits the test certificate to NEA, which was received from the
seller of transformer. Further customer awaits for and receives the site inspection.
5 Receive final connection by NEA and electricity flow 14 calendar days NPR 0
Agency : Nepal Electricity Authority
The external connection is done within 2 weeks after the previous procedure and electricity starts
flowing.
Takes place simultaneously with previous procedure.
Page 19Doing Business 2020 Nepal
Details – Getting Electricity in Nepal – Measure of Quality
Answer
Reliability of supply and transparency of tariff index (0-8) 0
Total duration and frequency of outages per customer a year (0-3) 0
System average interruption duration index (SAIDI) ..
System average interruption frequency index (SAIFI) ..
What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A
Mechanisms for monitoring outages (0-1) 0
Does the distribution utility use automated tools to monitor outages? No
Mechanisms for restoring service (0-1) 0
Does the distribution utility use automated tools to restore service? No
Regulatory monitoring (0-1) 0
Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? No
Financial deterrents aimed at limiting outages (0-1) 0
Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? No
Communication of tariffs and tariff changes (0-1) 1
Are effective tariffs available online? Yes
Link to the website, if available online https://nea.org.np/admin/a
ssets/uploads/Consumer_
Tarrif.pdf
Are customers notified of a change in tariff ahead of the billing cycle? Yes
Note:
If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index.
If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.
If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.
Page 20Doing Business 2020 Nepal
Registering Property
This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a
building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality
of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access
to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure Case study assumptions
Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the
(number) transaction, the property and the procedures are used.
• Preregistration procedures (for example, checking for liens, The parties (buyer and seller):
notarizing sales agreement, paying property transfer taxes)
- Are limited liability companies (or the legal equivalent).
• Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits)
• Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the
municipality) second largest business city.
- Are 100% domestically and privately owned.
Time required to complete each procedure (calendar days) - Perform general commercial activities.
• Does not include time spent gathering information
The property (fully owned by the seller):
• Each procedure starts on a separate day - though procedures
- Has a value of 50 times income per capita, which equals the sale price.
that can be fully completed online are an exception to this rule
- Is fully owned by the seller.
• Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years.
received - Is registered in the land registry or cadastre, or both, and is free of title disputes.
• No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its
official limits), and no rezoning is required.
Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two-
value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse
is 10 years old, is in good condition, has no heating system and complies with all safety standards,
• Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be
taxes).
transferred in its entirety.
• Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase.
excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind.
- Will not be used for special purposes, and no special permits, such as for residential use,
Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required.
• Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it.
• Transparency of information index (0–6)
• Geographic coverage index (0–8)
• Land dispute resolution index (0–8)
• Equal access to property rights index (-2–0)
Page 21Doing Business 2020 Nepal
Registering Property - Nepal
Indicator Nepal South Asia OECD high Best Regulatory
income Performance
Procedures (number) 4 6.9 4.7 1 (5 Economies)
Time (days) 6 107.8 23.6 1 (2 Economies)
Cost (% of property value) 5.8 7.0 4.2 0.0 (Saudi Arabia)
Quality of the land administration index (0-30) 6.0 9.1 23.2 None in 2018/19
Figure – Registering Property in Nepal – Score
75.0 97.6 61.6 20.0
Procedures Time Cost
Quality of the land administration index
Figure – Registering Property in Nepal and comparator economies – Ranking and Score
DB 2020 Registering Property Score
0 100
81.0: China (Rank: 28)
72.6: Bhutan (Rank: 53)
63.6: Nepal (Rank: 97)
51.9: Sri Lanka (Rank: 138)
47.6: India (Rank: 154)
47.6: Regional Average (South Asia)
Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of
the scores for each of the component indicators.
Page 22Doing Business 2020 Nepal
Figure – Registering Property in Nepal – Procedure, Time and Cost
Time (days) Cost (% of property value)
6 6
5 5
Cost (% of property value)
4 4
Time (days)
3 3
2 2
1 1
0 0
1 2 3 4
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.
Page 23Doing Business 2020 Nepal
Figure – Registering Property in Nepal and comparator economies – Measure of Quality
30
25 23.0 24.0
Index score
20
15
10.8
10 9.1
6.0 5.5
5
0
Nepal Bhutan China India Sri South
Lanka Asia
Details – Registering Property in Nepal – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Check for encumbrances of the property 1 day no charge
Agency : Land Revenue Office
Buyers or their lawyers (lekhandas, or paralegals) conduct the property search at the Land
Revenue Office to check for encumbrances of the property. The buyer must provide the location
details of the property and the period of time that needs to be check.
2 Obtain tax clearance certificate and certificate of access and building from the Municipality 2 days NPR 7,012.4; (Certificate
(relevant ward committee) of access and building (in
Agency : Municipality case of Kathmandu
The seller must go to the local government to certify the type of road that adjoins the property. The Metropolitan City):
seller has to go to the ward committee to obtain the certificate, which can be done in one day. A
tax clearance certificate must be obtained from the Municipality regarding the payment of the
Main road: NPR. 2000
property tax. If the property is not yet registered in the Municipality for tax purposes, it might take a
(The land area is less than
few days to collect the necessary papers of building permit, land deed, land revenue papers, field
visit of municipal engineers to verify and assess the property. In any case, it should not take more or equal to 4 Anna) / NPR.
than seven days. The value of the property for tax purposes is evaluated by a committee of the 500 per Anna (The land
Land Revenue Office (comprised of land registry office employees) who take into consideration a area exceeds 4 Anna)
variety of metrics, including the current market value, distance to a road, and size of the parcel
and building. Side road: NPR. 1500
(The land area is less than
or equal to 4 Anna) / NPR.
400 per Anna (The land
area exceeds 4 Anna)
Gravel/unpaved road:
NPR. 1000 (The land area
is less than or equal to 4
Anna) / NPR. 300 per
Anna (The land area
exceeds 4 Anna)
Track road: NPR. 800 (The
land area exceeds or
equal to 4 Anna) / NPR.
200 per Anna (The land
area exceeds 4 Anna))
3 Prepare a transfer deed document 1 day NPR 7,000
Agency : Lawyer's Office
Legally, the parties can prepare the transfer deed documents by themselves, but it usually is done
by the lekhandas, or paralegals. The deed documents are a certificate of citizenship, certificate of
ownership, and a tax clearance certificate. The lekhandas can help the seller verify the land
ownership certificate with the original land ownership book before preparing the deed.
4 Registration of the deed and issuance of a new title certificate 2 days NPR 296,940.4; (5.5% of
Agency : Land Revenue Office the property value)
The transfer deed is submitted for registration to the Land Revenue Office. The Land Revenue
Office checks the authenticity of the seller against the Citizenship Certificate. The existence of
liens or encumbrances on the property is also reviewed on the same day by the Land Revenue
Office. The registration fee is paid at the Land Revenue Office at the moment of applying for
registration. Parties must sign and put thumbprints on the transfer deed. After the officer verifies
all documents, the transfer deed will be registered, and the title certificate will usually be issued on
the same day. The documentation shall include: Land Ownership Certificate (already in
possession of the seller), Citizenship Certificate of seller and buyer or Incorporation Certificate of
Company Tax clearance from the Municipality/Village Development Committee (obtained in
Procedure 2).
Takes place simultaneously with previous procedure.
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