Registration of Non-Governmental Organizations (NGOs) in Nepal

Introduction

Non-Governmental Organization (“NGO”) is a non-profit entity that operates independently of any government. NGOs are typically focused on addressing social, environmental, or humanitarian issues and often fill gaps not addressed by governmental or private sectors.

This article provides an overview of registration of NGOs, and relevant compliances applicable to NGOs in Nepal.

Governing Laws

The laws governing matters relating to NGOs, its registration and applicable compliances are as follows:

a) Associations Registration Act, 2034 (1977): Focuses on the registration process of an association that serves as a basis of the structure of NGOs.

b) Social Welfare Act, 2049 (1992): Governs the affiliation of an association with the Social Welfare Council, and governs activities of NGOs.

c) Guidelines adopted by the Social Welfare Council.

NGO Registration Procedure 

A step-by-step procedure for registration of NGO in Nepal is provided below:

Step 1. Formation of a team

Pursuant to Associations Registration Act, 2034 (1977), a minimum of seven members holding Nepali citizenship are required to establish NGOs in Nepal.

Step 2. Obtaining a Recommendation Letter from the Local Level Ward Office.

The initial legal requirement for NGO registration in Nepal is to obtain a recommendation from the local level ward office where the organization intends to operate.

Step 3. Obtaining a Recommendation Letter from the District Coordination Committee.

Upon obtaining the local level ward office’s recommendation, the next step is to submit the application to the District Coordination Committee (DCC). The DCC evaluates whether the NGO’s objectives align with district development priorities and social welfare goals.

Step 4. Registration of an NGO at the District Administration Office.

The formal registration of the NGO is carried out at the District Administration Office (DAO). Applicants must submit required documents, including the organization’s constitution (Bidhan). Upon satisfaction of the application documents, the DAO will issue the registration certificate, typically within a few weeks.

Step 5. PAN registration at the Inland Revenue Department.

Like any legal entity, an NGO must remain tax-compliant under Nepali law. PAN registration with the Inland Revenue Department is essential for maintaining transparency in financial reporting and for legally receiving grants, donations, or other forms of funding.

Step 6. Obtain Affiliation from the Social Welfare Council 

The final step is obtaining affiliation from the Social Welfare Council, which provides additional legal recognition and institutional legitimacy. Following DAO registration, NGOs can apply to the SWC for affiliation. This affiliation is mandatory for NGOs intending to collaborate with international donors or partners.

Documents required for NGO registration

The following documents are legally required for NGO registration in Nepal:

Tax compliance for NGOs in Nepal 

After registration, NGOs must adhere to Nepalese tax laws to maintain legal status and financial transparency. Key obligations include:

a) Registering for a Permanent Account Number (PAN) with the Inland Revenue Department (IRD);

b) Maintaining clear and transparent accounting records covering all donations, expenditures, and project-related finances;

c) Filing annual tax returns as required by law;

d) Ensuring foreign donations comply with anti-money laundering and foreign exchange regulations to prevent misuse of funds.

Timeline for NGO Registration

The full NGO registration process in Nepal generally takes 1 month, covering approvals from the Ward Office, District Coordination Committee (DCC), District Administration Office (DAO), and Social Welfare Council (SWC). The timeline may vary based on the district and the efficiency in submitting complete and accurate documentation.

Exemptions and Facilities to NGOs in Nepal 

1. Income Tax Exemption

Under the Income Tax Act, 2058 (2002), NGOs may be eligible for income tax exemption on grants and donations used solely for social welfare purposes. For this, such NGOs must obtain Tax Exemption Certificate.

2. Customs duty and VAT exemptions 

• NGOs affiliated with the SWC can receive exemptions on customs duties and VAT for importing certain goods (like medical equipment, educational materials, or humanitarian aid).
• These exemptions require prior approval from the Ministry of Finance.

3. Priority in Government Collaboration

• NGOs registered and affiliated with SWC may receive priority access to government grants, cooperation in public projects, or inclusion in local-level planning.

4. Foreign Currency Facility

• NGOs working with international donors can apply for foreign currency approval from the Nepal Rastra Bank through the SWC.
• This facility ensures smooth inward remittance of project funds and grants.

5. Subsidies and Support 

In special cases, local or provincial governments may provide NGOs with land, building use rights, or financial subsidies, particularly if the organization serves a public need like education, health, or disaster relief.