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 2 Doing 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 3 Doing 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 4 Doing 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 5 Doing 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 6 Doing 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 7 Doing 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 8 Doing 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 9 Doing 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 10 Doing 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 11 Doing 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 12 Doing 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 13 Doing 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 14 Doing 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 15 Doing 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 16 Doing 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 17 Doing 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 18 Doing 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 19 Doing 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 20 Doing 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 21 Doing 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 22 Doing 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 23 Doing 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. Page 24 Doing Business 2020 Nepal Details – Registering Property in Nepal – Measure of Quality Answer Score Quality of the land administration index (0-30) 6.0 Reliability of infrastructure index (0-8) 1.0 Type of land registration system in the economy: Deed Registration System What is the institution in charge of immovable property registration? Land Revenue Office In what format are past and newly issued land records kept at the immovable property registry of the largest Paper 0.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, No 0.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Survey Department of the Ministry of Land Management, Cooperatives and Poverty Alleviation In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information No 0.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 2.5 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Only intermediaries 0.0 in the largest business city? and interested parties Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://dolrm.gov.np/off ice/118/content/12 Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, online 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: http://dolrm.gov.np/off ice/118/content/11 http://dolrm.gov.np/ap i/utilities/registration_r ate.php Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://dolrm.gov.np/off ice/118/content/11 Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency? Number of property transfers in the largest business city in 2018: Who is able to consult maps of land plots in the largest business city? Only intermediaries 0.0 and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5 Page 25 Doing Business 2020 Nepal Link for online access: http://dos.gov.np/? page_id=44 Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, online 0.5 if so, how does it communicate the service standard? Link for online access: http://dos.gov.np/? page_id=44 http://dos.gov.np/wp- content/uploads/2019 /04/नापी-कार्यालयबाट- प्रवाह-हुने-सेवाहरु.pdf Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 2.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Land Revenue Act 1978 Is the system of immovable property registration subject to a state or private guarantee? No 0.0 Type of guarantee: Legal basis: The property (Land/house) transaction of Nepal is based on Deed System. Government does not guarantee the land property of the people. Government is only the witness, under deeds system during the transaction of land or building. Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Is there a national database to verify the accuracy of government issued identity documents? No 0.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local District court businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without More than 3 years 0.0 appeal)? Page 26 Doing Business 2020 Nepal Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 27 Doing Business 2020 Nepal Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. 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 Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 28 Doing Business 2020 Nepal Getting Credit - Nepal Indicator Nepal South Asia OECD high Best Regulatory income Performance Strength of legal rights index (0-12) 10 5.5 6.1 12 (5 Economies) Depth of credit information index (0-8) 5 5.1 6.8 8 (53 Economies) Credit registry coverage (% of adults) 0.0 5.1 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 7.3 21.0 66.7 100.0 (14 Economies) Figure – Getting Credit in Nepal – Score 75.0 Score - Getting Credit Figure – Getting Credit in Nepal and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 80.0: India (Rank: 25) 75.0: Nepal (Rank: 37) 60.0: China (Rank: 80) 55.0: Bhutan (Rank: 94) 53.1: Regional Average (South Asia) 40.0: Sri Lanka (Rank: 132) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 29 Doing Business 2020 Nepal Figure – Legal Rights in Nepal and comparator economies 12 10 10 9 Index Score 8 6 5.5 4 4 4 2 2 0 Nepal Bhutan China India Sri South Lanka Asia Page 30 Doing Business 2020 Nepal Details – Legal Rights in Nepal Strength of legal rights index (0-12) 10 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents Yes to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the Yes original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third Yes party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Nepal and comparator economies 9 8 8 7 7 7 6 Index Score 6 5 5.1 5 4 3 2 1 0 Nepal Bhutan China India Sri South Lanka Asia Page 31 Doing Business 2020 Nepal Details – Credit Information in Nepal Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or No No 0 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 1,039,308 0 Number of firms 261,753 0 Total 1,301,061 0 Percentage of adult population 7.3 0.0 Page 32 Doing Business 2020 Nepal Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. 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 • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 33 Doing Business 2020 Nepal Protecting Minority Investors - Nepal Stock exchange information Stock exchange Nepal Stock Exchange Stock exchange URL http://www.nepalstock.com Listed firms with equity securities 125 City Covered Kathmandu Indicator Nepal South Asia OECD high Best Regulatory income Performance Extent of disclosure index (0-10) 6.0 5.8 6.5 10 (13 Economies) Extent of director liability index (0-10) 1.0 5.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 9.0 7.4 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 5.0 3.5 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 4.0 3.6 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 4.0 3.3 5.7 7 (13 Economies) Figure – Protecting Minority in Nepal – Score 58.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Nepal and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 80.0: India (Rank: 13) 72.0: China (Rank: 28) 72.0: Sri Lanka (Rank: 28) 58.0: Nepal (Rank: 79) 57.0: Regional Average (South Asia) 46.0: Bhutan (Rank: 111) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 34 Doing Business 2020 Nepal Figure – Protecting Minority Investors in Nepal and comparator economies – Measure of Quality Nepal 4 1 6 4 5 9 Bhutan 3 4 4 3 3 6 China 6 4 10 6 5 5 India 6 7 8 6 6 7 Sri Lanka 5 5 8 6 5 7 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 South Asia 3.9 5.9 6.1 4.4 4.1 7.1 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 35 Doing Business 2020 Nepal Details – Protecting Minority Investors in Nepal – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation Extent of director liability index (0-10) 1.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) No 0.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 9.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) Yes 1.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 5.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 4.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Page 36 Doing Business 2020 Nepal Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? No 0.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 4.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? No 0.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 37 Doing Business 2020 Nepal Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 38 Doing Business 2020 Nepal Paying Taxes - Nepal Indicator Nepal South Asia OECD high Best Regulatory income Performance Payments (number per year) 46 26.7 10.3 3 (2 Economies) Time (hours per year) 377 273.5 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 41.8 43.9 39.9 26.1 (33 Economies) Postfiling index (0-100) 33.3 41.2 86.7 None in 2018/19 Figure – Paying Taxes in Nepal – Score 28.3 49.3 77.6 33.3 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Nepal and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 89.2: Bhutan (Rank: 15) 70.1: China (Rank: 105) 67.6: India (Rank: 115) 60.2: Regional Average (South Asia) 59.8: Sri Lanka (Rank: 142) 47.1: Nepal (Rank: 175) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 39 Doing Business 2020 Nepal Figure – Paying Taxes in Nepal and comparator economies – Measure of Quality 100 95.0 90 80 Index score 70 60 50.0 49.3 49.3 50 41.2 40 33.3 30 20 10 0 Nepal Bhutan China India Sri South Lanka Asia Page 40 Doing Business 2020 Nepal Details – Paying Taxes in Nepal Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Corporate 3.0 125.0 20% taxable profit 14.98 income tax Employer paid - 12.0 122.0 10% gross salaries 11.28 Social security contributions Employer paid- 12.0 8.33% gross salaries 9.40 Gratuity contribution Employer paid- 1.0 5,000 rupees per fixed fee 4.42 Medical employee insurance Employer paid- 0.0 paid jointly 1,250 rupees per fixed fee 1.10 Accident employee insurance Ownership 1.0 NPR 33,000 fixed fee 0.49 renewal tax on vehicles Tax on interest 0.0 15% interest income 0.38 not included Municipal 1.0 NPR 10,000 fixed fee 0.15 business tax Property tax 1.0 various rates land value and 0.02 building value Land revenue tax 1.0 NPR 40 per anna property area 0.01 Stamp duty on 1.0 various rates 0.00 small amount insurance premium Capital gains tax 1.0 10% capital gains 0.00 included in other taxes Value added tax 12.0 130.0 13% value added 0.00 not included (VAT) Totals 46 377 41.8 Page 41 Doing Business 2020 Nepal Details – Paying Taxes in Nepal – Tax by Type Taxes by type Answer Profit tax (% of profit) 15.0 Labor tax and contributions (% of profit) 26.2 Other taxes (% of profit) 0.7 Page 42 Doing Business 2020 Nepal Details – Paying Taxes in Nepal – Measure of Quality Answer Score Postfiling index (0-100) 33.3 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? Yes Time to comply with VAT refund (hours) 119.0 0.0 Time to obtain VAT refund (weeks) 37.0 34.2 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 50% - 74% Time to comply with a corporate income tax correction (hours) 26.0 55.0 Time to complete a corporate income tax correction (weeks) 17.9 44.2 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 43 Doing Business 2020 Nepal Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. 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 Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 44 Doing Business 2020 Nepal Trading across Borders - Nepal Indicator Nepal South Asia OECD high Best Regulatory income Performance Time to export: Border compliance (hours) 11 53.4 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 103 310.6 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 43 73.7 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 110 157.9 33.4 0 (20 Economies) Time to import: Border compliance (hours) 11 85.7 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 190 472.9 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 48 93.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 80 261.7 23.5 0 (30 Economies) Figure – Trading across Borders in Nepal – Score 93.7 90.3 75.1 72.5 96.4 84.2 80.3 88.6 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Nepal and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 94.2: Bhutan (Rank: 30) 86.5: China (Rank: 56) 85.1: Nepal (Rank: 60) 82.5: India (Rank: 68) 73.3: Sri Lanka (Rank: 96) 65.3: Regional Average (South Asia) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 45 Doing Business 2020 Nepal Figure – Trading across Borders in Nepal – Time and Cost Time (hours) Cost (USD) 60 190 200 50 48 43 150 Time (hours) Cost (USD) 40 103 110 30 80 100 20 11 11 50 10 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 46 Doing Business 2020 Nepal Details – Trading across Borders in Nepal Characteristics Export Import Product HS 72 : Iron and steel HS 8708: Parts and accessories of motor vehicles Trade partner India India Border Birgunj border crossing Birgunj border crossing Distance (km) 140 140 Domestic transport time (hours) 16 19 Domestic transport cost (USD) 330 407 Details – Trading across Borders in Nepal – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 10.0 92.9 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 11.0 10.0 Import: Clearance and inspections required by 10.0 190.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 11.0 0.0 Page 47 Doing Business 2020 Nepal Details – Trading across Borders in Nepal – Trade Documents Export Import Commercial invoice Certificate of origin Road way bill BBN Export permit Single Administrative Document Packing list Truck chalan Customs export declaration Shipping bill (Bill of export) Certificate of origin (VSC) Document of Insurance Authority letter Type of Approval (for auto-parts) Single Administrative Document Packing list Special vehicle permit ARE-1 EXIM Certiciate EXIM Certificate Page 48 Doing Business 2020 Nepal Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. 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 Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. Page 49 Doing Business 2020 Nepal Enforcing Contracts - Nepal Standardized Case Claim value NPR 564,367 Court name Kathmandu District Court City Covered Kathmandu Indicator Nepal South Asia OECD high Best Regulatory income Performance Time (days) 910 1,101.6 589.6 120 (Singapore) Cost (% of claim value) 27.3 29.9 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 6.0 7.1 11.7 None in 2018/19 Figure – Enforcing Contracts in Nepal – Score 35.2 69.4 33.3 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Nepal and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 80.9: China (Rank: 5) 70.0: Bhutan (Rank: 29) 46.0: Nepal (Rank: 151) 43.5: Regional Average (South Asia) 41.2: India (Rank: 163) 41.2: Sri Lanka (Rank: 164) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 50 Doing Business 2020 Nepal Figure – Enforcing Contracts in Nepal – Time and Cost Time (days) Cost (% of claim value) 1600 35 1445 31.0 Cost (% of claim value) 29.9 1318 1400 30 27.3 1200 23.1 22.8 25 Time (days) 21.5 1000 910 20 800 16.2 589.6 15 600 496 10 400 225 200 5 0 0 1,101.6 Bhutan China India Nepal OECD South Sri high Asia Lanka income Page 51 Doing Business 2020 Nepal Figure – Enforcing Contracts in Nepal and comparator economies – Measure of Quality Nepal 2.5 0.5 0 3 Bhutan 2.5 3 0 2.5 China 3 5.5 3 5 India 2.5 1.5 2 4.5 Sri Lanka 2.5 1 0.5 4.5 OECD high income 2.5 3.2 2.4 3.6 South Asia 2.4 1.2 0.8 3.1 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Nepal Indicator Time (days) 910 Filing and service 45 Trial and judgment 500 Enforcement of judgment 365 Cost (% of claim value) 27.3 Attorney fees 20.8 Court fees 3.5 Enforcement fees 3 Quality of judicial processes index (0-18) 6.0 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 0.5 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Page 52 Doing Business 2020 Nepal Details – Enforcing Contracts in Nepal – Measure of Quality Answer Score Quality of judicial processes index (0-18) 6.0 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 0.5 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public No through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.0 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? No Page 53 Doing Business 2020 Nepal 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or Yes conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 54 Doing Business 2020 Nepal Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. 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 Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 55 Doing Business 2020 Nepal Resolving Insolvency - Nepal Indicator Nepal South Asia OECD high Best Regulatory income Performance Recovery rate (cents on the dollar) 41.2 38.1 70.2 92.9 (Norway) Time (years) 2.0 2.2 1.7 0.4 (Ireland) Cost (% of estate) 9.0 9.9 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) 8.0 6.5 11.9 None in 2018/19 Figure – Resolving Insolvency in Nepal – Score 44.4 50.0 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Nepal and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 62.1: China (Rank: 51) 62.0: India (Rank: 52) 47.2: Nepal (Rank: 87) 45.0: Sri Lanka (Rank: 94) 40.8: Regional Average (South Asia) 0.0: Bhutan (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 56 Doing Business 2020 Nepal Figure – Resolving Insolvency in Nepal – Time and Cost Time (years) Cost (% of estate) 2.5 25 22.0 2.2 2.0 Cost (% of estate) 2 20 1.7 1.7 1.7 Time (years) 1.6 1.5 15 9.3 9.9 10.0 1 9.0 9.0 10 0.5 5 0 0 No China India Nepal OECD South Sri Practice high Asia Lanka Bhutan income Page 57 Doing Business 2020 Nepal Figure – Resolving Insolvency in Nepal and comparator economies – Measure of Quality Nepal 4 2 0 2 Bhutan 1 2 1 0 China 6 3 2 2.5 India 4.5 2 1 0 Sri Lanka 3 2.5 1 0.5 OECD high income 5.3 2.8 2.1 1.9 South Asia 3.6 2.1 0.9 0.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Nepal and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 80 71.6 70 60 50 43.0 41.2 36.9 38.1 40 30 20 10 0 No Practice Nepal Bhutan China India Sri Lanka South Asia Page 58 Doing Business 2020 Nepal Details – Resolving Insolvency in Nepal Indicator Answer Score Proceeding foreclosure From the perspective of the BiZBank, as it is a secured creditor and has self help remedy under Section 57 of the Banking and Financial Institution Act, foreclosure is most likely to happen. Outcome piecemeal sale Upon completion of the foreclosure proceeding, Mirage will stop operating and its assets will be sold piecemeal in a public auction by an auctioneer appointed by the court. Time (in years) 2.0 It will take 2 years to complete foreclosure proceedings in Nepal. Main delays are due to finding a buyer and organizing the sale. Cost (% of estate) 9.0 It costs around 9% to complete foreclosure proceedings in Nepal, including fees of attorneys, assessors, and auctioneers, as well as court fees. Recovery rate 41.2 (cents on the dollar) Page 59 Doing Business 2020 Nepal Details – Resolving Insolvency in Nepal – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 8.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may file for 0.5 liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 4.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the No 0.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? No 0.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary 1.0 unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 2.0 Which creditors vote on the proposed reorganization plan? (c) Other 1.0 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as Yes 1.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote No 0.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 0.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting No 0.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 60 Doing Business 2020 Nepal Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. 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 Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 61 Doing Business 2020 Nepal Employing Workers - Nepal Details – Employing Workers in Nepal Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 119.6 Ratio of minimum wage to value added per worker 1.0 Maximum length of probationary period (months) 6.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 18.0 Paid annual leave for a worker with 5 years of tenure (working days) 18.0 Paid annual leave for a worker with 10 years of tenure (working days) 18.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 18.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 21.4 Page 62 Doing Business 2020 Nepal Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 42.9 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 22.9 Unemployment protection after one year of employment? Yes Page 63 Doing Business 2020 Nepal Business Reforms in Nepal From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Starting a Business: Nepal made starting a business more difficult by requiring in-person follow-up for employee registration for social security. Dealing with Construction Permits: Nepal made dealing with construction permits easier and less costly by reducing fees for building permits and improving the online e-submissions platform. Registering Property: Nepal made property registration more expensive by increasing the property transfer registration fee. Nepal also improved the quality of its land administration system by publishing the official service standards for delivering updated cadastral maps. Getting Credit: Nepal improved access to credit information by expanding the coverage of the credit bureau. Trading across Borders: Nepal reduced the time and cost to export and the time to import by opening the Integrated Check Post Birgunj at the Nepal-India border. Enforcing Contracts: Nepal made enforcing contracts easier by adopting a new code of civil procedure that introduces time standards for key court events. DB2019 Paying Taxes: Nepal made paying taxes more difficult by introducing a new labor contribution (gratuity contribution), medical insurance and accident insurance paid by the employer. Employing Workers: Nepal changed regulations pertaining to fixed-term contracts, probationary periods, working hours, paid maternity and sick leave, night work for women, third party approval in case of redundancy and unemployment protection. DB2018 Getting Credit: Nepal strengthened access to credit by operationalizing the existing law on secured transactions that implements a functional secured transactions system and establishes a centralized, notice-based, modern collateral registry. DB2017 Dealing with Construction Permits: Nepal made dealing with construction permits more difficult by increasing the cost of obtaining a building permit. Trading across Borders: Exporting in Nepal became more difficult due to an increase in the time and cost for documentary compliance following the introduction of a special vehicle permit requirement. At the same time, Nepal implemented the ASYCUDA World data management system, which expedited the customs clearance process. DB2015 Dealing with Construction Permits: Nepal made dealing with construction permits easier by implementing a new electronic building permit system. DB2014 Starting a Business: Nepal made starting a business easier by reducing the administrative processing time at the company registrar and by establishing a data link between agencies involved in the incorporation process. DB2012 Enforcing Contracts: Nepal improved oversight and monitoring in the court, speeding up the process for filing claims. DB2010 Registering Property: Nepal made transferring property easier by reducing the registration fee. Getting Credit: Nepal improved access to credit information by starting to distribute historical data. Page 64 Doing Business 2020 Nepal Page 65