Author: Sawol Singh

1. Introduction

The Advertisement (Regulation) Act, 2076 (2019) (the “Act”), published in the Nepal Gazette on 25 October 2019, is Nepal’s first dedicated statute regulating advertisements of goods, services, events, and programs. Subsequently, the Advertisement (Regulation) Regulation, 2077 (2020) was published in the Nepal Gazette on 19 October 2020. As the foundational legal framework governing advertisement standards, it seeks to enhance consumer protection, reinforce public decency, and regulate the burgeoning advertising industry.

This briefing summarizes the key provisions of the Act and analyses a critical gap within the statute, its silence on surrogate advertising, a practice that has increasingly proliferated across Nepal’s media landscape.

2. Scope of the Act

The Act regulates:

• All forms of advertisements, including print, electronic, online and outdoor displays.
• Obligations and liability of advertising agencies and advertisement providers.
• Permitted and prohibited content, including categories of products and messages that cannot be legally promoted.

Despite its broad scope, the Act does not explicitly regulate social media or digital advertising, nor does it define or prohibit surrogate advertising, thereby leaving regulators without clear procedural guidance or statutory authority to act.

3. Definition and Regulation of Advertisements

3.1 What Constitutes an Advertisement

The Act adopts a broad definition, where “Advertisement” means any word, sentence, drawing, image, symbol, poster, pamphlet, publication, sign, structure or any other audio, visual or audio-visual publication or prepared for publication in public regarding any product, service, event or occasion through the means including print, electronic media, online, social networks, hoarding board, balloon.

This definition effectively captures both traditional and online medium; textual, visual, audio, and audiovisual content disseminated through traditional and digital media, hoarding boards, balloons, and similar means.

3.2 Permitted Advertisements

Advertisements may be made to:

• Promote a product or service;
• Inform consumers about a product or service;
• Publicise programs or events; or
• Disseminate public information.

3.3 Prohibited Advertisements

The Act prohibits advertisements that directly or indirectly promote:

1. Products banned for production, distribution, sale, or use under prevailing laws;
2. Gambling and unauthorised betting activities;
3. Weapons, explosives, and similar hazardous products;
4. Prescription medicines or medical products requiring professional supervision;
5. Products requiring prior regulatory approval where such approval has not been obtained;
6. Products explicitly prohibited from advertisement by other applicable laws; and
7. Educational advertisements inserted into school or university syllabi, except when the information serves a clearly educational purpose and is not promotional.

Additionally, the Act also prohibits any advertisement that:

A. Threatens National Integrity or Public Order

• Undermines Nepal’s sovereignty, geographical integrity, nationality, or federal relations;
• Disrupts public peace or harms international relations;
• Is against the State or in contempt of court; and
• Encourages or facilitates criminal conduct.

B. Violates Public Morality or Social Values

• Contains abusive, defamatory, or degrading content.
• Disrespects labour or promotes discrimination based on sex, caste, religion, language, or economic status.
• Hurts religious sentiments or cultural values.

C. Engages in Unfair Market Conduct

• Misleads consumers or spreads misinformation.
• Disparages or deteriorates the reputation of competing products.
• Demoralises domestic industries or harms fair competition.

D. Violates Intellectual Property Rights

• Uses trademarks, patents, designs, or other IPR-protected elements without the rights-holder’s consent.

These prohibitions aim to prevent the commercial promotion of harmful, restricted, unregulated or banned products and ensure that advertising activities do not undermine public interest or lawful market conduct.

3.4 Advertisement-Prohibited Areas

Local authorities may designate restricted zones, such as those related to religious, cultural, archaeological, educational, or health institutions.

3.5 Mandatory Disclosure Requirements

Advertisements must disclose:

1. Name and address of the advertisement provider, and
2. Warnings on harmful effects, where relevant.

Non-compliance triggers liability for publishers and media owners and may attract a fine of up to NPR 5 lakh.

4. Regulation of Specific Advertising Mediums

4.1 Hoarding Boards

Approval from the local level is required for any hoarding board placed in public view. Applications may be rejected for reasons including interference with transportation, aesthetic disruption, violation of cultural or religious values, or breaches of local law.

4.2 Television (Clean Feed)

The Act enforces Nepal’s clean feed policy, barring all foreign advertisements and prohibiting Nepali media from dubbing foreign ads.

4.3 Written Publications

Print advertisements remain partially governed by the Press and Publication Act but must also comply with the 2019 Act.

4.4 Social Media

The Act contains no explicit regulatory mechanism for advertisements on social media or online platforms, despite their growing role as primary advertising channels in Nepal.

Nepal Rastra Bank’s directive requires payments for online ads to be processed through banking channels for taxation purposes, but this does not regulate advertising content.

4.5 Email/SMS Advertising

Unsolicited email or SMS advertisements without the recipient’s consent are prohibited.
However, the Act is silent regarding unsolicited advertising via phone calls, creating another interpretive gap.

5. Advertisement Board

The Act establishes an eight-member Advertisement Board empowered to:

• Propose a national advertising policy,
• Examine advertisement content,
• Develop codes of conduct,
• Ensure compliance with standards,
• Coordinate among regulators and stakeholders,
• Distribute government advertisements proportionately,
• Conduct awareness programs, and
• Direct advertisers or media houses, where required.

6. State and Local Level Regulation

State-level committees monitor and supervise both print and electronic advertisements, including hoarding boards, based on statutory criteria.

7. Advertisement Agencies

Agencies must be enlisted with the Advertisement Board. Existing agencies at the time of enactment must register within one year.

8. Complaints, Compensation, and Appeal

• Complaints may be filed with the Board, committees, or local-level authorities. The action pursuant to the complaint filed should be informed to the complainant by the Advertisement Board, committee or local level.
• Compensation may be awarded after an investigation to check whether the harm has been caused or not by unlawful advertisements.
• Appeals of decisions must be filed within 35 days to the competent court (District Court or High Court, depending on the level of decision).

9. Offences and Penalties

Penalties include:

Violation Type	Statutory Penalty	Notes
Hoarding board violations	Up to NPR 1,00,000	Includes placement without approval & obstruction of public space
Clean Feed (TV) violations	Up to NPR 5,00,000	Highest penalty category
Restricted area/hour violations	Up to NPR 1,00,000	Applies to areas designated by local authorities
Missing disclosure (advertiser details)	Up to NPR 1,00,000	Liability may shift to publisher
Unsolicited SMS/email ads	Up to NPR 1,00,000	Act is silent on unsolicited calls
Violations without specified penalty	Up to 1 year imprisonment or NPR 10,000 fine	General clause

Editors are protected from liability unless they are also media owners.

10. The Act’s Legal Silence on Surrogate Advertising

10.1. What is Surrogate Advertising?

Surrogate advertising involves promoting a permissible product or service using a name, logo, colour scheme, or brand identity identical or substantially similar to a product whose advertising is prohibited, creating a functional association in the minds of consumers without explicit reference to the prohibited item. The intention is to remind consumers of the prohibited product without explicitly advertising it.

Examples generally involve:

• Branding of music products, events, or merchandise using the visual identity of prohibited goods,
• Sponsorship arrangements where the surrogate brand closely mirrors a prohibited product’s brand identity,
• Use of digital channels to disseminate content indirectly associated with prohibited products.

10.2. Absence of Provisions in the Advertisement (Regulation) Act

While the Act clearly bans direct advertising of alcohol, tobacco, gambling, betting, and other restricted items, it does not prohibit surrogate advertising or provide criteria for determining when an advertisement indirectly promotes a banned product.

This legal omission creates not only an interpretive gap but a practical enforcement vacuum, leading to the following consequences:

• Enforcement agencies lack a legal basis to penalise surrogate advertising even when intent is evident.
• Brand owners can legally leverage near-identical branding through music labels, entertainment platforms, merchandise, or event sponsorships.
• Social media channels, which the Act does not comprehensively regulate, have become a primary space for such activities.
• Enforcement, where it occurs, tends to targetindividuals promoting a brand while being unable to act against corporate/beneficiary entities due to the absence of express statutory prohibitions.

10.3. Comparative Insight

Surrogate advertising is not inherently harmful. In other jurisdictions, it is permissible when the surrogate product is genuine and lawfully sold, and when marketing does not mislead consumers. Nepal currently lacks clear standards, leaving stakeholders uncertain about compliance thresholds and permissible brand resemblance.

Introducing clear legal standards, such as definitions, disclosure requirements, and limits on brand resemblance, would help Nepal distinguish between legitimate brand extensions and attempts to bypass statutory advertising restrictions. In the absence of such guidance, regulators, advertisers, and media houses face uncertainty, and enforcement remains inconsistent. Proper regulation would close existing gaps, promote fair competition, and align Nepal with international best practices without impeding legitimate commercial activity.

10.4. Regulatory Challenges

Without explicit statutory authority:

• The Advertisement Board may investigate, but cannot impose penalties solely for surrogate advertising.
• Complaints filed to regulators cannot result in sanctions unless the content independently violates other provisions (e.g., misleading, discriminatory, or immoral content).
• Enforcement appears inconsistent, especially where sponsorships by surrogate brands intersect with public events or government-linked organisations.

11. Conclusion

The Advertisement (Regulation) Act, 2076 (2019) and Regulations, 2077 (2020), are pioneering legal instruments that significantly advance Nepal’s advertisement governance framework. However, its silence on surrogate advertising, combined with underdeveloped digital advertising regulation, has created a legal vacuum that allows indirect promotion of restricted products to persist.

As a result, surrogate branding through events, merchandise, entertainment platforms and online media continues to thrive, exploiting the ambiguity. Regulators, though aware of the issue, remain constrained by the absence of express legislative authority.

A clearer statutory framework, potentially incorporating definitions, thresholds, and enforcement mechanisms for surrogate advertising, would strengthen regulatory capacity and provide much-needed legal certainty to advertisers, agencies, and media houses.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice, advertisement, personal communication, solicitation or inducement. No attorney-client relationship is created through this content. Gandhi & Associates assumes no liability for any consequences resulting from actions taken based on information contained herein.

For quick legal assistance:

Phone/Viber/WhatsApp: +977 9709035477

For specific legal advice regarding advertisement and related platforms in Nepal, please contact our office to schedule a consultation with our experts.

I. Introduction

Double taxation occurs when the same income is taxed by two different countries, creating an excessive burden that discourages cross-border trade and investment. In today’s globalized economy where capital, goods, services, and technology move freely across borders, the risk of double taxation has increased significantly. Nepal addresses this challenge through Double Taxation Avoidance Agreements (DTAAs) and provisions in the Income Tax Act, 2058 (2002), providing mechanisms for foreign companies to legitimately avoid paying tax twice on the same income.

II. Understanding Double Taxation

1) Types of Double Taxation

a) Juridical Double Taxation occurs when the same taxpayer is required to pay taxes to two different governments on the same income. This commonly arises when a taxpayer resides in one country but earns income in another, making them liable for taxation in both jurisdictions.

Example: An Indian company providing consulting services to a Nepalese client faces Nepal’s withholding tax on the payment and India’s corporate tax on the same income. Without relief mechanisms, the combined tax burden could exceed 40-50%, making the transaction economically unviable.

b) Economic Double Taxation refers to taxation of the same income by the same government but affecting two different taxpayers. A common example is corporate profits taxed at the company level and then taxed again as dividends in shareholders’ hands.

2) Taxation Principles

Two competing principles create the double taxation problem:

1. Source-Based Jurisdiction: The country where income originates has the right to tax it. If someone works in Nepal, Nepal claims taxing rights because it provides the opportunity and resources to generate that income.
2. Residence-Based Jurisdiction: The country where a person or entity resides has the right to tax their worldwide income regardless of where it’s earned. If a corporation is incorporated in India, India claims the right to tax all its income, including from Nepal operations.

When both principles apply simultaneously, double taxation results.

III. Nepal’s Legal Framework

Section 73 of the Income Tax Act, 2058 (2002)

Section 73(1): Power to Conclude International Agreements

The Government of Nepal may conclude international agreements with foreign countries for the avoidance of double taxation when any income of any person is taxable under Nepal’s Income Tax Act and the same income is also taxable in a foreign country.The law defines “international agreement” as any treaty or agreement with a foreign government applicable to Nepal that contains provisions to avoid double taxation and prevent fiscal evasion, or to render reciprocal administrative assistance in implementing tax liability.

Section 73(2) and (3): Collection Assistance

When a competent authority of another treaty country requests Nepal’s Inland Revenue Department to collect amounts payable by persons in arrears under that country’s taxation law, the Department may send written notice requiring payment within a specified date. This collected amount is then sent to the requesting competent authority, facilitating international tax cooperation.

Section 73(4) and (5): Anti-Abuse Provisions

When international agreements contain provisions requiring Nepal to exempt income or payments or apply reduced tax rates, certain entities are denied these benefits to prevent treaty abuse.

Specifically, benefits are denied to entities that are considered residents of the other party country for agreement purposes and where fifty percent or more of the vested ownership is held by individuals or entities (in which individuals have no interest) who are residents of both Nepal and the other treaty country. This provision prevents abuse through dual-resident entities that could manipulate benefits under multiple tax regimes.

IV. Nepal’s DTAA Network

Nepal has concluded DTAAs with eleven countries following principles established by the Organization for Economic Cooperation and Development (OECD) and United Nations (UN). Nepal’s treaty partners include India (first agreement 1987, revised 2011), Norway (1996), Thailand, Sri Lanka, Mauritius, Austria, Pakistan, China, South Korea, Qatar, and Bangladesh (2019). Negotiations continue with additional countries including Singapore, Malaysia, United Kingdom, and Oman.

The India-Nepal DTAA is particularly significant given extensive economic ties between the countries. This agreement, revised in 2011 and effective from March 2012, addresses taxation of business profits, dividends, interest, royalties, technical fees, capital gains, and employment income.

V. Key Concepts in Tax Treaties

1) Permanent Establishment (PE)

Section 68 of the Income Tax Act addresses permanent establishments. A PE represents a fixed place of business through which a foreign enterprise conducts operations in Nepal. Business profits are generally taxable in Nepal only if the foreign company maintains a PE there.

Common PEs include:

• Branch offices
• Factories or manufacturing facilities
• Construction sites exceeding specified durations (typically 6-12 months)
• Dependent agents with authority to conclude contracts

Non-PE situations:

• Independent agents acting in ordinary business
• Storage or display facilities without sales
• Purchasing offices
• Short-term service provision below treaty thresholds

Practical implication: If an Indian consulting company sends employees to Nepal for a 3-month project, it typically doesn’t create a PE, meaning business profits escape Nepal taxation. However, extending the project beyond 6 months may create a PE, subjecting profits to Nepal tax.

2) Beneficial Ownership

DTAAs apply only to beneficial owners, entities truly entitled to income and controlling its use. This prevents treaty shopping where companies route income through intermediary entities in treaty countries solely for tax benefits without genuine business substance.

Nepal’s tax authorities increasingly scrutinize beneficial ownership, requiring demonstration of real operational presence, decision-making authority, and commercial rationale beyond tax optimization.

3) Tax Residency

Treaties provide guidelines for determining residency of individuals and entities. A Tax Residency Certificate (TRC) issued by the home country tax authority serves as official proof of residence status for treaty purposes. Schedule 11 of the Income Tax Act prescribes the format for TRCs in Nepal.

VI. Methods to Eliminate Double Taxation

1) Exemption Method

The residence country simply exempts foreign-source income from taxation, leaving only the source country to tax. This method provides complete relief but is less common in Nepal’s treaties.

2) Tax Credit Method

The foreign tax credit method is more prevalent. The residence country taxes worldwide income but allows credit for taxes paid in the source country, limited to the lower of actual foreign tax paid or the home country tax attributable to foreign income.

Example:

• Income from Nepal: NPR 1,000,000
• Nepal withholding tax (10%): NPR 100,000
• Home country tax rate (30%): NPR 300,000
• Credit for Nepal tax: NPR 100,000
• Additional home country tax: NPR 200,000
• Total tax: NPR 300,000 (not NPR 400,000 without relief)

VII. Practical Steps for Foreign Companies

Step 1: Verify Treaty Applicability

Confirm whether Nepal has a DTAA with your home country. Identify which treaty articles apply to your specific income type (business profits, dividends, interest, royalties, technical fees). Verify your company qualifies as a treaty resident.

Step 2: Obtain Tax Residency Certificate

Apply to your home country’s tax authority for a TRC certifying your tax residence status. The certificate must be current for the relevant fiscal year and contain company details, tax identification number, and official residence confirmation. Some countries may require apostille or consular authentication.

Step 3: Submit Documentation to Nepal

Before payment occurs, provide the Nepalese payer with required documentation to apply reduced withholding rates:

• Valid Tax Residency Certificate
• Company incorporation certificate
• Treaty benefit claim form
• Beneficial ownership declaration
• Board resolution authorizing treaty claims

The payer then withholds at the treaty rate rather than domestic rate, providing immediate benefit.

Step 4: Maintain Compliance

File tax returns in Nepal if required (PE cases, certain thresholds). Report Nepal-source income in your home country return. Claim foreign tax credit by attaching Nepal withholding certificates and payment evidence. Maintain documentation for potential audits in either jurisdiction.

VIII. Anti-Abuse Provisions

1) Treaty Shopping Prevention

Treaty shopping involves routing income through entities in treaty countries to obtain benefits not directly available. Nepal’s anti-treaty shopping provisions in Section 73(4) and 73(5) deny benefits to conduit companies lacking genuine substance.

Example: A Bhutanese construction company registers in India solely to access the India-Nepal DTAA for Nepal projects. Nepal may deny treaty benefits if the company lacks genuine Indian substance.

2) Base Erosion and Profit Shifting (BEPS)

Nepal participates in international initiatives addressing Base Erosion and Profit Shifting, tax planning strategies exploiting gaps in tax rules to artificially shift profits to low-tax locations. The OECD/G20 BEPS Package provides 15 Actions giving governments tools to ensure profits are taxed where economic activities occur and value is created.

IX. Conclusion

Nepal’s framework for avoiding double taxation, established through Section 73 of the Income Tax Act and bilateral DTAAs with eleven countries, provides legitimate mechanisms for foreign companies to avoid excessive tax burdens. Success requires understanding treaty provisions, obtaining proper documentation including Tax Residency Certificates, demonstrating beneficial ownership and substance, and maintaining compliance in both jurisdictions.

 Disclaimer: This article is for general informational purposes only and does not constitute legal advice, advertisement, personal communication, solicitation or inducement. No attorney-client relationship is created through this content. Gandhi & Associates assumes no liability for any consequences resulting from actions taken based on information contained herein.

 For quick legal assistance:

Phone/Viber/WhatsApp: +977 9709035477

For specific legal advice regarding applicability of double tax avoidance in Nepal, please contact our office to schedule a consultation with our experts.

The Ministry of Culture, Tourism and Civil Aviation (the “Ministry”) under the Government of Nepal issued the Casino Regulations, 2082 (2025) (“Casino Regulations”). The primary objective of the Casino Regulations is to regulate the establishment, licensing, operation, and monitoring of casinos in Nepal, while ensuring security, transparency, and responsible gaming practices.

This article provides a general overview of the casino business incorporation requirements, licensing and renewal procedures, management obligations, and monitoring provisions for casino operations.

I. Key Definitions

The key definitions under Casino Regulation are as follows:

1. Large Casino: Casinos that offer both games played by hand, with the help of the dealer or spinner, by distributing cards, chips or coins, and games played by means of modern machines or electronic devices.
2. Small Casino: Casinos where games are played only through modern machines or electronic devices.

II. Company Incorporation and Pre-Approval of Casino Business

1) Required Paid-up Capital

A person willing to operate a casino must maintain the following paid-up capital while establishing a company, as detailed below:

For Large Casino	At least NPR 300 Million (in words Nepalese Rupees Three Hundred Million)
For Small Casino	At least NPR 200 Million (in words Nepalese Rupees Two Hundred Million)

If a company operating a casino by obtaining a license under the prevailing law at the time of commencement of these regulations has not established the paid-up capital as mentioned above, it shall maintain such paid-up capital by the end of Chaitra, 2085 BS (12 April 2028).

2) Pre-approval Requirement

A person willing to operate casino business must obtain prior approval shall submit an application to the Department along with a fee of NPR 10,000 (in words Nepalese Rupees Ten Thousand only) , attaching the following documents and details:-

S.N.	Description
a)	Written commitment from a four-star or higher rated hotel or resort to operate a casino on its hotel or resort premises
b)	The articles of association and regulations of the proposed company
c)	Shareholder, shareholding and their fund contribution details.
d)	Personal details of each director of the proposed company (citizenship certificate, passport or national identity card)
e)	Feasibility Study Report
f)	A financial and technical proposal
g)	If the casino is to operate within five kilometer of an international border, the applicant must submit the following documents : – A recommendation from the District Security Committee based on a security assessment – A security plan and proof of deploying at least 20 trained security personnel at the casino site.

3) Refusal grounds of prior approval

Approval will not be given under the following circumstances:

S.N	Description
a)	If any of the disqualifying conditions mentioned under the Tourism Act are present;
b)	A director of the proposed company is under 18 years of age;
c)	Capital requirements are not met;
d)	Required fees, documents and description are missing;
e)	More than one casino is proposed at the same hotel or resort;
.f)	Proposed casino location is within five kilometers of an international border and the applicant fails to meet the security standards required

III. License and Renewal

A company that has obtained pre-approval from the Department and intends to apply for a casino license must fulfill the following infrastructure and fitness requirements before filing an application for pre-approval.

1) Infrastructure and Qualification (Fit and Proper Test) related requirements

Companies that have been established with prior approval must meet specific standards, including:

S.N	Description
a)	Must have electronic surveillance systems to prevent theft and fraud.
b)	A system for maintaining damage/loss records and internal and external controls.
c)	Fire control system of at least 40 horsepower capacity.
d)	CCTV storage of six months and a secure room for storing footage.
e)	At least five trained security personnel for regular locations, and at least twenty for casinos within five kilometers of international borders.
f)	Use of walk-through gates, metal detectors, ID scanning, and biometric access control systems (face, retina, or thumb scan).
g)	Mechanisms for customer identification (KYC) and reporting per anti-money laundering laws.
h)	Recommendation from the District Police Office for casino operations.
i)	24/7 live CCTV feed of all games conducted within the casino.
.j)	Real-time digital entry records and counterfeit detection and counting machines.
k)	Emergency evacuation systems and disaster response plans.
.l)	Ownership of at least five four-wheeled vehicles or agreement with a travel agency.
m)	On-site health personnel for first aid and medical emergencies.
n)	Arrangement for cultural programs and appropriate entertainment stages.
o)	Casino layout and decorations per international standards with separate staff and player entry/exit pathways, etc.

A four-star or higher level hotel or resort where a casino is operated must meet in accordance with the prevailing laws.

2) Application for License

A company that has obtained pre-approval from the Department must apply for a casino license, and the related requirements are as follows:

(i) The application fees are as follows:

Description

NPR 1.5 million for a large casino (in words Nepalese Rupees One Million Five Hundred Thousand only)

NPR 1 million for a small casino (in words Nepalese Rupees One Million only)

(ii)The application must include the following documents:

S.N	Description
i.	Copy of Company Registration Certificate
ii.	Copy of Memorandum of Association and Article of Association
iii.	Receipt of fee payment
iv.	Evidence showing that the consent given by the four-star or higher level hotel or resort for operating a casino within its premises is still valid
v.	Any directives issued during inspections by the Department,
vi.	Authorization letter if a representative submits the application
vii.	Foreign investment approval, if joint venture is involved

(iii) The Department may conduct further inspections and will issue a license only if all conditions are met. If deficiencies are found, the company will be instructed to resolve them within a specified period.

(iv) Upon approval, the license fees are as follows:

S.N	Description
i.	NPR 30 million (in words Nepalese Rupees Thirty Million only)  for a large casino,
ii.	NPR 15 million (in words Nepalese Rupees Fifteen Million only) for a small casino.
iii.	Company that wants to operate more than one casino, fee for each casino as per (i) and (ii)

(v) In addition to the license fee, the following financial obligations must be fulfilled:

S.N	Description
i.	Applicable royalty amount as prescribed by the Finance Act,
ii.	A security deposit equal to 1.5 times the royalty amount, or a 14-month bank guarantee from a Class-A commercial bank
iii.	Proof of compliance with standards
iv.	Payment of application fees (NPR 10 million large, NPR 10 million small)
v.	Valid hotel consent,
vi.	Authorization for foreign joint ventures, if applicable.

3) Renewal of license

A company must submit an application to the department along with the following documents:

S.N	Description
i.	Proof of payment of royalty
ii.	Bank Guarantee of the same amount with a validity period of fourteen months from the date of issuance
iii.	Audit report of the previous financial year
iv.	Updated details and share records of the company’s directors and shareholders
v.	Copy of tax payment certificate of the previous fiscal year
vi.	Proof of depositing tax deductions from customers and employees into revenue account
vii.	Details of expenditure incurred for corporate social responsibility
viii.	Proof that the registration of the hotel/resort where the casino is operating has been updated

4) Cancellation of license

Before canceling a casino license under this Act, the Department must publish a public notice and provide the licensee with seven days to submit an explanation. If no explanation is submitted within the prescribed period, or if the explanation provided is found to be unsatisfactory, the Department may proceed with canceling the license.

A company may also voluntarily apply for cancellation of its license, provided that it has settled all outstanding dues, including royalty, fees, penalties, fines, and any other liabilities. Once a license is canceled, the Department must inform the Office of the Company Registrar, the concerned Inland Revenue Office, and the Department of Industries.

IV. Rules and Conditions for Operating a Casino in Nepal

The Casino Regulations outlines various operational rules, security conditions, location requirements, and ethical standards that a company must follow while operating a casino in Nepal. Some of the key provisions are:

S.N	Description
i.	Companies operating more than one casino at the time of this regulation must apply to operate only one casino.
ii.	Every casino must install a surveillance system approved by the Department, with clear facial visibility of all entrants. CCTV footage must be preserved for at least six months.
iii.	Casinos must not allow immoral, unethical, or criminal activities. Lending money or offering credit to gamblers is strictly prohibited.
iv.	Operations must respect Nepali culture, tradition, and social values, and games promoting unethical conduct are not permitted.
v.	Casinos must comply with existing money laundering laws and submit reports as required.
vi.	A casino cannot operate within five kilometers of an international border unless it meets specific security criteria. Casinos operating within three kilometers before the regulation may continue only if they comply with all updated requirements by the end of Chaitra, 2083 B.S (mid-April 2027).
vii.	Licensed casinos may request to change their hotel or resort location but must choose a four-star or higher facility and meet all legal standards to obtain departmental approval.
viii.	A large casino must employ at least 150 Nepali citizens, and a small casino must employ at least 50.
ix.	Operating or promoting online gambling games is prohibited.
x.	Promotion through any media (print, digital, audiovisual, etc.) inside Nepal is strictly prohibited.
xi.	The casino must regularly test water, beverages, and food provided to players through an authorized quality control agency.
xii.	The casino is expected to promote Nepali cuisine and operate only within the licensed resort premises.
xiii.	All instructions from the Department and Financial Information Unit must be followed. Casinos must cooperate with inspections and submit any requested documentation.

V. Joint Venture with Foreign Company and Foreign Currency Transactions

A company that has obtained a casino operating license may operate the casino in joint venture with a foreign company, provided that it secures approval from the Ministry on the recommendation of the Department. In entering into such a joint venture, the company must comply with all prevailing laws governing foreign investment. Furthermore, if the casino operation requires transactions in foreign currency, the licensed company must obtain permission from Nepal Rastra Bank in accordance with applicable laws to conduct such foreign currency transactions.

 Disclaimer: This article is for general informational purposes only and does not constitute legal advice, advertisement, personal communication, solicitation or inducement. No attorney-client relationship is created through this content. Gandhi & Associates assumes no liability for any consequences resulting from actions taken based on information contained herein.

 For quick legal assistance:

Phone/Viber/WhatsApp: +977 9709035477

For specific legal advice regarding the licensing and compliance requirement of casinos in Nepal, please contact our office to schedule a consultation with our experts.

I. Definition of Cryptocurrency

Cryptocurrency refers to a form of digital or virtual asset that operates on decentralized blockchain technology and functions as a medium of exchange, a store of value, or a unit of account without reliance on a central issuing authority.

Despite its technological appeal, the Government of Nepal and the Nepal Rastra Bank (“NRB”) have, time and again, issued clear public positions declaring that cryptocurrency, in all its forms and uses, including trading, mining, investment, and payment, is prohibited within Nepal. Cryptocurrency is currently banned in Nepal, and NRB has consistently reiterated that such instruments are not legal tender, not recognized as foreign currency, and not permitted for investment or remittance purposes.

II. NRB’s Prohibitory Notices on Cryptocurrency

NRB has issued multiple public notices over the years declaring cryptocurrency-related activities illegal in Nepal. The following is a consolidated and formally presented summary of the key notices:

1) Notice dated 2074/04/29 (13 August 2017): Bitcoin Transactions

NRB’s Foreign Exchange Management Department issued a public notice clarifying that, under the Nepal Rastra Bank Act, 2058 (2002) and the Foreign Exchange (Regulation) Act, 2019 (1962), only NRB-licensed entities may engage in foreign exchange transactions. As Bitcoin had not been recognized as currency or money in Nepal, and reports had indicated individuals engaging in Bitcoin transactions through the internet, NRB declared that all Bitcoin-related transactions are fully illegal in Nepal and cautioned the public not to engage in such activities.

2) Notice dated 2078/05/24 (9 September 2021): Cryptocurrency Transactions, Use, and Mining

NRB reiterated that all forms of cryptocurrency transactions, usage, and mining are illegal under Nepali law. The notice emphasized that individuals had begun to promote and encourage cryptocurrency activities, exposing the public to risks of fraud and loss. NRB warned that anyone found conducting or facilitating cryptocurrency transactions or mining activities would face legal action under prevailing laws.

3) Notice dated 2078/10/09 (23 January 2022): Virtual Currency, Cryptocurrency, and Network Marketing

NRB expressed concern over schemes promoting high-return investments linked to virtual currencies, cryptocurrencies, funds such as “Hyper Fund,” and pyramid-based network marketing models such as Jocial, Crowd 1, and Solemax Global.

NRB clarified that Nepal has not recognized virtual currencies or cryptocurrencies as legal tender or foreign currency and warned that involvement in such schemes may lead to fraud, capital flight, and economic harm.

All Nepali and foreign individuals residing in Nepal, and Nepalis residing abroad, were cautioned that engagement in such activities would result in legal action.

4) Notice dated 2079/04/30 (15 August 2022): Cryptocurrency, Stablecoins, Network Marketing, Hyper Fund

NRB reaffirmed earlier notices and clarified that cryptocurrencies (including stable coins) have no legal tender status, government backing, or regulatory protection in Nepal.
The notice highlighted risks of money laundering, terrorist financing, tax evasion, price volatility, and capital flight associated with cryptocurrency and stable coin activities, making such transactions illegal.
The notice further stated that any involvement, use, investment, membership, ownership, transfer, exchange, mining, or facilitation, would attract legal action under existing laws.

5) Notice dated 2079/12/20 (3 April 2023): Cryptocurrency, NFT, Digital Assets, DeFi

NRB’s most recent notice expanded the scope of prohibition to include Non-Fungible Tokens (NFTs), Digital Assets, Decentralized Finance (DeFi) activities, and all forms of virtual assets that may enable offshore investment or undermine national foreign exchange controls.
NRB emphasized that none of these instruments have legal recognition as currency or foreign exchange in Nepal and that they pose inherent risks, including capital flight, anonymity-based financial crime, consumer harm, and destabilization of monetary and financial stability.

NRB clarified that any individual, firm, company, institution, or agency inside Nepal, or Nepalis abroad, engaging in such activities will face prosecution under the Foreign Exchange (Regulation) Act, 2019 (1962) and the Act Restricting Investment Abroad, 2021(1964).

III. NRB’s Risk Assessment on Cryptocurrency

NRB’s Foreign Exchange Management Department has published an extensive assessment outlining key risks associated with cryptocurrency, of which few are listed below:

1) Macroeconomic Instability

Cryptocurrency transactions occur outside the regulated financial system and do not involve financial intermediaries. Because these transactions are speculative and lack institutional safeguards, widespread adoption could undermine macroeconomic balance.

2) Undermining Monetary Policy

Cryptocurrency circulation may lead to de-facto “dollarization” of the economy. Since cryptocurrencies are issued privately and outside NRB supervision, their usage would weaken central bank control over money supply, interest rates, and monetary policy transmission.

3) Pressure on Foreign Exchange Reserves

Cryptocurrencies are not recognized as reserve currency. Their use may reduce foreign exchange inflows, encourage remittances to be diverted into unregulated digital assets, and facilitate capital flight, all of which could harm Nepal’s already constrained foreign exchange reserves.

4) Money Laundering and Terrorism Financing Risks

Cryptocurrency transactions allow anonymity, obscured identities, and cross-border transfers without regulatory oversight. FATF has highlighted ML/TF risks arising from anonymity-enhancing features and decentralized systems. International studies show billions of dollars in illicit activity linked to cryptocurrencies.

5) Investment Security Risks

High-profile collapses such as FTX, Terra USD, and LUNA demonstrate extreme volatility and the absence of investor protection. Cryptocurrency investments carry substantial risk of total loss.

6) Fraud and Tax Evasion Risks

Cryptocurrency enables illegal activities including fraud, tax evasion, and unregulated financial flows. Studies cited by the Financial Stability Institute show tens of billions of dollars associated with illicit crypto addresses globally.

7) Conflict with International Regulatory Cooperation

International bodies including the IMF and UNCTAD have warned against recognizing cryptocurrency as legal tender. Adoption or tolerance of cryptocurrency could place Nepal in conflict with international financial cooperation frameworks.

8) Loss of Control over Foreign Exchange Regulation

Nepal maintains strict controls over foreign exchange transactions. Cryptocurrency transactions, being borderless and unregulated, could circumvent these controls and weaken NRB’s ability to manage foreign exchange.

IV. Legal Penalties for Cryptocurrency Activities in Nepal

Nepal imposes stringent penalties for engaging in cryptocurrency-related activities. The key legal consequences under prevailing laws are as follows:

1) Nepal Rastra Bank Act, 2058 (2002)

• Confiscation of digital assets or property involved.
• Fine up to three times the value of the cryptocurrency transaction.
• Imprisonment up to 7 years, or both.

2) Foreign Exchange (Regulation) Act, 2019 (1962)

• Confiscation of foreign digital assets or currencies.
• Fine up to three times the value of the transaction.
• Imprisonment up to 7 years, or both.
• Failure to pay fines results in an additional 4 years’ imprisonment.
• For amounts exceeding NPR 10 million, an extra 3 years’ imprisonment is imposed.

3) National Penal Code, 2074 (2017)

Where crypto-related activities amount to betting or gambling:

• First offence: Up to 3 months’ imprisonment or NPR 30,000 fine.
• Second offence: Up to 1 year imprisonment and NPR 50,000 fine.
• Subsequent offences: Additional 3 months’ imprisonment and NPR 10,000 fine for each repetition.

4) Electronic Transactions Act, 2063 (2008)

Cryptocurrency users may face cybercrime charges for unauthorized or fraudulent digital financial activities, including online scams, hacking, or unlicensed fintech operations.

Penalties include imprisonment, fines, and potential long-term prohibitions on digital activities.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice, advertisement, personal communication, solicitation or inducement. No attorney-client relationship is created through this content. Gandhi & Associates assumes no liability for any consequences resulting from actions taken based on information contained herein.

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