Delay in Implementation of Budget Announcement Affects Business Registration
Finance Minister Dr. Prakash Sharan Mahat's budget announcement on the 15th of Jestha regarding "Company registration with an authorized capital of 100 rupees and all types of fees for registration/renewal of new companies are waived" has encountered complications during its implementation. Despite the budget's announcement, the implementation should have commenced from Shrawan 1. The government received praise for this policy, expected to foster a favorable business environment and promote entrepreneurship.
However, even in the second month of the new financial year, the budget program has not been executed. The proposal submitted by the Office of the Registrar of Companies to eliminate registration and renewal fees and publish it in the Gazette has circulated in four different government ministries, including the Council of Ministers, for three months. Regrettably, the notice of the bill's revision has not been published in the Gazette.
The failure to publish this notification has had a significant impact, affecting millions of service users as the intended arrangement remains unimplemented.
In the fiscal year 2080/81 budget, it was announced that "a legal provision will be made to open a company even after declaring a minimum authorized capital of Rs 100." Similarly, it was declared that no fees or charges would apply when registering a new company or increasing its capital. Furthermore, the budget promised to simplify and make transparent the company registration and cancellation processes, facilitating online operations.
The government's assertion was that such an arrangement would encourage young entrepreneurs and enhance the business and industry environment by streamlining company administration. It was anticipated that this announcement would stimulate the growth of young enterprises and promote innovation in the market.
As per the Companies Act 2063, Nepal currently has a system of authorized capital and fees for company registration. At the time of company registration, a fee of Rs 1,000 is required for a company with a minimum authorized capital of Rs 1 lakh, Rs 4,500 for a company with an authorized capital of Rs 1 lakh to Rs 5 lakh, and Rs 9,500 for a company with a capital of Rs 5 lakh to 25 lakh. Companies with a maximum capital of Rs 25 lakh to Rs 1 crore are subject to a fee of Rs 16,000.
Although existing laws do not permit company registration with an authorized capital of 100 rupees, companies are currently being registered with an authorized capital of up to 100,000 rupees. However, the budget announcement canceled this registration fee.
Despite the initiation of online processes for company registration and cancellation as per the budget announcement, the proposal to implement the fee/duty exemption specified in the Act was sent by the Company Registrar's Office to the Council of Ministers through the Ministry of Industry. The proposal sent in June received cabinet approval in Shrawan and was forwarded to the economic committee.
However, the process was halted due to differing opinions from the Ministry of Law, which believed that the committee's decision needed to be filled and published in the Gazette. The government does not undertake any work without a fee, even if it's just a rupee, as it must proceed legally.
The Ministry of Industry submitted a proposal to the Ministry of Finance for the decision on revenue exemption needed to implement the budget announcement. This proposal has reached the Council of Ministers but remains undecided.
The budget's announcement has not been legally finalized, resulting in its non-implementation. Reports suggest that legal issues regarding fee exemption are the cause of the delay.
The delay in implementing the government's popular program has left service users in a state of confusion. Clients who were eagerly awaiting free company registration and cancellation services were left disappointed. Many service users, anticipating the Gazette's revision, have been unfairly affected by the government's confusion.
This delay has particularly affected new and young startups. While the government's announcement was well-received, its implementation has been hindered by inadequate preparation and unclear objectives, leaving many disappointed with the current state of affairs.
