Understanding private vs public company in Nepal is one of the first decisions foreign companies face when entering the Nepali market. This choice directly affects PAN card registration, tax exposure, disclosure obligations, and long-term scalability.
Nepal’s PAN (Permanent Account Number) is the backbone of the country’s tax system. Without it, no company local or foreign can legally operate, invoice, hire employees, or open a bank account.
This guide explains how private and public companies differ in Nepal, how PAN registration works for each, and what foreign investors must plan for from day one.
A PAN card is a unique tax identification number issued by Nepal’s tax authority. It links a company to all income tax, VAT, withholding tax, and payroll filings.
PAN registration is mandatory under the Income Tax Act, 2002 and enforced by the Inland Revenue Department (IRD).
A PAN is required to:
Without a PAN, a company is considered non-compliant, regardless of incorporation status.
The distinction between private and public companies is governed by the Companies Act 2006.
A private company is the most common structure for foreign investors.
Key characteristics:
Private companies are ideal for:
A public company is designed for capital raising and large-scale operations.
Key characteristics:
Public companies are suitable for:
PAN registration procedures are similar on the surface, but risk, scrutiny, and documentation depth differ significantly between private and public companies.
| Aspect | Private Company | Public Company |
|---|---|---|
| IRD scrutiny | Moderate | High |
| Supporting documents | Standard | Extensive |
| Ongoing reporting | Annual | Quarterly + annual |
| Audit expectations | Medium | Mandatory statutory audit |
| Tax risk reviews | Occasional | Frequent |
Regardless of structure, PAN registration follows a defined process.
The company must first be incorporated with the Office of the Company Registrar (OCR).
Required outputs:
Foreign companies must:
The PAN application is submitted to IRD, either:
IRD verifies:
Once approved, the PAN certificate is issued.
Tax treatment is broadly similar, but compliance expectations differ.
Companies must deduct tax on:
Failure to deduct correctly exposes directors to penalties.
PAN registration is a prerequisite for VAT.
Companies must register for VAT if:
Public companies are more likely to face early VAT audits.
Foreign investors often underestimate Nepal’s compliance environment.
Typical errors include:
These mistakes lead to penalties and repatriation delays.
For most foreign investors, a private company is the optimal starting point.
Why?
Public companies make sense only when:
This article reflects:
These laws are publicly available through Nepal government sources and enforced nationwide.
Choosing between private vs public company in Nepal is not just a corporate formality. It directly affects PAN card registration, tax exposure, compliance costs, and long-term flexibility.
For most foreign companies, a private company with early PAN registration provides the fastest, safest, and most controllable entry into Nepal. Public companies demand heavier compliance but unlock larger capital pathways.
Getting this decision right from day one saves years of regulatory friction.
Yes. Every company conducting business in Nepal must obtain a PAN, regardless of ownership nationality.
No. Company incorporation is required before PAN registration for commercial activities.
No. Public companies often face longer verification due to higher scrutiny.
Yes. A PAN is required before VAT registration can be completed.
Yes, but all activities must be disclosed during PAN registration.