Incorporate a company in Nepal is no longer a niche decision.
It is a strategic move for foreign companies seeking cost efficiency, market access, and long-term growth.
Nepal has quietly positioned itself as one of South Asia’s most attractive emerging destinations for foreign direct investment (FDI). Recent legal reforms, investor protections, and sector-specific incentives have significantly improved the ease of doing business.
This guide explains why incorporating a company in Nepal makes commercial sense, covering legal safeguards, tax advantages, and investment incentives foreign companies should understand before entering the market.
Nepal sits between India and China, two of the world’s largest economies.
But geography is only part of the story.
Foreign investors increasingly incorporate a company in Nepal because of:
• Competitive operating costs
• Liberal FDI framework
• Strong profit repatriation rights
• Skilled English-speaking workforce
• Government-backed investment protections
These factors combine to create a compelling risk-reward profile for international businesses.
When you incorporate a company in Nepal under the Companies Act, 2006, you gain a separate legal entity with limited liability.
This protects shareholders’ personal assets and creates contractual certainty.
Key legal protections include:
• Separate corporate personality
• Limited liability of shareholders
• Clear governance requirements
• Statutory dispute resolution mechanisms
These principles are aligned with international corporate law standards.
The Foreign Investment and Technology Transfer Act (FITTA), 2019 modernised Nepal’s FDI regime.
Foreign investors are expressly guaranteed:
• Protection against nationalisation
• Fair and equitable treatment
• Right to repatriate profits and capital
• Equal treatment with domestic investors
These guarantees are reinforced by Nepal’s bilateral investment treaties.
Most industries in Nepal allow 100 percent foreign ownership.
Common sectors include:
• IT and software services
• BPO and outsourcing
• Manufacturing
• Hydropower
• Tourism and hospitality
• Consulting and professional services
Only a limited “negative list” restricts foreign participation.
Nepal’s standard corporate income tax rate is 25 percent, which is competitive within South Asia.
Certain sectors enjoy reduced rates or exemptions, including:
• Manufacturing industries
• Hydropower projects
• Special Economic Zones (SEZs)
• Export-oriented businesses
Tax incentives are designed to encourage long-term investment.
Foreign companies incorporating in Nepal may qualify for:
• Full or partial tax holidays
• Reduced tax rates for initial years
• Customs duty exemptions on machinery
• VAT refunds for exporters
These incentives significantly improve early-stage cash flow.
Nepal has signed Double Taxation Avoidance Agreements with countries including:
• India
• China
• Norway
• Sri Lanka
• Mauritius
DTAAs prevent income from being taxed twice and improve cross-border structuring efficiency.
One of the most important reasons to incorporate a company in Nepal is repatriation certainty.
Foreign investors may repatriate:
• Dividends
• Royalties
• Management fees
• Loan repayments
• Sale proceeds of shares
Repatriation is permitted under FITTA 2019 and regulated by Nepal Rastra Bank.
Nepal offers a highly educated, English-speaking workforce at a fraction of global salary costs.
This makes Nepal attractive for:
• Technology development
• Accounting and finance
• Mortgage processing
• Engineering and design
• Customer support
Foreign companies often incorporate locally to build scalable teams.
Once you incorporate a company in Nepal, scaling becomes straightforward.
You can:
• Hire unlimited local employees
• Lease commercial office space
• Open local bank accounts
• Sponsor work visas for expatriates
• Expand into multiple sectors
This flexibility supports long-term growth strategies.
| Factor | Nepal | India | Bangladesh | Sri Lanka |
|---|---|---|---|---|
| 100% Foreign Ownership | Yes (most sectors) | Restricted sectors | Limited | Limited |
| Corporate Tax Rate | 25% | 22–30% | 27.5% | 30% |
| Profit Repatriation | Guaranteed by law | Regulated | Regulated | Restricted |
| Labour Cost | Low | Medium | Low | Medium |
| FDI Approval Time | Moderate | Slow | Slow | Moderate |
Insight: Nepal offers a rare balance of legal certainty and cost efficiency.
Foreign companies commonly incorporate in Nepal to operate in:
• IT and software development
• Outsourcing and shared services
• Renewable energy
• Manufacturing and assembly
• Tourism and eco-hospitality
• Consulting and advisory services
Government incentives are aligned with these sectors.
• Clear FDI approval process
• Transparent company registration
• Predictable compliance framework
• Low payroll costs
• Simple labour compliance
• Competitive tax regime
• Free share transferability
• Capital repatriation rights
• Ability to restructure or sell
This lifecycle flexibility reduces long-term risk.
Many foreign companies hesitate due to outdated perceptions.
In reality:
• Laws are codified and transparent
• Banking is regulated by NRB
• Profit repatriation is legally guaranteed
• Digital filings are increasingly standard
Professional guidance eliminates most friction points.
You should strongly consider incorporation if:
You plan long-term operations
You want to hire local staff directly
You need invoicing and VAT registration
You want asset ownership in Nepal
You plan to scale beyond a pilot phase
Short-term projects may prefer an Employer of Record model.
No market is risk-free.
Key risks include:
• Regulatory interpretation delays
• Banking documentation requirements
• Compliance complexity
These are mitigated by:
• Proper structuring
• Local legal and tax advisors
• Clear shareholder agreements
With the right partner, risks remain manageable.
To incorporate a company in Nepal today is to enter a market on the rise.
Foreign investors benefit from:
• Strong legal protections
• Competitive tax incentives
• Guaranteed repatriation
• Affordable skilled workforce
• Strategic regional positioning
Nepal rewards early movers who structure correctly and think long term.
Thinking of incorporating a company in Nepal?
Book a free strategy consultation to assess structure, tax efficiency, and compliance before you invest.
The right setup can save years of cost and risk.
Yes. Most sectors allow full foreign ownership, except those on the restricted negative list.
Typically 3–6 weeks, including FDI approval and company registration.
Yes. FITTA 2019 guarantees repatriation of profits, dividends, and capital.
The standard minimum is NPR 20 million, subject to sector-specific rules.
No. A local director is not mandatory, but local compliance support is recommended.