Foreign founders ask the same thing every year: how to incorporate a company in Nepal without friction. In 2025, the answer is clear. Nepal is a strong hub for software delivery and back-office tech. You get skilled talent, English fluency, and friendly time zones. Costs remain competitive. Compliance is predictable once you follow the playbook. This guide shows every step with plain language and zero fluff.
Nepal’s developer pool keeps growing. New grads enter each year. Returnees add senior depth.
English is widely used in tech teams. Global clients value that.
Time zones align with APAC, the Middle East, and Europe.
Network quality has improved across major cities.
Costs stay attractive for long-term scale.
Policy supports IT exports and digital jobs.
What this means for you: build a stable, compliant software team. Keep margins healthy. Protect IP. Repatriate profits cleanly.
Most foreign firms consider four paths. Each has trade-offs.
Private limited company (subsidiary).
Best for hiring, invoicing, and tax efficiency.
Branch office.
Works for limited-scope delivery under the parent.
Liaison office.
No revenue. Research and coordination only.
Contracting via local vendor.
Fast start, but low control and weak IP protection.
| Feature | Private Limited (Subsidiary) | Branch Office | Liaison Office | Vendor/PEO Route |
|---|---|---|---|---|
| Can invoice clients in Nepal? | Yes | Yes, within scope | No | Vendor invoices |
| Can export services and bill parent? | Yes | Yes, within scope | No | Indirect |
| Hiring and payroll control | Full | Medium | Minimal | Vendor-controlled |
| FDI approval required | Yes | Yes | Yes | No (for you) |
| Banking and repatriation | Full NRB support | Full NRB support | Limited | Vendor handles |
| Tax exposure | Corporate tax | Corporate tax | Minimal | At vendor level |
| IP ownership clarity | Strong | Strong | N/A | Weaker |
| Best use case | Long-term hub | Project-bound delivery | Market study | Pilot or stopgap |
Recommendation: choose a private limited subsidiary for full control, clean invoicing, and future scale.
This section is the heart of the playbook. Follow these steps in order.
Structure the project. Define service lines, headcount, and budgets.
Choose the entity. A private limited subsidiary suits most IT exporters.
Name reservation. Secure a unique name at the Office of Company Registrar.
Draft constitutional documents. Prepare MOA and AOA for tech services.
Board resolutions. Authorize investment and local signatories.
FDI filing. Apply under the Foreign Investment and Technology Transfer Act.
Banker selection. Choose a commercial bank with strong foreign desks.
Company registration. File with the Office of Company Registrar.
PAN registration. Obtain your Permanent Account Number.
VAT registration (if applicable). Register for VAT based on activity.
Open capital account. Enable inward remittances per NRB rules.
Remit paid-up capital. Send capital via banking channels.
Share allotment. Record allotment and update statutory registers.
Post-incorporation filings. Submit capital proof and compliance returns.
Social Security Fund setup. Enroll the company and your employees.
Payroll setup. Create compliant contracts and TDS workflows.
Operational banking. Activate current accounts and online banking.
Intercompany agreements. Sign a master services and transfer pricing policy.
Compliance calendar. Lock in monthly, quarterly, and annual tasks.
Kickoff hiring. Start with a lead engineer, HR, and finance support.
MOA and AOA reflecting software and export services.
FDI application forms and sponsor IDs.
Board resolutions and notarized passports.
Sample service scope and pricing annexures.
Lease intent letter for a future office.
Bank KYC and FATF compliance forms.
HR templates: offer, NDA, IP assignment, and handbook.
Keep sentences short in your files. It aids review and translation.
You will deal with three main bodies.
Department of Industry (DOI). Handles most FDI approvals.
Investment Board Nepal (IBN). Handles large or strategic investments.
Nepal Rastra Bank (NRB). Regulates foreign currency, remittances, and loans.
Core legal rails you should know:
Companies Act 2063 (2006). Governs incorporation and compliance.
FITTA 2019 and Rules 2020. Cover FDI approvals and reporting.
NRB Foreign Investment and Foreign Loan Bylaw 2078 (as amended).
Income Tax Act 2058 and VAT Act 2052 for tax treatment.
Labour Act 2017 and Social Security Act 2017 for employment basics.
Electronic Transactions Act 2063 for e-commerce and data offenses.
Note: Investment thresholds and “negative list” items can change. Confirm the latest position during filing.
Open an FDI capital account first. Use it for capital remittances and share subscriptions.
Send capital through official banking channels. Keep swift messages and FIRC copies.
Complete share allotment after funds land. Update statutory registers and the ROC.
For dividends, you will need:
Audited accounts and tax clearance.
Board resolution and shareholder resolution.
NRB approval for remittance documents.
Bank’s compliance review and outward remittance form.
For intercompany service fees, use:
Executed master service agreement.
Invoices with clear scope, milestones, and rates.
Transfer pricing policy and local file support.
Proof of service delivery and acceptance.
Tip: Keep a digital “remittance binder.” Include approvals, invoices, and bank proofs. Your audits will be faster.
Corporate tax applies to profits. VAT is generally 13% in Nepal.
Exported services may be outside VAT scope, if conditions are met.
You will deduct TDS on salaries and certain vendor payments.
Employees need PAN. Your payroll must compute TDS monthly.
Register for Social Security Fund contributions when employees join.
Build a tax calendar:
Monthly: VAT and TDS filing and payments.
Quarterly: advance tax reviews and TP true-ups.
Annual: audit, tax return, and thin capitalization checks.
Ask your advisor to map any tax treaty relief for your parent jurisdiction.
Draft clear employment contracts with probation, notice, and IP terms.
Issue NDAs and invention assignment agreements at onboarding.
Adopt a remote and office hybrid policy to widen your talent pool.
Enroll employees in Social Security Fund before first payroll.
Set up leave, overtime, and expense policies in your HRIS.
Expat staff:
Use the Department of Immigration process for work and non-tourist visas.
Keep role justifications and local training plans.
Maintain timely renewals and address updates.
Use robust NDAs with all staff and vendors.
Assign copyright and invention rights to the company.
Adopt secure coding and access control practices.
Limit PII access to a need-to-know basis.
Run background checks within local law.
Recommended policies: information security, data retention, BYOD, and incident response.
Map your client data flows. Keep them out of personal devices.
Use auditable tools for code, secrets, and deployment keys.
Days 1–15:
Incorporation, PAN, and bank accounts.
FDI application and capital planning.
Draft HR and finance templates.
Days 16–45:
Capital remittance and share allotment.
VAT registration, if required.
Hire HR, a finance associate, and the first tech lead.
Days 46–90:
Execute the master service agreement with the parent.
Start two delivery pods.
Close SOC-like controls for clients’ due diligence.
Price services at arm’s length. Use a transparent rate card.
Allocate management fees only with support and logs.
Document your functional analysis and comparables.
Retain timesheets, code reviews, and acceptance notes.
Update files annually or when scope changes.
Outcome: clean tax audits and smooth remittances.
Entity registered and constitution aligned with IT exports.
FDI approval in place and capital tracked.
Bank remittance files organized and updated.
VAT and TDS calendar configured and tested.
Social Security Fund registration complete.
Signed HR pack: offer, NDA, IP, handbook, and code of conduct.
Intercompany MSA and transfer pricing file ready.
Data security policies active and enforced.
Annual audit plan and board meeting calendar fixed.
Disaster recovery and incident response plan documented.
Avoid guesswork. Build a simple, defensible model.
| Cost Head | What to include | Notes |
|---|---|---|
| Talent | Salaries, benefits, SSF, hiring fees | Include training budgets |
| Facilities | Lease, utilities, security | Consider hybrid to save rent |
| Tech Stack | Laptops, cloud, licenses, security | Standardize device images |
| Admin | Accounting, audit, legal, advisory | Budget for first-year extras |
| Taxes | VAT, TDS, advance tax | Add a compliance buffer |
| Contingency | 5–10% of monthly burn | Covers FX and delays |
Revisit assumptions every quarter. Track burn and delivery margins.
Hold monthly board-style reviews with actions and owners.
Adopt OKRs for delivery, quality, and security.
Publish a two-page scorecard. Keep it simple and honest.
Invite key clients to quarterly showcases.
This builds trust and supports rate increases.
Using a liaison office to deliver billable work.
Delaying FDI approvals after capital entry.
Skipping VAT registration when required.
Paying salaries without proper TDS.
Weak NDAs and no IP assignment.
No transfer pricing file to support fees.
Remitting dividends without tax clearance.
Not documenting service delivery evidence.
Monthly: VAT, TDS, payroll, SSF, vendor TDS, and bank reconciliations.
Quarterly: board meeting, TP review, and provisioning.
Annually: audit, tax return, AGM, and dividend planning.
Ad-hoc: FDI amendments, director changes, and bank KYC updates.
1) How long does incorporation usually take?
Incorporation itself is fast with complete files. FDI and bank steps add time. Plan several weeks for end-to-end setup.
2) Can my subsidiary bill the parent for services?
Yes. Use a master service agreement, rate cards, and arm’s length pricing. Keep delivery evidence and acceptance notes.
3) Do I need VAT for exported services?
It depends on the service and where it is consumed. Many exports sit outside VAT. Confirm facts and register when needed.
4) Can I repatriate profits every year?
Yes, with audited accounts and tax clearance. Your bank and NRB will check documents. Keep a complete remittance binder.
5) Is a branch office better than a subsidiary?
Branches fit narrow project scopes. Subsidiaries suit long-term teams and growth. Ownership, hiring, and IP are cleaner there.