Business registration in Nepal: step-by-step guide 2025

Pjay Shrestha Sep 15, 2025 3:11:05 PM 5 min read

Business registration in Nepal process flow 2025 (registrar, investment, PAN, VAT)

Business registration in Nepal can be predictable and fast when you follow a clear playbook. This guide shows foreign companies every step, from entity selection to FDI approvals, OCR e-filing, PAN and VAT registration, municipal licensing, banking, payroll, and post-incorporation compliance. You will see timelines, cost drivers, checklists, and a side-by-side entity comparison. Where figures may change, validate against the latest official notices before filing.

Business registration in Nepal: your 2025 blueprint

Foreign entrants usually choose one of three pathways. A private limited subsidiary is most common for commercial operations. A branch office extends the foreign company into Nepal. A liaison office is a non-revenue presence for coordination and research only. A public limited is used for large capital raising or regulated sectors. Alternatives include distributor models, outsourcing, or joint ventures.

Entity options at a glance

Option	Typical use case	Legal personhood in Nepal	Can earn revenue?	FDI approval needed?*	Speed**	Notable considerations
Private limited subsidiary	Full commercial entry, hiring, contracting	Yes	✅	Often, for foreign shareholding	3–6 weeks	Most flexible; ring-fences liability; straightforward contracting.
Branch office	Execute projects where HQ remains contracting party	No (extension of parent)	✅	Often, plus sectoral consents	4–8 weeks	Parent balance sheet exposure; extra annual filings.
Liaison office	Market support and coordination	No	❌	Often, plus sectoral consents	4–8 weeks	No sales or invoicing; cost center only.
Public limited	Capital markets, regulated sectors	Yes	✅	Yes, if foreign capital	Longer	Higher governance and disclosure thresholds.

* FDI approval requirements depend on capital, sector, and structure.
** Speed assumes complete documents and quick translations.

Step-by-step process (from feasibility to incorporation)

1) Confirm feasibility and sector eligibility

Define your activities and map them to an entity type. Screen for restricted or closed sectors. Check foreign ownership rules and any capital thresholds. Note any professional licensing your industry may require after registration.

2) Choose your entry route

Subsidiary if you need local personhood, invoicing, hiring, and clearer governance.
Branch if contracts should remain with the foreign parent.
Liaison if you only need non-commercial presence and no sales.
Public limited if your model requires broader fundraising and regulatory oversight.

3) Reserve a unique company name

Prepare two or three name choices. Follow naming rules on distinctiveness, proper suffixes, and non-deceptive terms. Keep the name approval letter for your file.

4) Prepare your document pack

For a subsidiary (private limited):

Memorandum and Articles aligned to your scope.
Shareholder and director KYC.
Board or shareholder resolutions approving investment.
Registered address proof.
Translations and notarizations where required.
FDI pack if foreign capital is coming in (project plan, source of funds, financial credibility).

For a branch or liaison:

Parent certificate of incorporation and charter.
Board resolution authorizing Nepal presence.
Local representative details.
Any required consents for your sector.

5) Secure FDI approval

File the application with the investment authority with your capital structure, sector details, and project information. Track queries and respond promptly. After approval, bring capital through a recognized banking channel and maintain bank advice for future repatriation support.

6) File incorporation at the company registrar

Use the e-services portal to submit forms, MOA/AOA, and supporting documents. Pay fees online and respond to officer queries. After approval, obtain the Certificate of Incorporation. Keep digital and physical copies.

7) Register for PAN and, if needed, VAT

Apply for a Permanent Account Number immediately. Register for VAT when your activity or threshold requires it, or when customers demand VAT invoices. The standard VAT rate has historically been 13%. Confirm the current rate before pricing.

8) Obtain your municipal or ward trade license

Register with the local ward office. Requirements vary by municipality but usually include your incorporation certificate, PAN, tenancy or ownership proof, director photographs, and application forms. Keep the license current with renewals.

9) Open bank accounts and remit capital

Open a current account. For FDI, remit capital referencing your approval letter. Record share issuance, update the share register, and maintain documents for future dividend or capital repatriation.

10) Hire, pay, and operate lawfully

Issue local employment contracts. Set up payroll, withholding, and social obligations as applicable. Implement accounting and VAT compliance. Align your invoicing, import or export registrations, and sector permits with your business scope.

Timelines and the critical path

Feasibility and document prep: 1–2 weeks.
Name reservation: 2–3 business days.
FDI approval: 1–3 weeks after complete filing.
Incorporation: 1–2 weeks depending on queries.
PAN/VAT and municipal license: 1–2 weeks.

Parallelize tasks to shorten the calendar. For example, prepare municipal registrations during incorporation review.

Cost model: what drives your budget

Translations, notarizations, and legalizations for foreign documents.
Registrar fees based on capital brackets.
Investment approval fees or deposits where applicable.
Municipal trade license fees varying by ward and category.
Professional fees for legal, tax, accounting, and registered address services.
Compliance tooling such as accounting software and e-invoicing integrations.

Build a contingency of 10–15% for extra translations and unforeseen queries.

The document pack by pathway

Document	Subsidiary (Pvt. Ltd.)	Branch office	Liaison office
Name reservation approval	✅	❌	❌
MOA & AOA (Nepal entity)	✅	❌	❌
Parent charter and good standing	❌	✅	✅
Board resolution authorizing entry	✅	✅	✅
FDI approval (if foreign capital)	✅	Often required	Often required
Registered address proof	✅	✅	✅
KYC of directors/shareholders/rep	✅	✅	✅
Tax registrations (PAN, VAT if needed)	✅	✅	✅
Municipal or ward trade license	✅	✅	✅
Annual filings at registrar	✅	✅ (plus foreign company filings)	✅ (plus foreign company filings)

Tax and accounting basics

PAN is compulsory for all entities.
VAT applies when your activity or threshold requires it; confirm the current registration rules.
Monthly VAT returns and annual income tax returns are common obligations.
Withholding tax may apply to payments for services, rent, or cross-border fees.
Keep clean audit trails, from bank advice on capital to sales invoices and contracts.
Map intercompany transactions with arm’s-length pricing and proper documentation.

Banking, remittance, and repatriation

Keep your remittances clearly referenced to your investment approval. For dividends or capital reductions, collect board approvals, tax clearances, and bank documentation. Maintain a ledger of foreign currency inflows and outflows. This supports future audits and repatriation requests.

Hiring and HR compliance

Issue localized employment contracts with probation, leave, and notice terms.
Set up payroll calendars and withholdings.
Register for any applicable social or insurance frameworks.
Maintain a personnel file for each employee with KYC and contract documents.
Publish internal codes and policies suited to your industry and risk profile.

Sector restrictions and FDI notes for 2025

Some sectors are restricted or closed to foreign investors. Certain professional services may have foreign equity caps. A minimum foreign investment threshold is often applied to new projects. Policies can evolve through notices and directives. Validate your sector and capital plan before filing.

Risk and pitfall matrix

Risk	When it appears	How to mitigate
Mis-scoped MOA	At incorporation	Use tight, compliant objects and permitted activities.
Missing municipal license	After PAN/VAT	Track ward requirements early; file promptly.
Weak bank documentation	At capital remittance	Reference approvals; keep original bank advice and SWIFT copies.
Liaison office scope drift	During operations	Train teams that liaison cannot invoice or sell.
Missed annual filings	Post-incorporation	Maintain a compliance calendar with owners and deadlines.

Your 9-step execution plan

Select entity and confirm sector eligibility.
Outline capital structure and ownership.
Prepare FDI pack if foreign capital is involved.
Reserve company name on the e-services portal.
Draft MOA/AOA and board resolutions.
File for investment approval and respond to queries.
Incorporate at the registrar and obtain the certificate.
Register PAN, and VAT if needed; secure municipal license.
Open bank account, remit capital, and begin compliant operations.

Common mistakes to avoid

Using restricted terms in your MOA that invite queries.
Assuming a liaison office can issue invoices.
Forgetting the municipal trade license after PAN and VAT.
Skipping translations or notarizations where required.
Failing to record capital properly for future repatriation.

Mini-scenarios to guide your choice

Global SaaS vendor selling local subscriptions:
Pick a subsidiary. You need VAT invoicing, hiring, and contracts with local clients.

Engineering company executing one project under parent contracts:
A branch can fit, but review tax exposure and reporting duties.

Brand exploring the market with a small team and no sales:
Open a liaison office. Keep activity strictly non-commercial.

FAQ

1) What is the minimum foreign investment threshold?
Many projects require a minimum capital threshold for foreign investment. The exact value and exemptions can change. Confirm the current threshold with the investment authority before submitting your file.

2) Can a liaison office sell or sign revenue contracts?
No. A liaison office is for coordination and market support. It cannot sell, invoice, or earn income in Nepal.

3) Do I need VAT registration from day one?
Register PAN immediately. Register for VAT when your activity or threshold requires it, or when customers demand VAT invoices. Confirm the current VAT rate before pricing.

4) Is a branch office faster than a subsidiary?
Speed depends on document readiness, sector consents, and query cycles. A subsidiary often offers clearer contracting flexibility and local governance despite similar timelines.

5) Who approves foreign investment and post-approval changes?
The investment authority reviews foreign investment, sector restrictions, and changes such as name, location, capacity, and shareholding. Keep approvals and bank advice for future repatriation.

Pjay Shrestha

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