Private vs public company in Nepal is one of the first questions foreign companies ask when planning market entry.
The choice affects tax rates, compliance workload, capital strategy, and long-term exit options.
Nepal offers cost-efficient operations, a growing talent pool, and improving regulatory clarity.
Yet the corporate structure you choose shapes your risk profile and returns.
This guide explains business taxation in Nepal through the lens of private vs public company.
It is written for foreign founders, CFOs, and expansion teams.
You will learn how taxes work, what compliance looks like, and which structure fits your goals.
Nepal’s company law recognizes two dominant corporate forms for investors.
Both are governed by the Companies Act, 2063 (2006) and taxed under the Income Tax Act, 2058 (2002).
Regulatory oversight comes from the Office of the Company Registrar, Inland Revenue Department, and sector regulators.
Foreign investors usually start with a private company.
Public companies suit scale, capital markets, and long-term local participation.
A private company in Nepal is designed for closely held ownership.
It is flexible, faster to incorporate, and lighter on compliance.
This structure is common for foreign subsidiaries, back-office operations, and technology centers.
A public company is built for scale and public participation.
It can raise funds from the general public and list on NEPSE.
Public companies face stricter audits, disclosures, and regulatory scrutiny.
| Area | Private Company | Public Company |
|---|---|---|
| Shareholders | 1–101 | 7+ |
| Capital Raising | Private only | Public and private |
| Tax Rate (standard) | 25%–30% | 25%–30% |
| Compliance Load | Moderate | High |
| Audit & Disclosure | Annual audit | Enhanced audit + reporting |
| IPO Eligibility | Not allowed | Allowed |
| Foreign Investor Preference | Very high |
Insight:
Tax rates are similar.
Compliance cost and governance complexity create the real difference.
Nepal follows a residence-based corporate tax system.
Both private and public companies fall under these slabs.
Nepal encourages priority sectors.
Eligible companies may receive reduced tax rates or tax holidays.
Dividends distributed by Nepali companies attract 5% withholding tax.
This applies to both private and public companies.
Foreign shareholders can repatriate dividends subject to:
Nepal has Double Taxation Avoidance Agreements with several countries.
These treaties reduce effective tax leakage.
VAT in Nepal is 13%.
Registration is mandatory once the threshold is crossed.
Export services are generally zero-rated.
This is attractive for outsourcing and IT firms.
Withholding taxes play a major role in Nepal.
Common rates include:
Correct structuring avoids double taxation and penalties.
This is manageable with a local compliance partner.
Compliance costs are significantly higher.
Public companies operate under higher governance expectations.
Independent directors and committees are common.
Private companies enjoy flexibility.
Board structures can remain lean and foreign-controlled.
For foreign groups, this difference matters operationally.
Your funding roadmap should guide your structure choice.
Foreign investment is regulated under FITTA 2019.
Key points:
Both private and public companies can receive FDI approval.
Despite similar headline tax rates, effective tax cost differs.
Private companies often achieve:
Public companies gain credibility but pay for it in governance costs.
These mistakes delay operations and increase risk.
For most foreign entrants, the answer is clear.
Nepal’s law allows restructuring when business needs change.
Before deciding, ask these questions.
Your answers point to the right structure.
Private vs public company in Nepal is not a tax rate decision alone.
It is a strategic choice balancing compliance, governance, and growth.
Private companies suit most foreign investors entering Nepal.
Public companies serve scale, capital markets, and long-term localization.
Choosing correctly from day one saves time, tax, and operational friction.
No.
Standard corporate tax rates apply equally.
The difference lies in compliance and disclosure costs.
Yes.
100% foreign ownership is allowed in permitted sectors under FITTA.
No.
Large investments can operate as private companies unless public funding is required.
No.
Dividend withholding tax is 5% for both structures.
Yes.
Nepalese law allows conversion subject to regulatory approvals.