Can Foreigners Register a Company in Nepal Laws Process & Tips

Company registration in Nepal is a growing topic among foreign investors seeking access to South Asia’s emerging markets. Nepal offers low operating costs, a young workforce, and increasing openness to foreign direct investment.

But a common question remains: Can foreigners legally register a company in Nepal?

The short answer is yes, but only under specific legal frameworks. This guide gives foreign companies a complete, practical, and legally accurate explanation of company registration in Nepal. You will learn what the law allows, which structures foreigners can use, the full registration process, costs, timelines, and expert tips to avoid delays.

This article is written for foreign founders, international executives, and global companies evaluating Nepal as an investment destination.

Can Foreigners Register a Company in Nepal?

Yes. Foreigners can register a company in Nepal, but not through ordinary domestic company registration alone.

Foreign participation is governed primarily by Nepal’s Foreign Direct Investment (FDI) regime. This means foreign shareholders must follow investment approval rules before company incorporation.

Key Legal Reality

Foreigners cannot directly register a purely local company without FDI approval. Any foreign ownership, even 1%, triggers FDI regulations. 

Laws Governing Company Registration in Nepal for Foreigners

Foreign company registration in Nepal is regulated by several core laws and authorities.

Key Legislation

• Foreign Investment and Technology Transfer Act (FITTA) 2019

• Companies Act 2006

• Industrial Enterprises Act 2020

• Income Tax Act 2002

• Labour Act 2017

• Social Security Act 2018

Regulatory Authorities Involved

• Department of Industry (DoI) – FDI approval

• Office of the Company Registrar (OCR) – company incorporation

• Nepal Rastra Bank (NRB) – foreign capital inflow

• Inland Revenue Department (IRD) – tax registration

These institutions collectively govern company registration in Nepal for foreign investors.

Investment Structures Available to Foreign Companies in Nepal

Foreign companies can enter Nepal using different legal structures depending on their business goals.

Common Entry Options

• FDI-based Private Limited Company

• Branch Office

• Liaison (Representative) Office

• Employer of Record (EOR) as a pre-entry model

Each option has different compliance, tax, and operational implications.

Foreign Direct Investment (FDI) Company Registration in Nepal

What Is an FDI Company?

An FDI company is a Nepal-incorporated private limited company with foreign shareholding, approved under FITTA 2019.

Minimum Investment Threshold

As of current government guidelines:

• Minimum FDI amount: NPR 20 million (approximately USD 150,000)

This capital must be injected through formal banking channels.

Step-by-Step Process: Company Registration in Nepal for Foreigners

Below is the standard process followed by foreign investors.

1. Investment Approval (FDI Approval)

Before company registration in Nepal, foreigners must secure approval from the Department of Industry.

Documents required include:

• Project report or business plan

• Foreign investor identity documents

• Proposed company structure

• Capital commitment details

Approval usually takes 2–4 weeks, depending on sector and documentation quality.

2. Company Name Reservation

Once FDI approval is granted:

• Apply for name reservation at the Office of the Company Registrar

• Names must be unique and compliant with Nepalese law

3. Company Incorporation at OCR

Submit incorporation documents including:

• Memorandum of Association

• Articles of Association

• Shareholder details

• Director appointments

This step legally creates the company in Nepal.

4. Tax Registration (PAN / VAT)

After incorporation:

• Register for Permanent Account Number (PAN)

• Register for VAT if applicable

This is mandatory for all operating companies.

5. Capital Injection & NRB Reporting

Foreign investors must:

• Inject approved capital through a Nepal Rastra Bank–approved bank

• File foreign exchange reporting

Failure to follow banking compliance can delay operations.

6. Employment & Social Security Registration

If hiring staff:

• Register with Social Security Fund (SSF)

• Comply with Labour Act requirements

Timeline for Company Registration in Nepal (Foreign-Owned)

Typical total timeline: 4–6 weeks

Costs of Company Registration in Nepal for Foreigners

Costs vary by sector and structure.

Typical Cost Components

• Government registration fees

• Legal and consulting fees

• Capital requirement (FDI minimum)

• Ongoing compliance costs

While government fees are modest, professional advisory support is strongly recommended to avoid compliance risks.

Comparison: Entry Options for Foreign Companies in Nepal

This comparison helps foreign companies choose the right entry strategy before company registration in Nepal.

Sectors Open and Restricted for Foreign Investment

Nepal welcomes FDI in many sectors, including:

• IT and software development

• BPO and outsourcing

• Manufacturing

• Tourism and hospitality

• Energy and hydropower

However, some sectors remain restricted, such as:

• Small retail trading

• Certain agriculture activities

• Cottage industries

Sector eligibility must be verified before starting company registration in Nepal.

Taxation for Foreign-Owned Companies in Nepal

Foreign-owned companies are taxed similarly to domestic companies.

Key Taxes

• Corporate income tax: Generally 25%

• VAT: 13% (if applicable)

• Withholding taxes: On dividends, services, and royalties

Double taxation treaties may apply depending on investor nationality.

Common Mistakes Foreigners Make

Avoid these frequent issues:

• Applying for company registration without FDI approval

• Underestimating compliance timelines

• Improper capital injection methods

• Using nominee structures incorrectly

• Ignoring labour and SSF compliance

Professional guidance significantly reduces these risks.

Expert Tips for Smooth Company Registration in Nepal

1. Validate sector eligibility before investing

2. Prepare a clear project report

3. Structure shareholding carefully

4. Plan repatriation from day one

5. Use a local compliance partner

These tips help foreign companies register and operate confidently in Nepal.

Why Nepal Is Attractive for Foreign Companies

Nepal offers:

• Competitive labour costs

• English-speaking professionals

• Strategic location between India and China

• Government incentives for FDI

For many foreign companies, company registration in Nepal is both cost-efficient and scalable.

Conclusion: Company Registration in Nepal for Foreigners

Company registration in Nepal is fully possible for foreigners when done through the correct legal route. By following FDI laws, securing approvals, and complying with tax and labour regulations, foreign companies can operate legally and profitably in Nepal.

With the right structure and local expertise, Nepal can become a strong base for regional growth.

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Frequently Asked Questions (People Also Ask)

1. Can a foreigner own 100% of a company in Nepal?

Yes. FITTA 2019 allows 100% foreign ownership in approved sectors, subject to FDI approval.

2. What is the minimum investment for foreign company registration in Nepal?

The current minimum FDI threshold is NPR 20 million, depending on sector and project type.

3. Can foreigners register a company online in Nepal?

Partially. Some filings are online, but foreign company registration still requires in-person approvals.

4. Is profit repatriation allowed for foreign investors?

Yes. Foreign investors can repatriate profits and capital, subject to tax clearance and NRB rules.

5. How long does company registration in Nepal take for foreigners?

Typically 4–6 weeks, depending on approvals and documentation readiness.