Can Foreigners Register a Business in Nepal? Full Legal Breakdown

Foreign investors are increasingly looking at South Asia for new opportunities, and business registration in Nepal is now a practical option. The country offers liberal investment laws, streamlined company registration, and growing demand in sectors like energy, tourism, and services. Within the first 100 words, it’s important to know: yes, foreigners can register a business in Nepal—but only under certain rules. This article provides a full breakdown of the legal framework, step-by-step registration, and compliance requirements for foreign companies.

Legal Framework for Foreign Investment in Nepal

Nepal treats foreign and local investors equally under its laws. Most industries are open for foreign investment, except a few prohibited sectors such as defense, arms, atomic energy, and traditional cottage industries.

Foreigners can generally own up to 100% of a company, except in certain restricted fields. For example:

• Airlines and telecom: max 80% foreign ownership

• Consultancy services: max 51% foreign ownership

• Casinos: must include a Nepali partner

The minimum foreign investment threshold is NPR 20 million (around USD 160,000). There is no maximum limit.

Key governing laws include:

• Companies Act, 2006 (company registration and structure)

• Foreign Investment and Technology Transfer Act, 2019 (FDI approvals and regulation)

• Industrial Enterprises Act, 2020 (sector-specific licensing)

The Office of the Company Registrar (OCR) handles incorporation, while the Department of Industry (DOI) grants investment approvals.

Structures Available for Foreign Businesses

Foreign investors can choose among several business structures:

• Wholly-Owned Subsidiary – Separate Nepalese company, limited liability, allows 100% ownership in most sectors.

• Branch Office – Extension of the parent company; unlimited liability falls on the parent.

• Liaison Office – For communications and market research only; no commercial activity allowed.

• Joint Venture – Partnership with Nepali shareholders, useful for restricted or partnership-required industries.

Comparison Table

Step-by-Step Business Registration in Nepal

Foreign companies must follow these steps:

1. Check Eligibility – Ensure the proposed activity is not in the restricted sector list.

2. Apply for FDI Approval – Submit proposal to the Department of Industry with investment documents.

3. Reserve Company Name – Apply online with OCR for name reservation.

4. Draft Incorporation Documents – Prepare Memorandum and Articles of Association in Nepali.

5. Register with OCR – Submit all documents including DOI approval, shareholder IDs, capital proof, and office address.

6. Receive Registration Certificate – Usually issued within 5–10 working days.

7. Post-Registration Formalities – Obtain PAN, VAT (if required), local business license, and open a corporate bank account.

8. Sectoral Licenses – Obtain specific licenses if required (tourism, telecom, hydropower, etc.).

Documents and Costs

Documents required:

• FDI approval letter

• MOA and AOA of the company

• Passports of foreign shareholders

• Citizenship of local director

• Bank statement or capital deposit slip (NPR 20M minimum)

• Lease agreement of office space

• Passport photos of directors

Costs:

• OCR registration fees range from NPR 1,000 to 16,000 depending on capital.

• Minimum paid-up capital for a private limited company is NPR 100,000.

• Additional legal, notary, and translation costs apply.

Sector Restrictions

Foreign investors cannot enter:

• Defense, arms, and ammunition

• Atomic energy and nuclear materials

• Traditional cottage industries

• Local retail and small service businesses

• Currency printing and security-related industries

Sectors like hydropower, telecom, banking, and tourism are open but require licenses and approvals.

Taxes and Incentives

• Corporate Tax: 20% flat rate for most businesses

• VAT: 13% (mandatory if turnover exceeds threshold)

• Double Tax Treaties: Available with several countries to avoid double taxation

• Incentives: Tax holidays and concessions in priority sectors (e.g. SEZs, rural industries, export-focused industries)

FAQ

Q1: Can foreigners own 100% of a Nepali business?
Yes, up to 100% ownership is allowed in most sectors. Some industries have equity caps.

Q2: What industries are restricted?
Defense, arms, atomic energy, traditional cottage industries, local retail, and certain services are off-limits.

Q3: How long does registration take?
OCR typically issues certificates in 5–10 working days after submission.

Q4: What is the minimum investment?
Foreign investors must invest at least NPR 20 million (around USD 160,000).

Q5: Do foreigners need a local partner?
Not usually. But every company must appoint at least one Nepali resident director.