Nepal is fast becoming an emerging destination for international investors seeking strategic entry into South Asia. With its growing infrastructure, expanding digital economy, young workforce, and pro-investment government policies, many foreign companies are exploring company incorporation in Nepal to unlock new business potential.
But the question remains: Can foreigners open a business in Nepal?
The answer is: Yes, under specific legal conditions. Here’s a step-by-step guide that breaks it all down.
Yes. Foreign investment is legally permitted in Nepal under the Foreign Investment and Technology Transfer Act (FITTA) 2019, which clearly outlines how international investors can incorporate and operate businesses.
There are, however, restrictions on certain sectors (like retail trading and poultry farming), but for most industries such as IT, manufacturing, tourism, hydropower, and services, 100% foreign ownership is allowed.
Foreigners in Nepal can register under the following structures:
Private Limited Company (most common for SMEs)
Public Limited Company
Branch Office
Liaison Office
Joint Venture with Local Partners
The Private Limited Company is the most practical and flexible structure for foreign investors looking for full ownership, limited liability, and streamlined operations.
According to FITTA 2019, the minimum foreign investment threshold is NPR 20 million (approx. USD 150,000). This applies to both individuals and companies seeking to incorporate in Nepal.
This capital must be brought into Nepal through formal banking channels and documented with the Nepal Rastra Bank (NRB).
This includes:
Business objectives
Capital structure
Ownership details
Technology transfer plans (if applicable)
The Department evaluates:
Industry eligibility
Capital structure
Legal compliance
Once approved, you’ll receive a Foreign Investment Approval Letter.
You must submit:
Articles and Memorandum of Association
Details of shareholders and directors
Notarized identification documents
Once reviewed, the Company Registration Certificate will be issued.
You must register your capital inflow and get an NRB Foreign Investment Approval, which is critical for:
Repatriation of profits
Tax clearance
Compliance with national banking laws
You must register your company with the Inland Revenue Department (IRD) to receive:
PAN (Permanent Account Number)
VAT registration (if applicable)
This is necessary for operations and to inject your approved foreign capital.
Foreign companies incorporated in Nepal are treated the same as local companies under the Income Tax Act.
Corporate Tax Rate: 25% for most companies
Withholding Tax: Applies on dividends, royalties, and interest payments
Repatriation of Profits: Allowed with proper NRB clearance and tax clearance
Tax incentives are available for sectors like hydropower, tourism, agriculture, and IT.
Strategic Location: Gateway to both India and China
Young, Skilled Labor Pool: Median age under 25
Growing Digital Infrastructure
Tax Holidays & Incentives in Certain Sectors
Liberal Foreign Ownership Policies
Information Technology & BPO
Hydropower and Energy
Infrastructure & Construction
Manufacturing & Agro-processing
Hospitality and Tourism
Education and Health Services
Timely renewal of company registration annually
Submission of audited financials to OCR
Income Tax and VAT returns to IRD
Compliance with NRB for foreign capital and profits repatriation
Failure to comply can lead to penalties or revocation of investment licenses.
Company incorporation in Nepal is not only legally viable for foreigners but also offers access to a dynamic and growing market. With strategic government reforms, investor protection frameworks, and rising consumer demand, Nepal presents a compelling case for forward-thinking foreign businesses.
Whether you're launching a startup, a regional office, or a scalable investment venture, Nepal offers the legal infrastructure and market potential to thrive — provided you're ready to navigate the regulatory landscape professionally.