Checklist to Start a Business in Nepal in 2026

If you are planning to start a business in Nepal, the opportunity is real, but the process must be done correctly. Nepal welcomes foreign investment, yet it operates under a regulated framework that requires approvals, filings, and ongoing compliance.

This checklist is written specifically for foreign companies. It simplifies Nepal’s legal, tax, and operational requirements into clear, actionable steps. By the end, you will know exactly what is required, what to budget for, and how long each stage takes.

This guide reflects current practice under Nepal’s Company Act 2006, Foreign Investment and Technology Transfer Act (FITTA) 2019, Labour Act 2017, and tax regulations.

Why Foreign Companies Are Choosing Nepal

Before diving into the checklist, it helps to understand why Nepal is attractive.

Key advantages include:

• Competitive operating and labour costs

• English-speaking professional workforce

• Strategic access to India and China

• Government-backed FDI protections

• Growing tech, services, and outsourcing ecosystem

Foreign companies commonly enter Nepal for:

• IT and software development

• BPO, accounting, and shared services

• Engineering and design support

• Manufacturing and processing

• Market entry into South Asia

Start a Business in Nepal – At a Glance

Here is the high-level checklist foreign companies must complete.

Core Requirements Overview

1. Choose the correct legal entry model

2. Confirm FDI eligibility and sector approval

3. Incorporate the company in Nepal

4. Open bank accounts and inject capital

5. Register for tax and statutory compliance

6. Hire staff and set up payroll

7. Maintain ongoing compliance

Each step is explained in detail below.

Step 1: Choose the Right Business Entry Model

Your first decision determines everything that follows.

Common Options for Foreign Companies

• Private Limited Company (FDI Subsidiary)
  Best for long-term operations and revenue generation.

• Branch Office
  Suitable for executing a parent company contract in Nepal.

• Liaison Office
  Limited to market research and coordination only.

• Employer of Record (EOR)
  Ideal for testing the market before full FDI entry.

Expert insight: Most foreign companies start with EOR or a Private Limited Company to balance speed and compliance.

Step 2: Check FDI Eligibility Before You Invest

Not all sectors are open to foreign investors.

What You Must Verify

• Sector is not on the restricted or negative list

• Minimum capital threshold is met

• Activities align with approved investment categories

Current FDI Capital Requirement

• Minimum foreign investment: NPR 20 million (approx. USD 150,000)

• Applies per company, not per shareholder

This requirement is set under FITTA 2019 and enforced by the Department of Industry.

Step 3: Prepare Mandatory Documents

Foreign companies must submit fully notarised and, where required, apostilled documents.

Standard Document Checklist

• Parent company registration certificate

• Board resolution approving Nepal investment

• Memorandum and Articles of Association

• Passport copies of shareholders and directors

• Power of attorney for local representatives

• Proposed business plan and activity description

Tip: Errors or inconsistencies here are the most common cause of delays.

Step 4: Company Registration in Nepal

Once documents are ready, formal incorporation begins.

Registration Authorities Involved

• Office of the Company Registrar (OCR)

• Department of Industry (for FDI approval)

Typical Timeline

• Name approval: 1–3 working days

• OCR incorporation: 5–7 working days

• FDI approval: 15–30 working days

After this stage, your company legally exists in Nepal.

Step 5: Open Bank Accounts and Inject Capital

A foreign-investment-approved company must open:

• A temporary capital account

• A permanent operational account

Capital Injection Rules

• Funds must come from offshore accounts

• Bank issues a capital confirmation letter

• Capital must match approved FDI amount

This step is closely monitored by Nepal Rastra Bank (central bank).

Step 6: Tax Registration and PAN/VAT

Every company must register with Nepal’s tax authority.

Mandatory Registrations

• Permanent Account Number (PAN)

• VAT registration (if applicable)

Corporate Tax Snapshot

• Corporate income tax: 25% (standard rate)

• VAT: 13%

• Withholding tax on services: varies by transaction

Step 7: Employment, Payroll, and Labour Compliance

Hiring in Nepal requires compliance with local labour laws.

Key Employment Obligations

• Written employment contracts

• Minimum wage compliance

• Social Security Fund (SSF) registration

• Paid leave and public holidays

Social Security Contributions

• Employer: 20%

• Employee: 11%

Non-compliance leads to fines and operational risk.

Step 8: Ongoing Compliance Checklist

Starting a business is only the beginning.

Annual and Monthly Obligations

• Monthly tax filings

• SSF contributions

• Annual financial statements

• Annual general meeting

• Company renewal filings

Failure to maintain compliance can result in penalties or license suspension.

Comparison Table: Entry Models for Foreign Companies

Common Mistakes Foreign Companies Make

Avoid these costly errors:

• Underestimating compliance workload

• Choosing the wrong entry model

• Delaying capital injection

• Using non-compliant employment contracts

• Ignoring tax and SSF deadlines

A local compliance partner significantly reduces these risks.

Start a Business in Nepal – Cost Breakdown

While costs vary, foreign companies should budget for:

• Government fees

• Legal and advisory services

• Capital injection

• Accounting and compliance setup

Rule of thumb: Plan a buffer of 15–20% above base estimates.

Frequently Asked Questions (People Also Ask)

1. Can a foreigner fully own a company in Nepal?

Yes. Foreign investors can own 100% equity in approved sectors under FITTA 2019.

2. How long does it take to start a business in Nepal?

Typically 4–8 weeks, depending on FDI approval and document readiness.

3. What is the minimum investment to start a business in Nepal?

The current minimum foreign investment is NPR 20 million.

4. Can profits be repatriated outside Nepal?

Yes. Approved profits and capital can be repatriated after tax compliance.

5. Is Nepal suitable for outsourcing and shared services?

Yes. Nepal is popular for IT, accounting, engineering, and back-office outsourcing.

Conclusion: Start a Business in Nepal the Right Way

To start a business in Nepal successfully, foreign companies must balance opportunity with compliance. The market is welcoming, but documentation, approvals, and ongoing obligations matter.

With the right structure and local expertise, Nepal can become a cost-efficient and scalable base for your regional or global operations.

Call to Action

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Book a free consultation with our FDI and market-entry specialists. We will assess your structure, timeline, and compliance requirements before you invest.