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.
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
Here is the high-level checklist foreign companies must complete.
Choose the correct legal entry model
Confirm FDI eligibility and sector approval
Incorporate the company in Nepal
Open bank accounts and inject capital
Register for tax and statutory compliance
Hire staff and set up payroll
Maintain ongoing compliance
Each step is explained in detail below.
Your first decision determines everything that follows.
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.
Not all sectors are open to foreign investors.
Sector is not on the restricted or negative list
Minimum capital threshold is met
Activities align with approved investment categories
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.
Foreign companies must submit fully notarised and, where required, apostilled documents.
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.
Once documents are ready, formal incorporation begins.
Office of the Company Registrar (OCR)
Department of Industry (for FDI approval)
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.
A foreign-investment-approved company must open:
A temporary capital account
A permanent operational account
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).
Every company must register with Nepal’s tax authority.
Permanent Account Number (PAN)
VAT registration (if applicable)
Corporate income tax: 25% (standard rate)
VAT: 13%
Withholding tax on services: varies by transaction
Hiring in Nepal requires compliance with local labour laws.
Written employment contracts
Minimum wage compliance
Social Security Fund (SSF) registration
Paid leave and public holidays
Employer: 20%
Employee: 11%
Non-compliance leads to fines and operational risk.
Starting a business is only the beginning.
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.
| Model | Capital Required | Can Generate Revenue | Setup Speed | Best For |
|---|---|---|---|---|
| EOR | None | Yes | Fast (2–4 weeks) | Market testing |
| Liaison Office | Low | No | Medium | Research only |
| Branch Office | Moderate | Limited | Medium | Contract execution |
| FDI Company | NPR 20M | Yes | Slower | Long-term growth |
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.
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.
Yes. Foreign investors can own 100% equity in approved sectors under FITTA 2019.
Typically 4–8 weeks, depending on FDI approval and document readiness.
The current minimum foreign investment is NPR 20 million.
Yes. Approved profits and capital can be repatriated after tax compliance.
Yes. Nepal is popular for IT, accounting, engineering, and back-office outsourcing.
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.
Planning to start a business in Nepal?
Book a free consultation with our FDI and market-entry specialists. We will assess your structure, timeline, and compliance requirements before you invest.