Nepal’s startup ecosystem is quietly transforming.
A few years ago, registering a new business meant long queues, piles of paper, and uncertainty about approvals. But today, thanks to online registration, digital payments, and new investment laws, entrepreneurs can incorporate and operate faster than ever.
If you’re a startup founder or foreign entrepreneur, this guide explains exactly how to form a company in Nepal in 2025, legally, efficiently, and strategically.
We’ll explore startup-friendly structures, investment routes under FITTA 2019, tax benefits, and compliance tips that help you scale confidently from day one.
Nepal’s young, tech-savvy population and growing digital economy make it fertile ground for entrepreneurship.
The government’s Startup Enterprise Policy 2022, alongside the Industrial Enterprises Act 2020, encourages innovation through tax relief, simplified registration, and easier access to venture capital.
Key Drivers for Startup Growth:
Digitalization of government services: Online registration via the Office of the Company Registrar (OCR).
Liberal FDI regime: 100% foreign ownership in IT, consulting, e-commerce, and SaaS sectors.
Growing investor interest: VCs from Singapore, India, and Australia actively exploring Nepal’s tech and fintech space.
Tax incentives: Reduced rates for small industries and startup exemptions under Income Tax Act 2002, Section 11.
Youth entrepreneurship funding: Seed grants through the Department of Industry (DOI) and innovation hubs.
The structure you choose impacts taxation, ownership flexibility, and investor readiness.
| Type | Best For | Highlights |
|---|---|---|
| Private Limited Company | Tech startups, SMEs, foreign founders | Limited liability, easier fundraising, quick registration |
| Public Limited Company | Scale-ups planning IPOs or public funding | Requires seven shareholders, stricter compliance |
| Partnership Firm | Small-scale service businesses | Simple setup, but no limited liability |
| Sole Proprietorship | Freelancers and micro-entrepreneurs | Easiest to form, but unlimited liability |
| Branch Office (Foreign) | Extending a foreign startup | Requires DOI & NRB approval, operates under parent company |
| Liaison Office | Market research, non-revenue activities | No commercial operation allowed |
For scalable startups and foreign investors, a Private Limited Company is the preferred structure under Companies Act 2006.
Startups can now complete company formation digitally through the OCR e-filing system.
Here’s a simple roadmap:
Apply online at OCR. The name must end with “Private Limited” and follow Companies Act 2006, Section 9.
MOA (Memorandum of Association) — defines objectives, capital, and shareholding.
AOA (Articles of Association) — defines governance and operations.
Power of Attorney — if a local representative is authorized.
Upload notarized and translated documents via OCR. Approval typically takes 2–3 working days.
Obtain a Permanent Account Number (PAN) and, if applicable, VAT registration.
Once you start hiring, register under Labour Act 2017 and Social Security Act 2018 to manage employee benefits.
| Stage | Authority | Timeline (Days) |
|---|---|---|
| Name Reservation | OCR | 1–2 |
| Document Preparation | Legal/Consultant | 2–4 |
| Company Registration | OCR | 2–3 |
| PAN/VAT Registration | IRD | 1–2 |
| Labour & SSF | Labour Office, SSF | 2–5 |
| FDI Approval (if applicable) | DOI/NRB | 15–25 |
The Nepal government provides several relief measures for startups.
A. Income Tax Concessions
Newly registered small industries get up to 50% income tax rebate for 5 years (Income Tax Act 2002, Section 11).
Export-based IT and manufacturing units may receive tax holidays under Industrial Enterprises Act 2020.
B. Customs & Import Duty Relief
Machinery and software imported for innovation or research enjoy reduced tariffs.
C. Venture Capital & Grants
Government-backed seed funds for innovation-led startups.
NRB’s innovation credit guidelines (2079) support fintech and digital service startups.
Capital is the lifeblood of any startup. Nepal offers both domestic and foreign routes.
Angel investors and local VCs (e.g., emerging funds registered under the Securities Board of Nepal).
Bank loans backed by collateral or government innovation guarantees.
Under FITTA 2019, foreign founders can inject capital through:
Equity investment in private limited company shares.
Joint ventures with local partners.
Technology transfer or IP-based contribution.
Minimum FDI threshold: USD 20,000 per investor.
All foreign inflows must be recorded and verified by the Nepal Rastra Bank (NRB) before use or repatriation.
1. Obtain Approval:
Apply to the Department of Industry (DOI) with investment proposal and supporting documents.
2. Capital Transfer:
Deposit funds in a convertible foreign currency account.
3. Verification:
Bank issues an inward remittance certificate. NRB provides confirmation for future repatriation.
4. Share Allotment:
Once funds are received, shares are allotted proportionally.
5. Post-Approval Reporting:
Submit quarterly FDI status reports to DOI.
Even small startups must stay compliant with major acts to avoid penalties.
1. Labor Act 2017
Defines working hours, leave, minimum wages, and employment contracts.
2. Social Security Act 2018
Mandates monthly SSF contributions (31% of basic salary).
3. Companies Act 2006
Requires annual filings, board meetings, and audit reports.
4. Income Tax Act 2002
Quarterly and annual tax filings, TDS, and record-keeping obligations.
5. VAT Act 1996
Applies once turnover exceeds NPR 2 million or services are taxable.
Startups often overlook proper bookkeeping, a major mistake that can block future funding.
Key Requirements:
Maintain accounting records per Nepal Financial Reporting Standards (NFRS).
Hire an auditor approved by Institute of Chartered Accountants of Nepal (ICAN).
Submit annual audit reports to OCR and IRD.
Early-stage founders should implement cloud-based accounting systems to simplify compliance and investor reporting.
Keeping track of filings is essential.
| Period | Activity | Authority |
|---|---|---|
| Monthly | VAT & SSF filings | IRD, SSF |
| Quarterly | Advance tax payment | IRD |
| Annual | Audit, return filing | OCR, IRD |
| Ongoing | FDI reporting (if applicable) | DOI/NRB |
Pro tip: Use an automated reminder tool or outsource compliance management to firms like DCV for peace of mind.
Ignoring NRB Compliance: FDI funds not verified through NRB cannot be repatriated.
Incomplete MOA: Missing business objectives cause rejection at OCR.
No VAT Registration: Even digital service providers must register.
Skipping SSF: Inspections often penalize new companies for delays.
Poor Accounting Practices: Investors prefer startups with clean, auditable financials.
Recent reforms are shaping a new entrepreneurial era:
Startup Act (proposed 2024): Expected to simplify venture capital investment and exit mechanisms.
Digital Nepal Framework: Promotes e-governance and fintech collaboration.
FITTA Amendment (2025 draft): May lower FDI threshold below USD 20,000 for startups.
Youth and Small Enterprise Self-Employment Fund: Offers low-interest loans for entrepreneurs under 40.
These changes create a progressive ecosystem that rewards compliance-driven startups.
1. Can a foreign founder register a 100% foreign-owned startup in Nepal?
Yes, under FITTA 2019, foreign founders can fully own startups in most non-restricted sectors such as IT, consulting, and digital services.
2. How much initial capital do I need to start a company in Nepal?
There’s no fixed limit for local startups, but foreign investors must bring at least USD 20,000 per investor under FITTA 2019.
3. Are there tax incentives for startups?
Yes. Small industries and innovative enterprises enjoy up to 50% income tax rebate for the first five years under the Industrial Enterprises Act 2020.
4. What are the post-registration compliances I should never miss?
Monthly VAT and SSF filings, quarterly advance tax payments, annual audits, and OCR return submissions.
5. What sectors are best for startup investment in Nepal?
Tech, renewable energy, agriculture processing, education technology, and tourism, all supported by incentives and growing demand.
Setting up a startup is more than a legal task, it’s about building your foundation for growth, compliance, and investor trust.
Digital Consulting Ventures (DCV) helps founders turn their ideas into registered, investor-ready businesses.
We handle every aspect, from OCR registration and FDI structuring to tax setup, payroll, and annual compliance, so you can focus on innovation.
Our team of corporate lawyers, chartered accountants, and regulatory specialists ensures your startup meets every requirement of Companies Act 2006, FITTA 2019, and NRB directives, without delays or penalties.
Book a consultation today and let DCV help you establish and scale your startup in Nepal the right way.