Expanding into Nepal can feel complex when you are navigating new laws, multiple authorities, and an unfamiliar regulatory environment.
Foreign investors often ask:
“What approvals do I need from Nepal Rastra Bank?”
“How do I bring investment capital legally?”
“Can I fully own my company in Nepal?”
These questions are valid, and this guide is designed to give you clear, step-by-step answers.
In this complete beginner’s guide to company formation in Nepal (2025), you will learn how to register a company, obtain foreign investment approval, understand tax and labor laws, and stay compliant with local regulations.
By the end, you will know exactly how to set up your business in Nepal confidently and compliantly.
Over the last decade, Nepal has quietly transformed from a closed market into a gateway economy between India and China.
The Industrial Enterprises Act 2020 and Foreign Investment and Technology Transfer Act 2019 (FITTA) have simplified procedures, introduced online registration, and allowed up to 100% foreign ownership in most sectors.
Foreign investors are now entering industries such as:
Information Technology and BPO
Hydropower and Renewable Energy
Tourism and Hospitality
Manufacturing and Infrastructure
With competitive wages, English-speaking talent, and improving digital infrastructure, Nepal is positioning itself as a cost-effective base for South Asian operations.
Before registering your business, you must understand the laws governing investment, taxation, and employment in Nepal.
Key Acts include:
Companies Act 2006 & Rules 2064 – Governs registration, management, and compliance of all companies.
Foreign Investment and Technology Transfer Act 2019 (FITTA) – Regulates foreign ownership, investment approval, and repatriation.
Industrial Enterprises Act 2020 – Defines priority sectors and incentives.
Income Tax Act 2002 & VAT Act 1996 – Covers taxation and reporting obligations.
Labor Act 2017 & Social Security Act 2018 – Defines employment contracts and mandatory benefits.
Bonus Act 1974 – Prescribes annual employee bonuses.
All applications must pass through relevant authorities, including the Office of the Company Registrar (OCR), Department of Industry (DOI), Nepal Rastra Bank (NRB), and Inland Revenue Department (IRD).
Choosing the right structure determines your ownership rights, compliance obligations, and taxation model.
The most common form for both local and foreign founders.
Minimum two shareholders (or one under certain provisions).
Limited liability up to the share capital.
Can be fully foreign-owned in non-restricted sectors.
Required for large ventures intending to raise public capital.
Minimum seven shareholders.
Must appoint three directors.
Subject to stricter audit and disclosure requirements.
A foreign parent company can establish a branch to carry out the same business activities in Nepal.
Requires DOI and NRB approval.
All profits are taxable in Nepal.
Ideal for short-term projects or government contracts.
A non-commercial setup used for coordination, promotion, or market research.
No revenue-generating activities allowed.
Requires DOI registration and NRB reporting.
A separate legal entity with foreign shareholding.
Must obtain prior approval from DOI or Investment Board Nepal (IBN) depending on capital.
Minimum threshold: USD 20,000 per investor (FITTA 2019, Section 3).
Subject to NRB verification for capital inflow.
| Stage | Activity | Authority | Approx. Duration |
|---|---|---|---|
| 1 | Name reservation through online OCR portal | OCR | 1–2 days |
| 2 | Drafting MOA & AOA, notarization, and document preparation | Legal Advisor | 2–4 days |
| 3 | Company registration approval | OCR | 2–3 days |
| 4 | PAN & VAT registration | Inland Revenue Department (IRD) | 1–2 days |
| 5 | FDI approval (if applicable) | DOI or IBN | 10–20 days |
| 6 | Bank account opening and capital injection verification | Nepal Rastra Bank (NRB) | 2–5 days |
| 7 | Post-registration compliances (SSF, labour, etc.) | Relevant authorities | Ongoing |
You must first reserve your company name via the OCR’s online system.
The name must:
Be unique and not identical to existing names.
End with “Private Limited” or “Limited.”
Not contain prohibited words as per Companies Act 2006, Section 9.
OCR usually confirms approval within one to two business days.
Your legal consultant will draft the Memorandum of Association (MOA) and Articles of Association (AOA).
These define:
Company objectives and capital structure.
Rights and responsibilities of shareholders.
Governance, meetings, and dividend policies.
Foreign promoters must also provide a Power of Attorney, passport copies, and a lease agreement for the office address.
Documents must be notarized by an authorized notary in Nepal or legalized at the nearest Nepali Embassy.
Once the documents are ready, submit them online or at the OCR office in Tripureshwor, Kathmandu.
OCR reviews all forms, verifies promoter identities, and issues a Certificate of Incorporation if requirements are met.
Typical fees: NPR 1,000–5,000 depending on capital size.
Processing time: 2–3 working days.
If you are a foreign investor, you must obtain approval under FITTA 2019.
Up to NPR 6 billion: Department of Industry (DOI)
Above NPR 6 billion: Investment Board Nepal (IBN)
Application form for FDI
MOA, AOA, Board Resolution of parent company
Citizenship/Passport copies of foreign promoters
Project report or business plan
Joint venture agreement (if applicable)
NRB approval for capital remittance
Filing fee: around NPR 10,000
Processing time: 10–20 business days
Once approved, DOI/IBN issues a Foreign Investment Approval Letter, which allows you to inject capital via a convertible foreign currency account.
After receiving approval, you must bring the investment into Nepal through official banking channels.
NRB Verification Process:
Open a temporary foreign currency account with a commercial bank.
Transfer capital in convertible currency (USD, AUD, GBP, etc.).
Bank issues a foreign currency inward remittance certificate.
NRB verifies the transfer and issues a Capital Inflow Confirmation Letter.
This document is critical for repatriation of dividends or capital later.
(Ref: NRB Directive on Foreign Investment 2078, Clause 3.2)
Once registered, apply for Permanent Account Number (PAN) and, if applicable, Value Added Tax (VAT) at the Inland Revenue Department (IRD).
You’ll need:
Company registration certificate
Lease agreement
MOA/AOA
Passport of directors
PAN is mandatory for opening bank accounts and signing contracts. VAT is required if your annual turnover exceeds NPR 2 million or you deal in taxable goods or services.
(Ref: Income Tax Act 2002, Section 10; VAT Act 1996, Section 6)
Before hiring, register your company under:
Labour Act 2017, Section 6 – Employment contracts, working hours, and leave entitlements.
Social Security Act 2018, Section 21 – Contribution to the Social Security Fund (31% of basic salary).
Employers contribute 20%, employees 11%.
These must be deposited monthly through the SSF portal.
(Ref: Social Security Rules 2075)
Maintain double-entry accounting records in line with Nepal Financial Reporting Standards (NFRS).
Books must be updated daily and preserved for at least six years (Companies Act 2006, Section 80).
Every company must appoint a licensed auditor approved by the Institute of Chartered Accountants of Nepal (ICAN).
Audit reports must be submitted to OCR and IRD annually.
Quarterly advance tax payments.
Annual income tax return within 3 months after fiscal year end.
VAT returns every month.
Withholding tax on payments like rent, professional fees, or interest.
Submit your Annual Return to OCR every year showing updated shareholder and director details.
Failure to comply can lead to penalties or suspension (Companies Act 2006, Section 135).
| Aspect | Local Company | Foreign-Invested Company (FDI) |
|---|---|---|
| Minimum Capital | No minimum | USD 20,000 minimum investment |
| Approval Authority | OCR, IRD | OCR + DOI or IBN + NRB |
| Timeline | 5–7 days | 15–30 days |
| Currency of Capital | NPR | Convertible foreign currency |
| Repatriation Rights | Not applicable | Allowed via NRB approval |
| Tax Rate | Standard 25% | Same (subject to DTAA relief) |
100% foreign ownership in most sectors
Low operating cost and competitive labor market
Strategic access to India and China
Growing IT and service industry ecosystem
Favourable tax treaties and repatriation policies
| Tax Type | Rate | Governing Law |
|---|---|---|
| Corporate Income Tax | 25% standard | Income Tax Act 2002 |
| VAT | 13% | VAT Act 1996 |
| Withholding Tax (services, rent, etc.) | 15% average | Tax Administration Act |
| Social Security Fund | 31% total | Social Security Act 2018 |
| Dividend Tax | 5% | Income Tax Act 2002 |
Foreign companies must maintain transparent financial records, ideally using Nepal Financial Reporting Standards (NFRS). Bank statements, invoices, and vouchers must be preserved for at least six years.
Non-compliance can lead to penalties or suspension under Companies Act 2006, Section 135. Outsourcing compliance management to firms like Digital Consulting Ventures (DCV) ensures timely filings and peace of mind.
Office of Company Registrar (OCR) – Incorporation and annual filings
Department of Industry (DOI) – FDI registration
Nepal Rastra Bank (NRB) – Capital inflow/outflow regulation
Inland Revenue Department (IRD) – Tax registration and filings
Investment Board Nepal (IBN) – Large-scale investments
Social Security Fund (SSF) – Employer and employee contributions
1. What is the minimum capital for company formation in Nepal?
Local companies have no minimum capital, but FDI companies must invest at least USD 20,000 under FITTA 2019.
2. How long does it take to register a company in Nepal?
Local registration takes around a week, while FDI companies may take 3–4 weeks due to DOI and NRB approvals.
3. Can a foreigner own 100% of a Nepalese company?
Yes, except in restricted sectors listed under FITTA 2019 Schedule.
4. What taxes apply to newly registered companies?
Corporate tax (25%), VAT (13%), and 5% dividend tax apply as per Income Tax Act 2002 and VAT Act 1996.
5. Is it mandatory to audit every year?
Yes. All companies must submit audited financials annually to OCR and IRD under Companies Act 2006.
Registering a company in Nepal requires expertise in law, taxation, and compliance. Errors in the OCR process or FDI filings can cause weeks of delay.
Digital Consulting Ventures (DCV) simplifies this journey. From FDI structuring and NRB coordination to post-registration compliance and payroll setup, DCV ensures your business stays fully compliant and operational from day one.
Book a consultation today and let DCV guide your company formation in Nepal with precision, transparency, and end-to-end support.