Company Incorporation for NRNs and Foreign Nationals in Nepal

Company incorporation Nepal has become a strategic gateway for Non-Resident Nepalis (NRNs) and foreign nationals seeking access to South Asia’s emerging market. Nepal offers competitive labour costs, investment protections, and a steadily improving regulatory framework.

Yet incorporation rules differ sharply for foreigners and NRNs compared to local founders. Foreign investment thresholds, approvals, and compliance obligations apply from day one.

This definitive guide explains how company incorporation in Nepal works for NRNs and foreign nationals, what the law allows, and how to structure your entry correctly.

Why Nepal Is Attracting NRNs and Foreign Companies

Nepal’s investment environment has evolved rapidly since the enactment of FITTA 2019.

Key macro drivers include:

• Strategic access to India and China

• Young, English-speaking workforce

• Competitive operating costs

• Government incentives for priority sectors

• Guaranteed profit repatriation under law

According to Nepal Rastra Bank and the Department of Industry, foreign direct investment approvals have grown steadily year-on-year since 2020.

Legal Framework Governing Company Incorporation Nepal

Foreign-owned company incorporation in Nepal is governed by multiple statutes. Understanding their interaction is critical.

Core laws you must know

• Companies Act, 2006 – company formation and governance

• Foreign Investment and Technology Transfer Act (FITTA), 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

• Labour Act, 2017

• Social Security Act, 2018

• Nepal Rastra Bank (NRB) Foreign Exchange Directives

These laws collectively define who can invest, how much, and under what conditions.

Who Can Incorporate a Company in Nepal?

NRNs

NRNs enjoy preferential treatment compared to other foreigners.

They may:

• Own up to 100% equity in most sectors

• Invest individually or jointly

• Repatriate dividends, capital, and royalties

NRN status must be proven through an NRN ID card issued by the Government of Nepal.

Foreign Nationals and Companies

Foreign nationals and overseas companies may incorporate subject to:

• Minimum investment thresholds

• Sectoral restrictions

• Government approvals

Certain industries remain restricted or capped under the negative list published by the Government of Nepal.

Types of Companies Available for Foreign Investors

1. Private Limited Company

Most common structure for company incorporation Nepal.

Features:

• Separate legal entity

• Limited liability

• Suitable for long-term operations

• Allows 100% foreign ownership in permitted sectors

2. Branch Office

Extension of a foreign parent company.

Best for:

• Project-based work

• Donor-funded contracts

• Short to medium-term presence

Branches cannot engage in independent commercial trading.

3. Liaison Office

Non-commercial presence only.

Permitted activities:

• Market research

• Relationship management

• Promotion

Revenue generation is prohibited.

Minimum Investment Requirement for Company Incorporation Nepal

Under FITTA 2019, the minimum foreign investment threshold is:

NPR 20 million (approx. USD 150,000)

This applies per foreign investor, not per company, unless exempted.

Exceptions

• Certain technology transfer arrangements

• Priority industries with cabinet approval

• NRN investments under specific schemes

Step-by-Step Process for Company Incorporation Nepal

Below is the practical process foreign founders follow.

1. Sector Eligibility Check

Confirm your business is not on the negative list.

2. Company Name Reservation

Reserve a unique name at the Office of the Company Registrar (OCR).

3. Foreign Investment Approval

Apply to:

• Department of Industry (DOI) or

• Investment Board Nepal (IBN) for large projects

4. Company Registration

Submit constitutional documents to OCR.

5. NRB Approval & Capital Inflow

Open a foreign investment bank account.
Inject capital through formal banking channels.

6. Tax Registration

Obtain PAN and VAT registration if applicable.

7. Labour & SSF Compliance

Register employees under Nepal’s Social Security Fund.

Documents Required for Company Incorporation Nepal

Foreign founders should prepare the following:

• Passport copies of shareholders and directors

• Certificate of incorporation of parent company

• Board resolution approving Nepal investment

• Shareholder agreement

• Memorandum and Articles of Association

• Power of attorney

• Bank reference letter

• Project report or business plan

All foreign documents must be notarised and apostilled or consularised.

Comparison: NRN vs Foreign National Incorporation

Taxation for Foreign-Owned Companies in Nepal

Understanding tax exposure is essential.

Corporate Income Tax

• Standard rate: 25%

• Special industries: 20%

• Banks and financial institutions: 30%

Withholding Taxes

• Dividends: 5%

• Royalties: 15%

• Technical service fees: 15%

Double taxation avoidance treaties (DTAs) apply with several countries.

Profit Repatriation Rules Explained

FITTA 2019 guarantees repatriation of:

• Dividends

• Capital on exit

• Loan repayments

• Royalties and fees

Repatriation requires:

• Audited financials

• Tax clearance

• NRB approval

Funds must exit through formal banking channels only.

Employment & HR Compliance Obligations

Foreign-owned companies must comply fully with Nepali labour law.

Key requirements include:

• Written employment contracts

• Minimum wage compliance

• Mandatory SSF contributions

• Leave and termination rules

• Bonus Act compliance

Failure to comply can delay repatriation and visa renewals.

Common Mistakes Foreign Founders Make

Avoid these frequent errors:

• Assuming local incorporation rules apply to foreigners

• Underestimating approval timelines

• Injecting capital without NRB approval

• Ignoring SSF registration

• Structuring shareholding incorrectly

Professional structuring at incorporation saves years of compliance risk.

How Long Does Company Incorporation Nepal Take?

Typical timelines:

• Name reservation: 1–2 days

• Foreign investment approval: 2–4 weeks

• Company registration: 2–3 days

• NRB clearance & capital inflow: 1–2 weeks

End-to-end: 4–6 weeks on average.

Cost Breakdown for Foreign Company Incorporation

Expect costs across:

• Government fees

• Legal drafting

• Investment approvals

• Banking and compliance setup

Professional advisory support often reduces long-term compliance costs.

When You Should Use an EOR Instead

If you want to:

• Hire quickly

• Avoid upfront capital thresholds

• Test the market

An Employer of Record (EOR) model may be more suitable initially.

Many foreign firms transition from EOR to full incorporation later.

Frequently Asked Questions (People Also Ask)

Can foreigners own 100% of a company in Nepal?

Yes. Company incorporation Nepal allows 100% foreign ownership in permitted sectors under FITTA 2019.

What is the minimum investment for foreigners in Nepal?

The standard minimum is NPR 20 million per foreign investor unless exempted.

Is company incorporation in Nepal risky for foreigners?

Risk is manageable with proper legal structuring, approvals, and ongoing compliance.

Can profits be repatriated outside Nepal?

Yes. FITTA 2019 guarantees repatriation of dividends, capital, and royalties.

Do NRNs need DOI approval to start a company?

Yes. NRN investments still require foreign investment approval.

Final Thoughts: Company Incorporation Nepal Done Right

Company incorporation Nepal offers real opportunities for NRNs and foreign nationals who plan carefully. The legal framework is supportive, but procedural discipline matters.

With the right structure, approvals, and compliance systems, Nepal can be a highly efficient regional base.

Ready to Incorporate in Nepal?

Speak with our foreign investment specialists to assess eligibility, structure your entity, and manage approvals end-to-end.

👉 Book a consultation today and start your Nepal expansion with confidence.