Company Incorporation in Nepal: A Complete Beginner’s Guide (2026)

Company incorporation in Nepal has become a strategic move for foreign companies seeking cost efficiency, skilled talent, and long-term access to South Asia. Nepal is no longer just a low-cost outsourcing destination. It is a legally structured, investment-friendly market backed by modern FDI laws and improved regulatory clarity.

With reforms under FITTA 2019, the Companies Act 2006, and digital company registration systems, incorporating a company in Nepal is more transparent than ever. This guide explains the process step by step, in plain language, so foreign founders, CFOs, and expansion leaders can make confident decisions.

What Does Company Incorporation in Nepal Mean?

Company incorporation in Nepal refers to the legal registration of a business entity with the Office of the Company Registrar (OCR), allowing it to operate as a recognized corporate body.

Once incorporated, the company gains:

• Separate legal identity

• Ability to hire employees locally

• Eligibility to open bank accounts

• Access to tax registration and profit repatriation

For foreign companies, incorporation is typically done through Foreign Direct Investment (FDI) approval.

Why Foreign Companies Are Incorporating in Nepal

Nepal offers a rare combination of low operational costs and strong legal protections for foreign investors.

Key strategic advantages

• Competitive salary and operating costs

• English-speaking, educated workforce

• Investor protections under FITTA 2019

• Profit and capital repatriation rights

• Time-zone overlap with Asia, Europe, and Australia

According to Nepal Rastra Bank and the Department of Industry, FDI approvals have steadily increased over recent years, particularly in IT, services, and consulting sectors.

Types of Business Entities in Nepal

Foreign companies must choose the correct structure before starting company incorporation in Nepal.

1. Private Limited Company (Most common)

• Separate legal entity

• Minimum 1 shareholder

• Suitable for FDI and scaling

2. Public Limited Company

• Minimum 7 shareholders

• Used for large capital-intensive ventures

3. Branch Office

• Extension of foreign parent

• Limited operational scope

4. Liaison Office

• Non-revenue generating

• For market research only

Comparison: Business Structures for Foreign Companies

Insight: Over 80 percent of foreign investors choose a Private Limited Company due to flexibility and repatriation rights.

Legal Framework Governing Company Incorporation in Nepal

Company incorporation in Nepal is regulated by multiple laws:

• Companies Act 2006

• Foreign Investment and Technology Transfer Act (FITTA) 2019

• Industrial Enterprises Act 2020

• Income Tax Act 2002

• Labour Act 2017

• Social Security Act 2018

These laws collectively protect investors, employees, and the state.

Step-by-Step Process of Company Incorporation in Nepal

Step 1: Company name reservation

Submit proposed names to the OCR portal.

Step 2: FDI approval

Apply to the Department of Industry with:

• Investment plan

• Shareholding structure

• Parent company documents

Step 3: Company registration

Register Memorandum and Articles of Association with OCR.

Step 4: PAN and VAT registration

Register with the Inland Revenue Department.

Step 5: Bank account and capital injection

Open a local bank account and inject foreign capital.

Step 6: Labour and SSF registration

Mandatory compliance for hiring employees.

Documents Required for Foreign Company Incorporation

Foreign investors should prepare the following:

• Certificate of Incorporation of parent company

• Board resolution approving Nepal investment

• Passport copies of shareholders and directors

• Project report and financial projections

• Memorandum and Articles of Association

All documents must be notarized and apostilled.

Minimum Capital Requirement for FDI in Nepal

As per FITTA 2019:

• Minimum foreign investment: NPR 20 million

• Sector-specific thresholds may apply

Capital must be brought into Nepal through formal banking channels.

Taxation After Company Incorporation in Nepal

Corporate tax

• Standard corporate tax: 25 percent

• Certain sectors receive incentives

Dividend tax

• Withholding tax: 5 percent

Personal income tax

• Progressive slabs as per Income Tax Act

Nepal has Double Tax Avoidance Agreements (DTAA) with multiple countries, reducing tax exposure for foreign companies.

Employment and HR Compliance

Once company incorporation in Nepal is complete, employers must comply with:

• Written employment contracts

• Minimum wage regulations

• Paid leave and holidays

• Social Security Fund contributions

• Payroll tax deductions

Non-compliance can lead to penalties or license suspension.

Common Mistakes Foreign Companies Make

Avoid these frequent errors:

• Choosing the wrong entity structure

• Underestimating compliance workload

• Delaying capital injection

• Ignoring SSF and labour filings

• Using unlicensed local agents

Professional guidance reduces regulatory risk significantly.

How Long Does Company Incorporation in Nepal Take?

Typical timeline:

1. Name approval: 2–3 days

2. FDI approval: 2–4 weeks

3. Company registration: 3–5 days

4. Tax and bank setup: 1–2 weeks

Total: Approximately 4–6 weeks.

Costs Involved in Company Incorporation

Costs vary based on structure and advisory support.

Typical cost components

• Government registration fees

• FDI application charges

• Legal and consulting fees

• Notarization and translation

Transparent advisors provide fixed-fee packages.

Is Nepal Safe for Foreign Investment?

Yes. FITTA 2019 guarantees:

• Protection against nationalization

• Equal treatment with local investors

• Full repatriation of profits and capital

• Dispute resolution mechanisms

Nepal is also a signatory to international investment protection conventions.

When Company Incorporation Makes Sense vs Alternatives

Some companies start with:

• Employer of Record (EOR)

• Outsourcing partnerships

They later transition to full company incorporation in Nepal once scale and stability are achieved.

Conclusion: Is Company Incorporation in Nepal Right for You?

Company incorporation in Nepal is no longer complex or risky when done correctly. For foreign companies seeking sustainable expansion, Nepal offers legal certainty, cost advantages, and strong investor protections.

With the right structure and local expertise, incorporation becomes a strategic asset rather than a compliance burden.

Call to Action

Thinking about company incorporation in Nepal?
Speak with our FDI and company registration specialists for a free consultation and incorporation roadmap tailored to your business goals.

Frequently Asked Questions (People Also Ask)

Is company incorporation in Nepal allowed for 100 percent foreign ownership?

Yes. FITTA 2019 allows full foreign ownership in approved sectors.

How much time does company incorporation in Nepal take?

Usually between four and six weeks, depending on approvals.

Can profits be repatriated after incorporation?

Yes. Profits and capital can be repatriated through formal banking channels.

Is a local director required?

No. Foreign nationals can serve as directors.

Is physical presence required in Nepal?

No. The process can be completed remotely with authorized representatives.