PAN/VAT registration Nepal after incorporation: what’s next (Company registration in Nepal)

If you’ve completed company registration in Nepal, your next focus is tax onboarding. You must obtain a Permanent Account Number (PAN). You may also need to register for Value Added Tax (VAT). These registrations unlock bank operations, payroll, lawful invoicing, and import or export. This guide explains the “what’s next” steps. It translates legal requirements into practical checklists for foreign founders and FDI teams.

Company registration in Nepal: PAN/VAT after incorporation

New entities often rush to open bank accounts and hire staff. Do that only after PAN. VAT may follow, depending on your business model and turnover. The Inland Revenue Department (IRD) manages both registrations. The process is digital first. However, physical verification can still occur.

Key laws and references used throughout this guide (no links):

• Companies Act 2063 (2006)

• Income Tax Act 2058 (2002) and Finance Acts (annual)

• Value Added Tax Act 2052 (1996) and VAT Rules

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

• Nepal Rastra Bank (NRB) foreign exchange and FDI procedural circulars

• IRD e-filing and e-billing notices (current fiscal year)

Note: The standard VAT rate in Nepal is 13% under the VAT Act. Thresholds and procedural circulars can change via Finance Acts or IRD notices.

PAN vs VAT at a glance

Your first 30 days after incorporation: the essentials

1. Board readiness. Approve authorized signatories and tax registrations.

2. PAN application. Apply online. Prepare originals for verification.

3. Bank KYC. Use PAN certificate to open the current account.

4. FDI capital inflow plan. Coordinate NRB compliance and channel funds via the banking route.

5. Payroll basics. Draft employment agreements and prepare e-TDS workflows.

6. VAT decision. Assess if your model requires immediate VAT registration. Consider threshold, imports, and B2B sales.

7. E-billing setup. Choose a VAT-compliant invoicing tool if you register for VAT.

8. Accounting stack. Implement a Chart of Accounts and document controls.

9. Statutory registers. Maintain share register, minute books, and related company records.

10. Compliance calendar. Map monthly, quarterly, and annual deadlines for PAN and VAT.

PAN registration in Nepal — requirements, steps, and timelines

Who needs PAN?

• Every incorporated company and branch office.

• Liaison offices that run payroll or withhold taxes.

• Entities that will make payments requiring withholding (e.g., rent, services).

Documents checklist (typical)

• Certificate of Incorporation and PAN application form.

• MOA/AoA or constitutional documents.

• Board resolution approving PAN and naming signatories.

• Lease agreement or ownership proof for the registered office.

• Director and authorized signatory IDs with photographs.

• Contact details, email, and phone number for IRD correspondence.

Step-by-step process

1. Online application. Complete entity details and attach documents.

2. Submission and acknowledgment. Save the reference number.

3. Verification. Respond to any IRD queries. Keep originals ready.

4. Approval. Receive PAN certificate.

5. Activation. Create e-filing credentials and set password hygiene.

Processing timelines

• Many cases complete within a few business days after correct filing.

• Timelines may extend if verification or additional queries arise.

• Keep a buffer. Align bank KYC with PAN availability.

Common mistakes to avoid

• Mismatch between lease address and registered office address.

• Missing board resolution or signatory pages.

• Unclear business activity description.

• Not preparing for site verification.

• Delayed creation of e-filing credentials.

VAT registration in Nepal — do you need it now?

When is VAT mandatory?

• You make taxable supplies and want to issue VAT invoices.

• You need input tax credit on purchases.

• You import or intend to export with VAT implications.

• Your turnover approaches the threshold notified by IRD for the fiscal year.

• IRD directs registration for your activity cluster.

Documents checklist (typical)

• All PAN documents.

• Detailed business activity description and HS codes (if importing).

• List of goods/services and supply chain summary.

• Warehouse or store details and photographs (if applicable).

• Sample invoice template and details of e-billing software.

• Bank account proof and initial capital evidence.

VAT registration: step-by-step

1. Threshold and model assessment. Confirm need based on activities and clients.

2. Pre-readiness. Align invoice format with VAT Act requirements.

3. Online application. Fill VAT form with supporting documents.

4. Physical or desktop verification. Keep premises and signage ready.

5. Approval and VAT number. Set up e-billing and train your team.

6. First return planning. Prepare inventory opening balances and input claim strategy.

VAT invoicing essentials

• Use a tax invoice with mandatory fields: supplier name, VAT number, buyer name, invoice number, date, description, quantity, unit price, taxable value, VAT amount, and totals.

• Include 13% VAT where applicable.

• Map exempt, zero-rated, and standard-rated supplies correctly.

• Keep sequential invoice numbers and secure e-billing controls.

• Issue credit notes and debit notes for adjustments as per VAT Rules.

Returns and payments

• VAT returns are filed periodically as per IRD’s schedule.

• Maintain purchase and sales registers for each period.

• Reconcile input credit with supplier output declarations.

• Pay any net VAT due with the return.

• Maintain audit trails for refunds and zero-rating claims.

Post-registration obligations most founders overlook

e-TDS 

• Deduct TDS on qualifying payments such as rent, services, and payroll.

• File e-TDS schedules and deposit on time.

• Issue TDS certificates to vendors and employees.

• Reconcile TDS with annual returns under the Income Tax Act.

Advance and provisional tax

• Review projected profit and set advance tax installments.

• Update rolling forecasts each quarter.

Corporate income tax return and audit

• Maintain books under the Companies Act and Income Tax Act.

• Statutory audit is mandatory for companies.

• Prepare financial statements and tax computations.

• File corporate returns by IRD deadlines.

Record retention

• Keep vouchers, ledgers, contracts, and e-billing records for statutory periods.

• Maintain electronic backups and off-site copies.

Special notes for foreign investors 

FDI private limited company

• FITTA 2019 governs investment approvals and repatriation rights.

• Bring capital via the formal banking channel.

• Secure NRB compliance for foreign currency flows.

• Keep capital evidence (SWIFT, bank advice) ready for future repatriation.

• VAT is common for B2B or import-export models.

Branch office

• Obtain PAN for withholding and corporate tax obligations.

• VAT depends on the branch’s supply profile.

• Keep foreign head office support agreements on file.

• Place emphasis on PE (permanent establishment) considerations under tax law.

Liaison office

• Liaison offices are typically non-commercial.

• PAN may still be needed for payroll and withholding.

• VAT is generally not applicable if no taxable supply occurs.

• Maintain strict scope control to avoid PE risk.

Costs and realistic timeframes (indicative)

These are ballpark planning figures. Actuals depend on activity, verification, and IRD workload.

A practical compliance calendar for your first 90 days

• Week 1–2: PAN application, bank KYC, e-filing credentials, accounting stack.

• Week 2–3: VAT assessment; if needed, submit VAT application and prepare for verification.

• Week 3–4: VAT approval; implement e-billing, staff training, and invoice controls.

• Month 2: First TDS filings, VAT return planning, input credit documentation.

• Month 3: Quarterly tax review, advance tax planning, audit readiness checklist.

Risk, penalties, and how to stay safe

• Late registration can trigger penalties under the VAT and Income Tax Acts.

• Wrong invoicing leads to disallowed credits and assessments.

• TDS non-compliance creates cascading vendor issues and interest costs.

• Poor records increase audit exposure and delay refunds.

• FDI traceability gaps complicate repatriation and capital verification.

Mitigation: Use checklists, segregate duties, reconcile monthly, and document every assumption. Review updates from the Finance Act each fiscal year.

Tools and systems you actually need

• IRD e-filing credentials with secure access control.

• VAT-compliant invoicing with sequential numbering and export features.

• General ledger software aligned to Nepali GAAP and tax rules.

• Document management for contracts, leases, and tax letters.

• Payroll and e-TDS system with accurate coding and certificate generation.

• Internal controls: maker-checker for invoices, bank reconciliations, and period close.

Step-by-step: end-to-end playbook 

1. Finalize board resolutions for PAN and VAT.

2. Prepare the document pack and confirm registered office readiness.

3. Apply for PAN and track verification.

4. Open the bank account using PAN.

5. Assess VAT need based on turnover, imports, and B2B customers.

6. Align invoice formats with VAT rules.

7. Apply for VAT and complete any site verification.

8. Configure e-billing and train the team.

9. Set up e-TDS workflows and calendars.

10. Begin periodic filings with reconciliations and variance review.

What belongs in your VAT invoice pack 

• Master invoice template and numbering policy.

• Customer master with VAT numbers.

• Daily sales register and credit note log.

• Purchase register with supplier VAT numbers for input credit.

• Evidence of exports or zero-rated supplies, where applicable.

• Monthly VAT return file with payment proofs and reconciliations.

FAQ (People Also Ask)

1) Is VAT mandatory for every new company in Nepal?
No. PAN is mandatory. VAT depends on your taxable supplies, threshold status, and business model. Many B2B and import/export companies register early to issue VAT invoices and claim input credit.

2) What is the VAT rate in Nepal?
The standard VAT rate is 13% under the Value Added Tax Act 2052. Exempt and zero-rated categories exist. Apply the correct rate based on your goods or services.

3) Can a liaison office get PAN but avoid VAT?
Often yes. Liaison offices are typically non-commercial. They may need PAN for payroll and withholding, but they usually do not register for VAT unless they make taxable supplies.

4) When should I apply for PAN after incorporation?
Immediately. Obtain PAN before bank operations, payroll, and any transaction that requires withholding or tax reporting to avoid penalties and delays.

5) What happens if I delay VAT registration?
You risk penalties, denied input credits, and inability to issue valid tax invoices. Early assessment prevents compliance gaps and protects margins.