Choosing between a private vs public company in Nepal is one of the most strategic decisions a foreign investor will make. It directly shapes tax exposure, compliance intensity, capital flexibility, and long-term exit options. With Nepal’s Fiscal Year 2081/82 bringing clarified tax administration, tighter disclosure norms, and more predictable FDI pathways, the choice matters more than ever. This guide breaks the decision down plain English, zero fluff so you can move fast with confidence.
Nepal’s corporate framework is anchored in the Companies Act, 2063 (2006) and administered by the Office of Company Registrar (OCR). Taxation is governed by the Income Tax Act, 2058 and annual budget statements issued by the Inland Revenue Department (IRD).
For foreign companies, two incorporated options dominate:
Private Limited Company
Public Limited Company
Both can be FDI-approved through the Department of Industry (DoI), subject to sector eligibility and capital thresholds.
A private company in Nepal is designed for control, speed, and operational efficiency. It caps shareholders and restricts share transfers, making it ideal for subsidiaries, back offices, and service exporters.
Shareholders: 1–101
Minimum paid-up capital: NPR 1,000,000 for FDI entities (sector-specific rules apply)
Share transfer: Restricted
Public fundraising: Not permitted
Disclosure: Limited, non-public
Offshore delivery centers
Captive IT and BPO units
Regional headquarters
Export-oriented services
A public company is built for scale and capital access. It enables broader shareholding and potential listing, but with heavier compliance and governance requirements.
Shareholders: Minimum 7, no upper limit
Minimum paid-up capital: NPR 10,000,000
Share transfer: Freely transferable
Public fundraising: Allowed
Disclosure: Extensive, public-facing
Capital-intensive projects
Infrastructure and hydropower
Banks and financial institutions
Businesses planning IPOs
From a headline tax rate perspective, both structures are treated equally. The differences emerge in administration, audits, and distribution planning.
Corporate Income Tax: 25%
VAT: 13% (where applicable)
Withholding taxes: Sector-dependent
There is no preferential CIT rate based solely on private or public status.
Annual audit
Annual return to OCR
Regular tax filings to IRD
Limited public disclosure
Enhanced audits and reporting
Mandatory governance committees
Continuous disclosures
Capital market oversight (where listed)
| Dimension | Private Company | Public Company |
|---|---|---|
| Ownership control | High | Diluted |
| Minimum capital | NPR 1M (FDI) | NPR 10M |
| Tax rate (CIT) | 25% | 25% |
| Compliance cost | Low–moderate | High |
| Fundraising | Private only | Public allowed |
| Speed to incorporate | Fast | Slower |
| Best for | Subsidiaries, BPO, IT | Large-scale ventures |
Short answer: Neither offers a lower statutory tax rate.
Real answer: A private company typically delivers better effective tax efficiency due to:
Lower compliance overhead
Simpler dividend planning
Easier group cost allocations
For most foreign service exporters, this translates to higher net margins.
Use this quick decision lens:
Is public fundraising planned in Nepal?
Is local shareholder diversification required?
Does the sector mandate public status?
Is operational control critical?
If you answered “no” to most, a private company is usually the right call.
Public companies pay less tax.
False. Rates are identical.
FDI requires a public company.
False. Most FDI entities are private.
Private companies cannot scale.
False. Scaling is operational, not structural.
OCR: Incorporation and statutory filings
DoI: FDI approval and amendments
IRD: Tax registration and compliance
Nepal Rastra Bank: Capital inflow and repatriation
A private company suits most foreign investors due to lower compliance, faster setup, and full ownership control, without tax disadvantages.
No. Both private and public companies are taxed at the same corporate income tax rate under Nepalese law.
Yes. Full foreign ownership is allowed in most FDI-approved sectors.
Possible, but procedural and compliance-heavy. It should be planned early.
Private companies typically face fewer administrative layers when repatriating dividends through Nepal Rastra Bank.
The private vs. public company in Nepal decision is less about tax rates and more about control, cost, and clarity. Under Fiscal Year 2081/82, Nepal’s framework clearly favors private companies for foreign investors entering service, technology, and outsourcing sectors. Choose public only when scale and public capital demand it. Structure it right, and Nepal becomes a clean, compliant, and profitable base.