FAQs About Company Registration in Nepal Legal Fees and Process

Company registration in Nepal is often the first and most critical step for foreign companies entering the Nepali market. Yet many investors struggle to understand legal fees, timelines, compliance rules, and the correct structure to choose. This guide answers the most common questions foreign companies ask before incorporating in Nepal. You will learn the exact process, realistic costs, legal requirements, and how to avoid delays while staying fully compliant.

This article is written from an advisor’s perspective. It reflects real regulatory practice, not theory.

Why Company Registration in Nepal Matters for Foreign Companies

Nepal is positioning itself as a strategic South Asian hub for services, IT, outsourcing, hydropower, tourism, and manufacturing. Government reforms under FITTA 2019 and the Industrial Enterprises Act 2020 have made foreign investment clearer, though not simpler.

Registering correctly protects your capital, ensures profit repatriation, and prevents regulatory penalties.

Foreign companies typically register in Nepal to:

• Establish a long-term market presence

• Hire local or outsourced staff legally

• Secure FDI approval and banking access

• Repatriate dividends and service fees

• Comply with tax, labour, and immigration laws

Types of Company Registration in Nepal for Foreign Investors

Choosing the wrong structure is the most expensive mistake foreign companies make.

1. Private Limited Company (FDI Company)

This is the most common structure for foreign investors.

Key features:

• Minimum 1 shareholder

• Can be 100 percent foreign-owned

• Requires FDI approval

• Separate legal entity

Best for operating businesses, hiring staff, and generating revenue.

2. Branch Office

A branch is an extension of a foreign parent company.

Key features:

• No separate legal identity

• Allowed for revenue-generating activities

• Requires approval from multiple regulators

Best for companies executing contracts in Nepal.

3. Liaison Office

A liaison office is non-commercial.

Key features:

• No income-generating activities

• Limited to marketing, coordination, research

• Lower compliance burden

Best for market entry testing.

4. Representative Office

Often confused with liaison offices. Functionally similar but used less frequently.

Step-by-Step Company Registration Process in Nepal

The company registration in Nepal process involves multiple regulators. Understanding the correct sequence saves months.

Step 1: Name Reservation at OCR

You apply to the Office of Company Registrar (OCR).

Requirements:

• Proposed company name

• Business objectives

• Promoter details

Approval usually takes 1 to 3 working days.

Step 2: FDI Approval (Foreign Companies Only)

Foreign investment approval is mandatory.

Authorities involved:

• Department of Industry or IBN

• Nepal Rastra Bank (post-investment)

Documents required:

• Board resolution

• Parent company documents

• Investment plan

• Passport copies

Step 3: Company Incorporation at OCR

Once FDI is approved, the company is incorporated.

Documents:

• Memorandum of Association

• Articles of Association

• Shareholder agreements

You receive a Certificate of Incorporation.

Step 4: Tax Registration (PAN and VAT)

Registration with the Inland Revenue Department is compulsory.

PAN is mandatory. VAT applies if thresholds are met.

Step 5: Bank Account and Capital Injection

FDI capital must enter Nepal through an approved bank channel.

This step triggers NRB reporting obligations.

Step 6: Local Ward and Labour Compliance

You must register:

• Local ward office

• Social Security Fund

• Labour office

Legal Fees for Company Registration in Nepal

Foreign investors often underestimate total legal costs. Below is a realistic breakdown.

Government Fees

• Name reservation: NPR 100

• Company registration: NPR 1,000 to 15,000 (based on capital)

• PAN registration: No fee

• VAT registration: No fee

Professional and Advisory Fees

These vary by complexity.

Typical ranges:

• Company incorporation support: USD 800 to 1,500

• FDI approval handling: USD 1,000 to 3,000

• Compliance setup and licensing: USD 500 to 2,000

Ongoing Annual Costs

• Audit and tax filings

• Company renewals

• Labour and SSF compliance

Comparison Table: Registration Options for Foreign Companies

Timeline for Company Registration in Nepal

While official timelines are optimistic, real-world timelines differ.

Typical duration:

1. Name approval: 1 to 3 days

2. FDI approval: 15 to 30 days

3. Company incorporation: 3 to 5 days

4. Tax and bank setup: 7 to 10 days

Total realistic timeline: 4 to 8 weeks

Delays often occur due to incomplete documents or unclear investment objectives.

Common Mistakes Foreign Companies Should Avoid

Foreign investors often repeat the same errors.

Avoid these pitfalls:

• Choosing the wrong entity structure

• Understating capital requirements

• Ignoring labour law compliance

• Delaying NRB reporting

• Using generic legal templates

Early advisory support reduces long-term costs significantly.

Compliance After Company Registration in Nepal

Registration is only the beginning.

Post-incorporation obligations include:

• Annual returns to OCR

• Income tax filings

• VAT filings if applicable

• Social Security Fund contributions

• Statutory audit

Non-compliance can lead to penalties or FDI suspension.

Taxation Overview for Foreign-Owned Companies

Key tax points:

• Corporate income tax: 25 percent standard rate

• Withholding tax on dividends: 5 percent

• VAT: 13 percent

• Transfer pricing rules apply

Double Taxation Avoidance Agreements may reduce tax exposure.

How Nepal’s Laws Govern Foreign Company Registration

Key legislation governing company registration in Nepal includes:

• Companies Act 2006

• Foreign Investment and Technology Transfer Act 2019

• Industrial Enterprises Act 2020

• Income Tax Act 2002

• Labour Act 2017

These laws collectively regulate ownership, repatriation, employment, and compliance.

When Should Foreign Companies Seek Professional Help

Professional support is recommended if:

• Investment exceeds USD 100,000

• Multiple shareholders are involved

• You plan to repatriate profits

• You require work visas

Experienced advisors prevent regulatory backtracking.

Frequently Asked Questions About Company Registration in Nepal

Can foreigners own 100 percent of a company in Nepal?

Yes. Under FITTA 2019, foreigners can own 100 percent equity in approved sectors.

What is the minimum capital for foreign investment in Nepal?

The minimum FDI threshold is NPR 20 million, subject to sector-specific rules.

How long does company registration in Nepal take?

For foreign companies, the process usually takes 4 to 8 weeks.

Is physical presence required in Nepal?

Not initially. Registration can be handled through a local representative.

Can profits be repatriated outside Nepal?

Yes. Profits and dividends can be repatriated after tax compliance and NRB approval.

Conclusion

Company registration in Nepal is a regulated but highly rewarding process for foreign companies that approach it correctly. Understanding legal fees, timelines, and compliance obligations from the start prevents delays and protects your investment. With the right structure and expert guidance, Nepal offers a stable and cost-effective entry into South Asia.

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