Company incorporation Nepal is often the first and most critical step for foreign companies entering South Asia’s fastest-evolving frontier market. Nepal offers competitive labor costs, English-speaking talent, and growing demand across tech, infrastructure, consulting, and trading.
Yet incorporation is not just paperwork. It determines your tax exposure, profit repatriation, compliance burden, and long-term scalability. This guide answers the most common questions foreign founders ask, with practical, experience-backed insights you can act on immediately.
Foreign businesses cannot legally trade, hire staff, or invoice clients in Nepal without a registered entity. Incorporation is the legal foundation for everything that follows.
Key reasons it matters:
It establishes legal personality and limited liability
It enables banking, contracts, and invoicing
It determines tax residency and reporting
It unlocks FDI approvals and profit repatriation
In Nepal, these outcomes are governed primarily by the Companies Act 2006, administered by the Office of the Company Registrar (OCR).
Choosing the right structure is a strategic decision. The most common options include:
This is the most popular structure for foreign companies.
Separate legal entity
100 percent foreign ownership allowed in most sectors
Suitable for long-term operations
An extension of the foreign parent company.
No separate legal personality
Limited scope of activities
Heavier reporting obligations
Used only for market research and coordination.
No revenue-generating activities allowed
Not suitable for operations or hiring at scale
| Criteria | Private Limited (FDI) | Branch Office | Liaison Office |
|---|---|---|---|
| Legal status | Separate Nepali entity | Extension of parent | Extension of parent |
| Revenue allowed | Yes | Yes (restricted) | No |
| Hiring employees | Yes | Yes | Limited |
| Tax liability | Corporate tax | Corporate tax | Minimal |
| Best for | Long-term growth | Project-based entry | Market research |
Insight: Over 80 percent of foreign investors opt for a private limited company due to flexibility and tax clarity.
The incorporation workflow is structured but documentation-heavy.
Name reservation via OCR portal
Preparation of constitutional documents
Foreign investment approval (if applicable)
Company registration certificate issuance
PAN and VAT registration
Bank account opening
Most delays occur at steps 2 and 3 due to incomplete or inconsistent documents.
Foreign founders typically need:
Passport copies of shareholders and directors
Notarized and apostilled parent company documents
Memorandum and Articles of Association
Board resolution approving Nepal investment
Lease agreement for registered office
Tip: Documents issued overseas must often be notarized and legalized. Missing this step can add weeks.
Foreign investment is regulated under Nepal’s investment framework and overseen by relevant authorities depending on investment size.
Key principles:
Certain sectors are restricted or capped
Minimum investment thresholds may apply
Repatriation is allowed subject to tax clearance
Compliance reporting is mandatory
Failure to structure FDI correctly can block dividend remittance later.
Once incorporated, companies become tax residents in Nepal.
Corporate income tax (generally 25 percent)
Withholding tax on payments
VAT at 13 percent (if applicable)
Payroll taxes for employees
Misclassifying management fees
Ignoring transfer pricing exposure
Missing monthly withholding filings
Delayed PAN or VAT registration
After company incorporation Nepal, hiring must comply with local labor regulations.
Employers must:
Issue compliant employment contracts
Enroll staff in social security schemes
Maintain statutory leave records
Follow termination procedures strictly
Non-compliance can result in penalties and employee disputes.
Incorporation is only the beginning. Day-to-day operations require local awareness.
Banking KYC can be slow for foreign directors
Currency conversion requires documentation
Annual compliance filings are mandatory
Government portals are improving but still manual
Working with a local incorporation and compliance partner significantly reduces friction.
A realistic timeline for foreign companies:
Name reservation: 1 to 2 days
Document preparation: 5 to 10 days
FDI approval: 2 to 4 weeks
OCR registration: 3 to 5 days
Tax registration: 2 to 4 days
Average total timeline: 4 to 6 weeks
Search engines and regulators value experience, expertise, authority, and trust.
Professional advisors help you:
Choose the correct structure
Avoid regulatory red flags
Optimize tax and repatriation outcomes
Stay compliant year after year
This is especially critical for foreign companies unfamiliar with Nepal’s regulatory environment.
Yes. Most sectors allow full foreign ownership, except restricted industries. Approval depends on sector and investment size.
Minimum thresholds vary by sector and policy. Professional review is recommended before application.
Yes. Profits and dividends can be repatriated after taxes and regulatory clearances.
No. Foreign directors can reside overseas, though a local representative is often required.
Yes. The OCR portal supports online filing, but physical follow-ups are still common.
Company incorporation Nepal is not just a legal formality. It shapes your tax exposure, compliance risk, and growth potential. Foreign companies that invest time in proper structuring avoid costly corrections later.
If you are planning to enter Nepal, the smartest move is to incorporate correctly from day one.
Planning company incorporation in Nepal?
Speak with our specialists for a structured, compliant, and stress-free setup. We guide foreign companies from incorporation to full operational readiness.