Foreign Company Incorporation in Nepal: Legal Process & Compliance (2025 Edition)

If you plan to incorporate a company in Nepal, this guide is for you.
It shows every step, from approvals to taxes.
It explains timelines, documents, and risk points.
You also get a compliance calendar and a ready checklist.
All guidance aligns with Nepal’s Companies Act 2063, FITTA 2019, FITTA Rules 2021, NRB FX/FDI Bylaw 2021, and current IRD practices.

Who this guide is for

• Foreign founders opening a Nepal subsidiary.

• Multinationals weighing a branch or liaison office.

• Investors planning joint ventures with local partners.

• Legal, finance, and expansion teams seeking a clear path.

Entry pathways at a glance

Choose a structure that matches activity, risk, and control.
Pick the one that avoids rework later.

*Assumes complete, consistent documents and stable scope.

Why this matters: the right structure secures repatriation, licensing, and tax alignment.
It also reduces later changes to your MOA and filings.

Nepal’s FDI framework you must know

Core laws and regulators

• Companies Act 2063 (2006) — forms, filings, foreign company provisions.

• FITTA 2019 — foreign investment entry, technology transfer, repatriation rights.

• FITTA Rules 2021 — procedures, documents, timelines, fee schedules.

• NRB Foreign Investment and Foreign Loan Management Bylaw 2021 — currency inflows, loans, and outward remittances.

• IRD — PAN, VAT, and withholding rules after incorporation.

Approving authorities

• Department of Industry (DOI): standard FDI projects up to the statutory threshold.

• Investment Board Nepal (IBN): large-scale or strategic projects above that threshold.

• Sector regulators: telecom, insurance, energy, health, and others where needed.

Minimum foreign investment

The base minimum investment is NPR 20 million per project.
Policy-level flexibility may apply for some IT/ICT activities.
Confirm your industry classification before you file.

Negative list and sensitive activities

Most sectors are open.
Restricted lines include cottage industries, certain personal services, and security printing.
Primary agriculture and real estate trading are also restricted in many cases.
Always validate your MOA Objects against the current negative list.

Repatriation and forex control

Dividends, sale proceeds, royalties, and capital are repatriable.
You must meet tax clearance, documentary proof, and NRB procedures.
Maintain a clean inward remittance trail from day one.

How to Incorporate a Company in Nepal: step-by-step

This is your practical, sequenced plan.
Use it as a working checklist with your advisors.

1) Select the legal pathway

Pick subsidiary, branch, liaison, or JV.
Map it to activity, risk, and licenses.
Define shareholding and board control first.

2) Confirm sector openness

Check the negative list and any foreign ownership caps.
Align your MOA Objects with permitted activities.
Avoid catch-all Objects that invite queries.

3) Identify the approving authority

Match your project size to DOI or IBN.
List any sector regulators you must approach.
Plan the sequence so approvals flow without conflict.

4) Reserve a compliant name (OCR)

Search and reserve the company name on the OCR system.
Use Objects that match your chosen name.
Avoid restricted words without proof of license.

5) Prepare the FDI application pack

Build a clean, consistent file.
Here is the typical content set:

• Parent incorporation certificate and charter.

• Parent board resolution approving the Nepal investment.

• Shareholding structure and beneficial ownership KYC.

• Audited financials or a bank reference.

• Draft MOA/AOA with precise Objects.

• JV agreement if any.

• Technology transfer or royalty drafts if applicable.

• Five-year business plan and financial projections.

• Passports and addresses for all promoters and directors.

• Registered office evidence or lease draft.

6) Bank readiness and NRB alignment

Choose a commercial bank with FDI experience.
Confirm purpose codes, SWIFT narrative, and evidence.
Plan capital tranches and document the source of funds.

7) Obtain FDI approval

Submit to DOI or IBN.
Respond to queries with precise and dated documents.
Track validity periods for approvals and letters.

8) Incorporate with OCR

File MOA/AOA and director data in the OCR system.
Appoint a Company Secretary if required by size or policy.
Secure the Certificate of Incorporation.

9) Bring in capital through the bank

Wire the approved capital from overseas.
Ensure the SWIFT narrative matches the approval language.
Collect inward remittance evidence for future repatriation.

10) Register for PAN and assess VAT

Apply for Business PAN with the IRD.
Assess VAT registration based on activity and turnover triggers.
Remember the VAT rate is 13% in Nepal.

11) Hire and comply with labor laws

Issue compliant employment contracts.
Register employer and employees with the Social Security Fund (SSF) if applicable.
Set payroll cycles, leave records, and contributions.

12) Open operating bank accounts and secure sector licenses

Open accounts with authorized signatories and board authority.
Apply for sector licenses if your industry requires them.
Start invoicing only after tax and licensing readiness.

Numbered setup roadmap (copy this)

1. Confirm sector openness and choose the structure.

2. Fix shareholding, directors, and control rights.

3. Map project size to DOI or IBN.

4. Reserve a compliant company name on OCR.

5. Prepare the FDI file and notarize translations.

6. Submit, track, and clear queries quickly.

7. File OCR incorporation with final MOA/AOA.

8. Wire capital with correct codes and evidence.

9. Get PAN; assess VAT registration.

10. Enroll in SSF and finalize contracts.

11. Open operating accounts and go live.

12. Build a compliance calendar for year one.

Document master-list (bring these on day one)

• Certificate of incorporation and charter of the parent.

• Board resolution approving the Nepal investment.

• UBO chart and KYC dossier for all promoters.

• Audited financials or bank reference letter.

• Draft MOA/AOA with exact Objects.

• Nepal lease or registered office evidence.

• Local director IDs and passport copies.

• If branch or liaison: notarized parent charter, scope note, and Nepal representative details.

Taxes and payroll after incorporation

PAN: mandatory for every registered entity.
VAT: rate is 13%. Registration depends on turnover thresholds in the current Finance Act.
Withholding: apply Nepal-source rules for vendor and salary payments.
Payroll and SSF: enroll eligible staff and deposit monthly contributions.
Repatriation: dividends flow after audits, tax clearance, and bank verification.

Compliance calendar (first 12 months)

• Within 15–30 days: PAN; VAT registration if required; labor contracts.

• Monthly: VAT returns (if registered); SSF contributions; payroll withholding.

• Quarterly: Withholding statements and reconciliations.

• Annually: Financial statements, tax return, and OCR annual filings.

Original comparison table: structure vs compliance burden

Note: Liaison offices do not invoice.
Branch offices remain part of the foreign legal person.

Risk controls and quality checks

• Objects too broad: invites queries. Keep them precise.

• Missing NRB trail: blocks dividend repatriation later. Fix SWIFT narratives.

• Wrong VAT assumption: thresholds vary by activity. Confirm before invoicing.

• Director KYC gaps: trigger re-filings. Prepare UBO proofs early.

• Sector license lag: pushes go-live dates. Start in parallel with OCR.

EEAT reinforcement

• Experience: DCV has supported foreign entries across IT, manufacturing, and services.

• Expertise: We work to Companies Act 2063, FITTA 2019, FITTA Rules 2021, NRB FX Bylaw 2021, and current IRD practice notes.

• Authority: We align filings with regulator checklists and bank evidence standards.

• Trust: We build an audit-ready paper trail from the first remittance.

Frequently Asked Questions

1) How long does incorporation usually take?
A clean file takes 4–8 weeks end-to-end.
Large projects or high-license sectors take longer.

2) What is the minimum investment for foreign investors?
The base minimum is NPR 20 million per project.
Some IT/ICT activities may have flexibility by policy.

3) Can we repatriate profits and capital?
Yes. You need audited accounts, tax clearance, and NRB-compliant bank evidence.

4) When is VAT registration required?
Register when your activity and turnover cross Finance Act thresholds.
The VAT rate is 13%.

5) Which authority approves foreign investment?
DOI approves standard projects up to the statutory ceiling.
IBN handles larger or strategic projects above it.