--- title: "Foreign Company Incorporation in Nepal: Legal Process & Compliance (2025 Edition)" description: Incorporate a company in Nepal with confidence. 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[Nepal Accounting](https://digitalconsultingventures.com/insights/tag/nepal-accounting) # Foreign Company Incorporation in Nepal: Legal Process & Compliance (2025 Edition) [![Vijay Shrestha](https://digitalconsultingventures.com/hs-fs/hubfs/s%20(2)-1.png?width=48&height=48&name=s%20(2)-1.png)](https://digitalconsultingventures.com/insights/author/vijay-shrestha) [Vijay Shrestha](https://digitalconsultingventures.com/insights/author/vijay-shrestha) Sep 10, 2025 4:21:12 PM 5 min read ![Infographic showing how to incorporate a company in Nepal: approvals, steps, and compliance timeline for foreign investors](https://digitalconsultingventures.com/hubfs/Untitled%20design%20%287%29-2.jpg) 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. | Pathway | What it is | Can earn revenue? | Tax profile | Primary approvals | Typical setup window\* | Best for | | --- | --- | --- | --- | --- | --- | --- | | **Private Limited Subsidiary** | Nepal company with foreign shareholding | Yes | Corporate income tax; VAT if registered | FDI approval (DOI/IBN), NRB inflow, OCR incorporation, IRD PAN/VAT | 4–8 weeks | Long-term ops, teams, local contracts | | **Branch Office** | Extension of foreign company | Yes | Tax on Nepal-source income | OCR branch filing; sector licenses; NRB if capitalized | 3–6 weeks | Projects, tenders, single client | | **Liaison (Contact) Office** | Representative office | No | Cost center; no local revenue | OCR liaison filing; visa and labor support | 2–4 weeks | Market development, coordination only | | **Joint Venture** | Co-owned Nepal company | Yes | Company tax; VAT as applicable | FDI + sector approvals; same as subsidiary | 5–9 weeks | Local partner synergy, sector access | \*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 | Factor | Subsidiary | Branch | Liaison | | --- | --- | --- | --- | | Legal personhood | Separate Nepal entity | Same as parent | Not separate | | Revenue allowed | Yes | Yes | No | | Tax base | Nepal profits | Nepal-source profits | Not applicable | | FDI approval | Yes | Case-by-case | Usually no capital; confirm | | NRB inflow | Share capital | Operating funds / capitalization | Expense remittances | | OCR filing | New company | Foreign company branch | Foreign company liaison | | VAT | If registered | If registered | Usually not | | Best for | Long-term ops, teams | Projects, tenders | Market presence only | **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. #### Don't forget to share this post! 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