Foreign Company Registration in Nepal: Step-by-Step Guide (2026)

If you are planning to start a business in Nepal, 2026 presents one of the most attractive entry points yet for foreign companies. Nepal has modernised its foreign direct investment framework, simplified approvals, and opened priority sectors to international investors. From IT and BPO to hydropower, tourism, and manufacturing, Nepal offers cost efficiency, a skilled workforce, and strategic access to South Asia.

This guide is written specifically for foreign founders, CFOs, and expansion leaders who want a clear, compliant, and commercially sound pathway to entering Nepal. We walk through legal structures, FDI approvals, timelines, costs, tax considerations, and post-registration compliance—step by step.

Why Foreign Companies Are Choosing Nepal in 2026

Nepal is no longer just an outsourcing destination. It is now a structured investment jurisdiction with investor protections enshrined in law.

Key advantages when you start a business in Nepal

• Competitive labour and operating costs

• English-speaking professional workforce

• Government-approved FDI repatriation rights

• Strategic access to India and China

• Growing IT, fintech, renewable energy, and services sectors

Under the Foreign Investment and Technology Transfer Act, foreign investors enjoy non-discriminatory treatment and legally protected profit repatriation.

Understanding Legal Entry Options for Foreign Companies

Before you start a business in Nepal, you must choose the correct legal presence. Each option has different compliance, tax, and control implications.

1. Foreign-Owned Private Limited Company (FDI Company)

This is the most common and scalable structure.

Best for:

• Long-term operations

• Hiring local staff

• Generating local revenue

Features:

• 100% foreign ownership allowed in most sectors

• Separate Nepali legal entity

• Subject to corporate tax and local compliance

2. Branch Office

Suitable for:

• Executing parent-company contracts

• Limited commercial activity

Limitations:

• Cannot freely expand into unrelated activities

• Requires annual approval renewals

3. Liaison (Representative) Office

Suitable for:

• Market research

• Non-revenue activities

Limitations:

• No income-generating operations allowed

Step-by-Step Process to Start a Business in Nepal (Foreign Investors)

Step 1: Sector Eligibility & Investment Threshold

Not all sectors are open to foreign investment. Most service, IT, consulting, and manufacturing sectors are permitted.

Minimum investment:

• NPR 20 million (approx.) per foreign investor

• Can be injected in phases

Step 2: FDI Approval from the Department of Industry

Foreign investors must apply to the Department of Industry.

Required documents:

• Parent company incorporation documents

• Board resolution approving Nepal investment

• Business plan and financial projections

• Passport copies of shareholders

Approval timeline:

• 15–30 working days in most cases

Step 3: Company Registration with OCR

Once FDI approval is issued, the company is registered under the Companies Act.

Outputs:

• Certificate of Incorporation

• PAN (tax ID)

• Company registration number

Step 4: Capital Injection & Bank Compliance

• Open a foreign currency account

• Inject approved share capital

• Obtain inward remittance certificate

Banks operate under directives from Nepal Rastra Bank.

Step 5: Tax, Labour & Local Registrations

• VAT registration (if applicable)

• Social Security Fund registration

• Local ward office registration

Comparative Insight: FDI Company vs Branch vs Liaison Office

Taxation Framework for Foreign-Owned Companies

When you start a business in Nepal, understanding taxes early avoids compliance risks.

Key taxes

• Corporate income tax: 25% (standard)

• VAT: 13% (sector-dependent)

• Withholding tax on services and dividends

Nepal has no capital gains tax on share value increases for many FDI exits, subject to structure.

Profit Repatriation & Exit Rights

One of the strongest incentives to start a business in Nepal is lawful repatriation.

Foreign investors may repatriate:

• Dividends

• Royalty and technical fees

• Loan repayments

• Sale proceeds

Repatriation is guaranteed under FITTA and regulated through Nepal Rastra Bank channels.

Employment, Payroll & HR Compliance

Foreign companies must comply with the Labour Act.

Employer obligations:

• Written employment contracts

• Minimum wages compliance

• Social Security Fund contributions

• Leave and public holiday entitlements

Many foreign firms use an Employer of Record initially, then convert to FDI once scale is proven.

Common Mistakes Foreign Companies Make

Avoid these frequent pitfalls:

• Choosing liaison office when revenue is planned

• Underestimating capital thresholds

• Ignoring SSF and labour compliance

• Structuring FDI without exit planning

• Delaying tax registrations

A structured entry roadmap reduces cost and regulatory exposure.

Timeline to Start a Business in Nepal

Typical end-to-end timeline:

1. Pre-assessment and structuring: 5–7 days

2. FDI approval: 2–4 weeks

3. Company registration and tax IDs: 1–2 weeks

4. Bank capitalisation and compliance: 1–2 weeks

Total: ~30–45 days

Frequently Asked Questions (People Also Ask)

Can foreigners fully own a company in Nepal?

Yes. Most sectors allow up to 100% foreign ownership under FITTA, subject to approval.

What is the minimum investment to start a business in Nepal?

The standard minimum is NPR 20 million per foreign investor, though sector-specific rules apply.

How long does foreign company registration take?

Typically 30–45 days from document submission to operational readiness.

Can profits be repatriated from Nepal?

Yes. Dividends, royalties, and exit proceeds can be repatriated through regulated banking channels.

Is Nepal suitable for IT and outsourcing companies?

Very much so. Nepal has a strong talent pool and favourable FDI treatment for IT and services.

Conclusion: Is Nepal Right for Your Expansion?

If you are looking to start a business in Nepal, the country offers a rare mix of low operating cost, legal investor protections, and long-term growth potential. With the right structure and compliance partner, foreign companies can enter Nepal confidently and scale sustainably.

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