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.
Nepal is no longer just an outsourcing destination. It is now a structured investment jurisdiction with investor protections enshrined in law.
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.
Before you start a business in Nepal, you must choose the correct legal presence. Each option has different compliance, tax, and control implications.
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
Suitable for:
Executing parent-company contracts
Limited commercial activity
Limitations:
Cannot freely expand into unrelated activities
Requires annual approval renewals
Suitable for:
Market research
Non-revenue activities
Limitations:
No income-generating operations allowed
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
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
Once FDI approval is issued, the company is registered under the Companies Act.
Outputs:
Certificate of Incorporation
PAN (tax ID)
Company registration number
Open a foreign currency account
Inject approved share capital
Obtain inward remittance certificate
Banks operate under directives from Nepal Rastra Bank.
VAT registration (if applicable)
Social Security Fund registration
Local ward office registration
| Criteria | FDI Private Ltd | Branch Office | Liaison Office |
|---|---|---|---|
| Revenue generation | Allowed | Limited | Not allowed |
| Hiring local staff | Yes | Yes | Limited |
| Ownership | Up to 100% foreign | Parent company | Parent company |
| Long-term scalability | High | Medium | Low |
| Typical use case | Full operations | Project execution | Market entry |
When you start a business in Nepal, understanding taxes early avoids compliance risks.
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.
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.
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.
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.
Typical end-to-end timeline:
Pre-assessment and structuring: 5–7 days
FDI approval: 2–4 weeks
Company registration and tax IDs: 1–2 weeks
Bank capitalisation and compliance: 1–2 weeks
Total: ~30–45 days
Yes. Most sectors allow up to 100% foreign ownership under FITTA, subject to approval.
The standard minimum is NPR 20 million per foreign investor, though sector-specific rules apply.
Typically 30–45 days from document submission to operational readiness.
Yes. Dividends, royalties, and exit proceeds can be repatriated through regulated banking channels.
Very much so. Nepal has a strong talent pool and favourable FDI treatment for IT and services.
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.