Foreign company registration Nepal: FITTA 2019 essentials

If you are exploring company registration in Nepal, this guide is for you. We translate FITTA 2019 into clear steps. You will learn the routes, approvals, documents, timelines, and compliance. We designed it for foreign founders, corporate legal teams, and investors. You will also see an at-a-glance comparison and a full checklist.

Executive snapshot: your decision map

Choose the right setup based on purpose, risk, and speed.

Key idea: Start with your commercial goal. Then match the legal route. Protect capital flows. Plan the repatriation path from day one.

Company registration in Nepal under FITTA 2019

FITTA 2019 is the central law for foreign investment and technology transfer. It defines who counts as a foreign investor, what qualifies as FDI, approvals required, and exit and repatriation rules. It sits alongside the Companies Act 2063 and NRB directives. You will engage with the Office of the Company Registrar (OCR), the Department of Industry (DoI), and sometimes the Investment Board Nepal (IBN).

Who is a foreign investor under FITTA 2019

• Non-resident individuals investing equity.

• Foreign companies or bodies corporate investing equity.

• Reinvestment of earnings from existing FDI.

• Investment through foreign loans as permitted.

• Technology transfer arrangements within permitted modes.

Tip: Your route depends on investment type and sector rules. Align the legal basis before sending funds.

What counts as “investment” under FITTA 2019

• Equity capital in a company incorporated in Nepal.

• Reinvestment of retained earnings and reserves.

• Foreign loan as permitted within NRB frameworks.

• Technology transfer agreements meeting FITTA 2019 modes.

• Lease financing and other forms as notified.

DoI vs IBN: which authority will you face?

• Department of Industry (DoI): Most small to mid-sized FDI and standard sectors.

• Investment Board Nepal (IBN): Strategic or large projects, or sectors notified as IBN-handled.

• OCR: Incorporation and corporate filings for all companies.

• NRB: Capital inflow registration, share register, loan approvals, and repatriation compliance.

Practical rule: Check your project size, sector, and instruments. Then confirm whether DoI or IBN is the primary approver. You will still incorporate at OCR.

Negative list and sector regulators

Some activities are restricted or require additional approvals. Expect sectoral nods in banking, insurance, telecom, energy, education, health, aviation, and similar regulated areas. Always check the current negative list and any equity caps or foreign shareholding conditions.

Technology transfer under FITTA 2019

Permissible TT modes include licensing of patents, know-how, trademarks, and technical services. TT contracts should cover scope, fees, duration, confidentiality, and dispute resolution. Ensure payments can be repatriated within the NRB framework.

The nine-step timeline 

Below is a typical end-to-end journey for a wholly foreign-owned subsidiary. Adjust steps for branch or liaison offices.

1. Name search and reservation (OCR).
   Check conflicts and reserve your company name.

2. Foreign investment approval (DoI or IBN).
   Submit the application, project report, and investor KYC.

3. Incorporation (OCR).
   File MOA/AOA, director details, registered office, and capital structure.

4. PAN and tax registrations.
   Register for PAN. Add VAT only if your activity requires it.

5. Banking setup.
   Open the foreign currency and local accounts at a commercial bank.

6. Capital remittance and NRB share register.
   Bring in equity via banking channels. Complete NRB registration.

7. Share certificate issuance and statutory books.
   Issue and record shares. Update statutory registers and minutes.

8. Post-incorporation licenses.
   Apply for industry-specific permits and local registrations.

9. People, payroll, and immigration.
   Hire staff, enroll in Social Security Fund (SSF), and process work visas.

Typical outcome: You are ready to invoice, hire, and run operations. Your capital and compliance are aligned for future repatriation.

Document checklist 

For corporate investors

• Certificate of incorporation and charter documents.

• Board resolution approving investment.

• Ultimate beneficial owner (UBO) structure chart.

• Audited financials or proof of funds.

• Authorized signatory letter and IDs.

• Principal place of business and contact.

For individual investors

• Passport copy and proof of address.

• Bank statement or proof of funds.

• Investor profile or CV (where requested).

• Photograph(s) in specified format.

For the Nepal entity

• Draft MOA/AOA with objects aligned to the approval.

• Registered office lease or address proof.

• Proposed directors’ IDs and profiles.

• Share capital plan and par value.

• Initial business plan and activity codes.

For technology transfer (if any)

• Draft TT agreement, fee structure, and payment terms.

• IP ownership and licensing scope.

• Technical support and training schedules.

For foreign loans (if any)

• Term sheet with interest, tenor, and repayment.

• Security and subordination terms.

• NRB approvals as applicable.

Costs and timings: what to plan for

• Official fees: Paid at OCR and the approving authority.

• Professional fees: Legal, tax, and advisory support.

• Licenses: Sectoral fees and clearances as required.

• Translations and notarizations: For foreign documents.

• Bank charges: For remittance and account operations.

Time drivers: sector approvals, completeness of KYC, TT or loan complexity, and workload at authorities.

Post-incorporation compliance you should not miss

• Statutory books and minutes. Keep registers up to date.

• Annual filings. File returns with OCR and tax authorities.

• Audit. Maintain audited financial statements.

• Tax compliance. Withholdings, VAT where applicable, and advance taxes.

• Payroll. Contracts, payroll taxes, SSF contributions, and leave records.

• Immigration. Work permits and visas aligned to roles and quotas.

• NRB reporting. Maintain share registers, loan compliance, and repatriation records.

Good practice: Build a compliance calendar by entity, license, and filing frequency. Assign owners and due dates.

Banking, capital, and NRB essentials

• Bring capital through formal banking channels only.

• Register each inflow at NRB to secure repatriation rights.

• Issue shares within the approval window to avoid penalties.

• Align loan terms with NRB rules before disbursement.

• Keep dividend and royalty documentation audit-ready.

Outcome: Clean money-in and money-out trails. Smooth future exits and distributions.

Repatriation, royalties, and exits

• Dividends: Allowed from post-tax profits after due approvals and filings.

• TT fees and royalties: Pay per approved contracts and NRB norms.

• Loan interest and principal: Repatriable per NRB registered loan terms.

• Capital gains: Exit proceeds subject to taxes and clearances.

• Winding up or share transfer: Follow Companies Act and FITTA processes.

Pro tip: Document board approvals and working papers for every outbound payment.

Subsidiary vs Branch vs Liaison: deeper dive

Subsidiary 

• Best for: Full commercial operations and brand control.

• Ownership: Up to 100% foreign ownership in open sectors.

• Governance: Local directors allowed; no blanket local director mandate in law, but operational ease may favor one.

• Tax: Corporate tax on profits. Withholdings and VAT as applicable.

Branch Office

• Best for: Delivering contracts already awarded to the parent.

• Scope: Limited to parent’s permitted activities and approvals.

• Tax: Permanent establishment rules apply. Separate tax profile in Nepal.

• Practical: Requires careful contract and invoicing flows.

Liaison/Representative Office

• Best for: Non-revenue activities like market research.

• Limits: Cannot conduct commercial sales.

• Tax: Limited filings; no income tax on sales since it cannot sell.

• Use case: Early presence before a larger move.

People and immigration planning

• Hiring: Follow Labor Act and Regulations for contracts and benefits.

• SSF: Enroll employees and make contributions on time.

• Expat roles: Secure work permits and visas before deployment.

• Ratios: Some sectors may apply local-to-expat ratios or skill tests.

• Training plans: Use TT or secondment models to upskill local teams.

Governance and risk controls for FDI entities

• Board cadence: Quarterly meetings with proper minutes.

• Delegations: Clear spending and signing authorities.

• Related-party transactions: Benchmark and document pricing.

• Data and IP: Secure contracts and access controls.

• Internal audit: Annual risk checks in finance, tax, and HR.

• Whistleblower line: Encourage early reporting of issues.

Tax outline 

• Corporate income tax: Applied to net profits at the prevailing rate.

• Withholding taxes: On services, rent, contractors, and cross-border fees.

• VAT: Charge VAT if your activity falls within VAT scope.

• Customs and excise: For importers or specific goods.

• Transfer pricing: Apply arm’s length principles for group transactions.

• Incentives: Sector-specific incentives may exist. Check current notices.

The compliance calendar 

• Monthly: VAT returns, withholdings, payroll taxes, SSF.

• Quarterly: Advance taxes, board meetings.

• Annually: Corporate tax return, audit, AGM, OCR filings.

• Event-based: NRB filings for capital inflows, loans, dividends, TT payments.

Common pitfalls 

• Unclear objects: Draft MOA objects too narrow or too broad. Fix with crisp activity codes.

• Late share issuance: Miss the issuance window after remittance. Calendar it.

• TT without NRB alignment: Contracts approved but payment clauses fail NRB tests. Pre-check.

• Branch scope creep: Activities go beyond permitted scope. Train teams.

• Missing UBO clarity: Complex structures without proofs. Prepare a clean UBO chain.

• Lease issues: Registered office proof not in the right name. Align documents early.

Original insight table: approval routes and what they mean

How to choose: Map your capex, sector, and timelines. Then confirm the primary approver before drafting your MOA.

One-page checklist you can copy

• Define purpose and entity type.

• Confirm DoI or IBN route.

• Prepare investor KYC and UBO chart.

• Draft MOA/AOA aligned to approvals.

• Reserve name at OCR.

• Secure registered office proof.

• File foreign investment application.

• Incorporate at OCR.

• Open bank accounts.

• Remit capital and register with NRB.

• Issue shares and update registers.

• Get sector licenses.

• Set up payroll, SSF, and HR policies.

• Build your compliance calendar.

FAQ 

1) Can a foreign company own 100% of a Nepal subsidiary?
Yes, in open sectors. Some activities are restricted or require special approvals. Always check the current negative list and sector rules.

2) How long does incorporation take?
The legal path is straightforward. Timelines vary with approval queues, sectoral permits, and document readiness. Plan for several weeks, then add time for banking and NRB steps.

3) What is the difference between a branch and a subsidiary?
A branch is an extension of the parent and limited to approved activities. A subsidiary is a separate Nepal company with full local rights in permitted sectors.

4) Can I repatriate dividends and royalties?
Yes. Ensure profits, taxes, and filings are complete. Maintain NRB registrations and approval documents for dividends, royalties, and loan payments.

5) Do I need a local director or shareholder?
No blanket rule mandates a local director or shareholder. Some sectors or practical banking needs may favor local representation.