Forming a Tech, Construction or Consultancy Company in Nepal

If you are a foreign company looking at forming a tech, construction or consultancy company in Nepal, you may be unsure which legal path is right. The term “forming a tech, construction or consultancy company in Nepal” covers many business types, each with specific registration, compliance and investment requirements.
In this guide, you will learn the full process, how to choose the correct structure, register with the OCR, comply with FDI rules under FITTA 2019, set up tax registrations (PAN and VAT), meet labor and audit obligations, and avoid common compliance pitfalls.

Industry-Specific Company Formation Matters

Whether you are in software development, civil infrastructure or business consulting, each industry has distinct regulatory requirements in Nepal.
For example:

• Tech firms often benefit from export incentives under the Income Tax Act 2002 and streamlined registration. 

• Construction companies must consider licences, local engineering rules and often deal with multiple municipal or provincial approvals.

• Consultancy firms must ensure service-scope clarity, VAT registration (under the VAT Act 1996) and correct branding.
  Choosing the right registration pathway avoids unnecessary delays, fines and rework.

Legal Framework for Company Formation in Nepal

Understanding the legal basis helps you operate with confidence.
Key laws you must satisfy include:

• Companies Act 2006 & Rules 2064 – sets out incorporation, directors, shares, audits.

• Foreign Investment and Technology Transfer Act 2019 (FITTA 2019) – governs foreign ownership, capital inflow.

• NRB Directives – manage foreign investment, repatriation of profits.

• Industrial Enterprises Act 2020 – offers incentives, licensing for manufacturing or big infrastructure.

• Labour Act 2017, Social Security Act 2018 – cover employee rights, SSF contributions.

• Tax laws: Income Tax Act 2002, VAT Act 1996, Tax Administration Act.
  By aligning your business model with these frameworks, you avoid regulatory surprises and build a solid foundation for growth.

Choosing the Right Company Structure for Your Sector

1. Structure Options

• Private Limited Company — most common for tech & consultancy firms.

• Public Limited Company — suited for large construction or infrastructure projects.

• Branch or Liaison Office — when your foreign firm wants representative status only.

2. Key Considerations

• Foreign ownership rules under FITTA 2019 (sector-dependent).

• Capital inflow must be in convertible currency and verified by NRB.

• Industry licensing: construction may need permits from local councils and possibly registration under the Industrial Enterprises Act 2020.

3. Comparative Overview

Step-by-Step Process for Your Sector

1. Reserve your company name via the OCR portal (Office of the Company Registrar).

2. Draft MOA & AOA tailored to your sector (tech, construction, consultancy) and get notarised documents.

3. If foreign investment, apply for DOI or IBN approval under FITTA 2019 before registration.

4. Transfer foreign capital in convertible currency to Nepal, obtain NRB capital-inflow certificate.

5. Submit incorporation documents to OCR and pay registration fees.

6. Register for PAN and VAT with the Inland Revenue Department (IRD).

7. Register employees under SSF, ensure compliance under Labour Act 2017 and Social Security Act 2018.

8. For construction: obtain necessary project licences, local engineering licences, municipal approvals.

9. Open bank account, set up accounting system under Nepal Financial Reporting Standards (NFRS).

10. Start operations, hold AGM, file annual audit reports and maintain all records.

Key Sector-Specific Highlights

• Tech companies should clearly list software development, SaaS or IT consulting in the MOA. BizSewa

• Construction firms may require engineering firm registration, local partner or licence from the relevant provincial body.

• Consultancy firms need to define service scope, professional indemnity insurance and VAT registration from start.

• Foreign investors must track repatriation rights and share transfer rules under NRB directives.

• Ensure your team is aware of Nepal tax rate (corporate income tax approx 25%), VAT threshold, and SSF contribution obligations.

OCR Registration and Sector-Specific Requirements

The Office of the Company Registrar (OCR) oversees incorporation. 
Key requirements include:

• Name reservation and approval.

• Submission of MOA and AOA.

• Lease or evidence of registered office within Nepal.
  For sectors like construction, you may need additional licenses or engineering council registration (e.g., the Nepal Engineering Council for construction firms).

Foreign Direct Investment (FDI) Process for Your Sector

If you bring in foreign capital, you must follow:

• Submit FDI application under FITTA 2019 (to DOI or IBN depending on amount).

• After approval remit funds in convertible currency and obtain NRB Certificate.

• Keep records of foreign capital inflows for audit and repatriation.
  Tech companies often benefit from lower risk; construction firms may face sector-specific FDI caps or conditions.
  By completing this properly, you preserve your right of repatriation and full foreign ownership rights.

Tax, PAN, VAT, and Accounting Compliance

• Register your company for PAN under the Income Tax Act 2002 and for VAT under the VAT Act 1996 if turnover crosses threshold.

• Corporate tax rate is about 25% plus possible sector incentives. 

• Maintain accounting under Nepal Financial Reporting Standards (NFRS).

• Appoint auditor approved by the Institute of Chartered Accountants of Nepal (ICAN) and file annual audit report.

Labor, Social Security and Foreign Staff Requirements

If you hire staff:

• Register employees for the Social Security Fund (SSF) and contribute employer/employee share (under Social Security Act 2018).

• Comply with employment contracts, working hours, leave, termination rules under the Labour Act 2017.

• If you appoint foreign directors or foreign staff, comply with Immigration Rules and labour permit requirements.
  Failing to comply here can result in penalties, audits or visa issues that affect your business operations.

Construction-Sector Specific Compliance and Risks

For construction firms there are extra requirements:

• Ensure your company has the necessary engineering licences or certifications if mandated by local provincial authorities.

• Obtain environmental clearances or local municipal permissions if required (e.g., under the Environmental Act).

• Secure land use and construction permits to avoid project delays.

• Understand local labour rules for construction sites and SSF requirements for manual workers.
  These steps are often overlooked and cause major project disruption.

Technology & Consultancy Industry Advantages and Considerations

In the tech or consultancy sector:

• You can often benefit from export-oriented tax incentives (via the Industrial Enterprises Act 2020).

• Your MOA objectives should reflect SaaS, digital services, IT outsourcing to maximise eligibility for incentives.

• Consultancy services must clearly define mode of delivery (local, global) and manage VAT registration and cross-border tax rules.

• Data protection, IP registration and cybersecurity compliance may be key for tech firms; consider the Intellectual Property Act 1965 where applicable. Tech and consultancy companies therefore often face fewer infrastructure hurdles but must focus on service-regulation, VAT and export compliance.

Timeline & Cost Considerations for These Sectors

Budget appropriately for licences, legal fees and sector-specific compliance.
🟢 DCV Tip: Include contingency of 10-15% for delays in construction or complex tech licensing.

Why Foreign Investors Choose This Path

• 100% foreign ownership possible in most sectors under FITTA 2019.

• Nepal offers strategic access to South Asia, lower labour costs and growing demand.

• Formal registration gives credibility to banks, clients and partners.

• Proper structure supports foreign capital repatriation and share transfer flexibility.

• Export-oriented tech or consultancy firms may access tax incentives via Industrial Enterprises Act 2020.
  This makes forming a tech, construction or consultancy company in Nepal a compelling proposition when done correctly.

Common Pitfalls for Each Sector

• Tech firms: using wrong MOA wording, missing IP registration, firewalling data.

• Consultancy: inadequate VAT registration, service delivery outside permitted scope.

• Construction: missing local permits, ignoring land/engineering approvals, non-compliance with labor/SSF rules.
  By being sector aware you avoid cost, delay and regulatory risk.

Frequently Asked Questions

1. How long does it take to set up a tech, construction or consultancy company in Nepal?
Typically 7-15 business days for consultancy or tech firms, and 20-30 days for construction due to extra approvals.

2. Can a foreign company own 100 % of a consultancy or tech firm in Nepal?
Yes, foreign ownership up to 100 % is allowed in most sectors under FITTA 2019, provided you complete DOI/NRB approvals.

3. Do construction companies need different registration than tech firms?
Yes. Construction firms often require local engineering or municipal licensing, extra land or project permits, and possibly industrial registration under the Industrial Enterprises Act 2020.

4. What are the corporate tax rates for tech or consultancy companies in Nepal?
Corporate tax is around 25% under the Income Tax Act 2002, though export-oriented firms may access incentives. 

5. Is VAT registration required for consultancy services?
Yes. If your turnover exceeds the threshold under the VAT Act 1996 you must register and issue tax invoices. Failure disrupts operations and client relations.

Forming a tech, construction or consultancy company in Nepal is an excellent strategic move. But achieving success requires more than filing forms, you must align with the correct structure, meet foreign investment rules, complete tax and labour registrations, and maintain ongoing compliance.

Digital Consulting Ventures (DCV) offers you full end-to-end support: we guide you through the OCR process, FDI approvals, NRB verification, PAN/VAT registration, SSF compliance, audit readiness and sector-specific licensing. With our expertise in Nepalese business law, taxation and regulatory compliance, you are equipped to launch and operate your company with confidence.

Book a consultation today to begin your company formation in Nepal with expert guidance and zero surprises.