If you are planning to start a business in Nepal, you are not alone. Nepal is emerging as a strategic hub for cost-efficient talent, South Asia market access, and long-term growth. For foreign companies, however, success depends on choosing the right legal pathway from day one.
This guide explains how foreigners can start a business in Nepal legally, covering FDI rules, entity structures, approvals, timelines, costs, and ongoing compliance. It is written for decision-makers who want clarity, not guesswork.
Foreign investors are increasingly looking at Nepal for regional expansion. Key drivers include:
Competitive operating costs compared to India and Southeast Asia
Large English-speaking graduate workforce
Favorable time zone overlap with Australia, Europe, and Asia
Liberalized Foreign Direct Investment (FDI) regime
Guaranteed profit and capital repatriation under law
For companies in IT, professional services, BPO, fintech, engineering, and consulting, Nepal offers scale without complexity—if structured correctly.
Yes. Foreigners can legally start a business in Nepal under the Foreign Investment and Technology Transfer Act (FITTA) 2019 and related regulations.
However, foreigners cannot operate as sole proprietors or partnerships. Every foreign-owned venture must be structured through an approved legal vehicle and registered under FDI rules.
When you start a business in Nepal, you must select one of the following approved structures.
This is the most common and scalable option.
Key features
100 percent foreign ownership allowed in most sectors
Minimum FDI threshold: NPR 20 million (approx. USD 150,000)
Can hire staff, invoice locally, and generate revenue
Eligible for profit repatriation
Best for: Long-term operations, revenue-generating businesses, tech firms.
A branch office is an extension of the foreign parent company.
Key features
No separate legal personality
Can earn income in Nepal
Requires sectoral approval and parent guarantees
Best for: Companies executing specific projects or contracts.
A liaison office is restricted in scope.
Key features
No revenue-generating activity allowed
Limited to coordination, marketing, and research
Fully funded by the foreign parent
Best for: Market entry, feasibility studies, and relationship building.
Many foreign companies enter Nepal through an EOR model before committing capital.
Why EOR works
No entity or FDI approval required
Immediate hiring of Nepali staff
Payroll, tax, and labor compliance handled locally
Best for: Testing the market before formal FDI incorporation.
| Criteria | FDI Company | Branch Office | Liaison Office | EOR Model |
|---|---|---|---|---|
| Can generate revenue | Yes | Yes | No | No |
| Requires FDI approval | Yes | Yes | Yes | No |
| Minimum capital | NPR 20M | Case-specific | No | No |
| Hiring employees | Yes | Yes | Limited | Yes |
| Setup time | 6–10 weeks | 8–12 weeks | 4–6 weeks | 1–2 weeks |
| Ideal for | Long-term growth | Projects | Market study | Pilot teams |
Below is the typical FDI company incorporation process.
Not all sectors are open to foreign investment. Retail trading, real estate brokerage, and some local services remain restricted.
Applications are filed with the Department of Industry or Investment Board Nepal, depending on investment size.
Register the entity with the Office of the Company Registrar.
Foreign capital must be remitted through approved banking channels.
Permanent Account Number (PAN)
VAT (if applicable)
Social Security Fund (SSF)
Operational bank accounts, payroll systems, and compliance calendars are finalized.
Foreign investors should prepare:
Certificate of Incorporation (parent company)
Board resolution approving Nepal investment
Passport copies of shareholders and directors
Proposed business plan and investment amount
Power of Attorney for local representatives
All documents must be notarized and, where required, apostilled.
Indicative timeline
FDI approval: 3–5 weeks
Company registration: 1–2 weeks
Banking and tax setup: 1–2 weeks
Typical cost components
Government fees
Legal and compliance advisory
Accounting and payroll setup
Total costs vary by structure, sector, and investment size.
Starting a business in Nepal is only the first step. Ongoing compliance is critical.
Foreign companies must manage:
Monthly payroll tax and SSF filings
VAT filings (if registered)
Annual financial audits
Annual returns to the Company Registrar
FDI reporting and renewals
Non-compliance can delay profit repatriation and future approvals.
One of the strongest incentives to start a business in Nepal is guaranteed repatriation.
Foreign investors may repatriate:
Dividends and retained earnings
Sale proceeds of shares
Loan principal and interest
Royalties and service fees
Repatriation is permitted after tax clearance and regulatory approval through Nepal Rastra Bank.
Avoid these frequent pitfalls:
Choosing the wrong entry structure
Underestimating compliance obligations
Delaying capital injection
Using informal payroll arrangements
Not planning repatriation upfront
Expert local guidance can prevent costly restructuring later.
Nepal works best for foreign companies that value:
Long-term cost efficiency
Skilled offshore teams
Regional South Asia access
Regulatory certainty with the right partner
If speed matters, an EOR model can precede formal FDI incorporation.
If you are ready to start a business in Nepal, the right structure and compliance partner make all the difference.
👉 Book a consultation to assess your sector eligibility, choose the optimal legal pathway, and launch with confidence.
Yes. Most sectors allow 100 percent foreign ownership under FDI laws, subject to minimum capital and approvals.
The minimum FDI threshold is NPR 20 million, though certain sectors may have higher requirements.
Typically 6–10 weeks, including FDI approval, registration, and compliance setup.
Yes. FDI companies, branches, and EOR models can legally employ Nepali staff.
Yes. Nepal guarantees profit and capital repatriation after tax clearance and regulatory approval.
To start a business in Nepal as a foreigner, you need more than enthusiasm. You need the right legal pathway, compliant structure, and long-term plan. With proper setup, Nepal offers stability, talent, and growth opportunities that few emerging markets can match.