How to Incorporate a Company in Nepal as a Foreigner (2025 Edition)

Starting a business in Nepal as a foreigner in 2025 is more streamlined than ever, thanks to recent reforms. Company incorporation in Nepal for foreign investors involves navigating Nepal’s foreign investment laws, obtaining approvals, and completing registrations with various government agencies. This comprehensive guide walks you through each step – from securing Foreign Direct Investment (FDI) approval under the Foreign Investment and Technology Transfer Act (FITTA) to registering your company with the Office of the Company Registrar (OCR), and handling post-registration tasks like tax and central bank registration. We’ll also highlight key 2025 updates (such as automatic FDI approval routes and digital filings) and provide tips to ensure a smooth process. Let’s dive in with a conversational yet authoritative breakdown of how to start a business in Nepal as a foreigner in 2025.

Understanding Nepal’s Foreign Investment Framework (FITTA 2019 & 2025 Updates)

Foreign investment in Nepal is governed by the Foreign Investment and Technology Transfer Act 2019 (FITTA), which sets the rules for FDI approval. Under FITTA, foreign investors must obtain government approval before incorporating a company in Nepal. As of 2025, Nepal requires a minimum investment of NPR 20 million (approximately USD $150,000) for foreign-owned projects. (This threshold was reduced from NPR 50 million in 2022 to encourage small and medium-sized foreign ventures. However, recent policy changes have introduced flexibility for certain sectors – notably, information technology (IT) startups are exempt from the NPR 20 million minimum if they use the new automatic approval route.

Before proceeding, ensure your proposed business is in a sector open to foreign investment. Nepal maintains a “Negative List” of industries where FDI is prohibited or restricted. For example, foreigners cannot invest in small-scale agriculture, animal husbandry, or fisheries intended for local markets, or in personal services like barber shops and local taxi services. Other banned sectors include real estate trading (excluding construction), retail trade, local courier and catering services, weapons manufacturing, and businesses like travel agencies or trekking guides aimed at local tourism. Professional services (legal, engineering, accounting, etc.) are also restricted for foreign investment beyond certain ownership limits. It’s crucial to verify that your business activity is not on this Negative List. If it is, company registration in Nepal will not be permitted for foreign investors in that sector.

If your business is permitted, FITTA requires you to go through an approval process (detailed in the next section) and comply with certain conditions. Notably, once approval is granted, you must bring the committed investment into Nepal within one year. Extensions are possible in some cases, but investors typically need to remit at least a portion of the capital (e.g. 25% of the approved amount) within that first year to demonstrate commitment. This framework ensures that approved foreign projects proceed in a timely manner.

2025 Reforms at a Glance

In recent years, Nepal has introduced investor-friendly reforms to improve its FDI climate:

• Automatic FDI Approval Route: Introduced in late 2023, foreign investors in seven key sectors can get automatic online approval for investments up to NPR 500 million (≈ USD $3.7 million). These sectors include energy production, agriculture and forestry, infrastructure, tourism, information technology, services, and manufacturing. Under this “automatic route”, you apply through an online one-stop portal and receive instant or expedited pre-approval without the need for lengthy case-by-case review. This is a game-changer for modest-sized projects – previously, all FDI proposals were reviewed individually, which could take weeks. Now, if your plan falls in these sectors and below the NPR 500M ceiling, you can benefit from a fast-track, simplified approval process. (We’ll cover how to use this route in the FDI approval step.)

• No Minimum Capital for IT Startups: To attract tech investment, Nepal removed the minimum capital requirement for information technology-based industries when using the automatic route. In practical terms, this means a foreign tech startup can invest less than NPR 20 million and still get approved, as long as they apply via the online system and meet other criteria. This waiver is unique to the ICT sector and is part of 2025’s pro-startup incentives.

• Reduction of FDI Threshold: As mentioned, the general minimum FDI threshold is now NPR 20 million. This was reduced from NPR 50 million in a 2022 policy announcement to make Nepal more accessible to small and medium foreign investors.

• Digital One-Stop Services: Nepal is digitizing many steps of the incorporation process. The Office of the Company Registrar now offers online name reservation and company registration filings, and the Department of Industry’s One Stop Service Center supports online FDI applications and coordination among agencies. These digital platforms mean you can initiate several processes remotely – a big plus if you’re abroad. (For example, you can reserve your company name via the OCR e-Services portal instead of visiting the office in person.)

• Fee Waivers and Incentives: To encourage new businesses, the government at times provides financial incentives. In fact, for fiscal year 2023/24, government fees for company registration and for increasing capital were completely waived for new investments. Such incentives may be extended or reintroduced, so it’s worth checking the current fiscal year’s policies. Additionally, businesses classified as “industries” under Nepal’s Industrial Enterprises Act may enjoy tax holidays or customs duty exemptions (e.g. manufacturing or export-oriented industries often get a 5-year tax holiday and other concessions). While these incentives are not directly part of the incorporation step, they are useful to know as you plan your investment.

With this background in mind, let’s look at the key government bodies you’ll be dealing with during the company incorporation process.

Key Regulatory Bodies Involved in Nepal Company Registration and FDI

Multiple government agencies play a role in approving and registering a foreign-owned business in Nepal. Here are the main bodies and their functions:

• Department of Industry (DOI) – The DOI, under the Ministry of Industry, Commerce and Supplies, is the primary agency that approves foreign investment proposals under FITTA for most sectors. If your planned investment is below a certain size (generally under NPR 6 billion) and in a permitted sector, you will apply to the DOI for FDI approval. The DOI also hosts the One Stop Service Center which facilitates various post-approval registrations (industry registration, tax, etc.) in one place. For smaller investments and those using the automatic route, DOI is your go-to regulator.

• Investment Board Nepal (IBN) – The IBN is a high-level government entity that handles large-scale investments and special projects. If your project’s size is NPR 6 billion or above (around USD $45+ million), or it falls under certain nationally significant sectors (like big infrastructure or hydro-power projects), your FDI approval is processed by IBN instead of DOI. IBN was established to expedite large FDI projects and provide one-window facilitation for big investors.

• Office of the Company Registrar (OCR) – The OCR is the authority responsible for company name approval and incorporation under the Companies Act, 2006. Once you have an FDI approval (or concurrent to it), you will reserve your company name and register the company with the OCR. The OCR issues the Certificate of Incorporation, making your entity a legal Nepali company. It also maintains records of shareholders, directors, and company statutory filings. Notably, OCR now offers an online registration portal that allows electronic submission of documents and tracking of application status.

• Nepal Rastra Bank (NRB) – NRB is Nepal’s central bank. It oversees all foreign currency transactions and foreign investment inflows. After your company is incorporated, NRB must register the foreign investment and give clearance for you to bring money into Nepal. Down the line, NRB’s approval is required for repatriating profits, dividends, or capital gains out of Nepal. Essentially, NRB ensures that foreign exchange regulations are followed and that your investment (and any future repatriation) is properly documented.

• Inland Revenue Department (IRD) – The IRD is the tax authority. Every company in Nepal must register with the IRD to obtain a Permanent Account Number (PAN), which is the tax identification number for paying income tax, VAT, and other taxes. Foreign companies also register for VAT (Value Added Tax) if they will be involved in taxable sales of goods or services. The IRD monitors ongoing tax compliance like annual tax returns and VAT filings.

• Local Ward Office / Municipal Authorities – This often-overlooked entity is important post-incorporation. Businesses in Nepal are typically required to register at the local Ward Office (the lowest administrative division of the city or municipality) where the company’s address is located. The Ward Office issues a local business registration and may levy an annual fee (usually between NPR 5,000 to NPR 15,000, depending on the municipality). The Ward’s recommendation letter is also needed if you plan to obtain an Industry Registration Certificate from DOI (especially for manufacturing or industrial enterprises). Essentially, the local government keeps track of businesses in its area for local taxation and record-keeping.

These bodies will appear throughout the incorporation journey. Below, we proceed step-by-step through the process, referencing which agency is involved at each stage.

Step 1: Obtain Foreign Investment Approval under FITTA

The first major step to incorporating a company in Nepal as a foreigner is securing approval for your investment. This is mandated by FITTA and ensures your plan aligns with Nepal’s FDI policies. Here’s how to navigate the FDI approval process:

• Prepare Your Proposal and Documents: You will need to submit an application to the relevant government body (DOI for most projects, or IBN for very large projects). Prepare a detailed proposal or project report describing your business plan in Nepal – including the scope of business, projected investment amount, financial projections, and employment generation if applicable. In addition, gather the required supporting documents. Typically, for a foreign company investor, this includes: your Certificate of Incorporation from your home country, your Memorandum and Articles of Association, and a Board Resolution authorizing the Nepal investment (all notarized). If the investor is an individual, you’ll need a notarized copy of your passport and a personal bio-data or CV. In both cases, you should obtain a Financial Credibility Certificate (FCC) from your bank – a letter from your bank in your home country stating that you (or your company) have a sound financial standing or sufficient funds for the investment. Other common requirements are: audited financial statements of the investor (to show solvency), and an investment schedule/timeline indicating when and how the pledged capital will be injected. If there will be multiple foreign investors or a joint venture between a foreign and Nepali company, a Joint Venture Agreement should be drafted. Also, designate an authorized representative in Nepal for the application (could be a lawyer or a hire) and provide their Power of Attorney so they can liaise with authorities on your behalf.

• Submit the FDI Application: With documents in hand, submit your application to the Department of Industry (DOI), or to Investment Board Nepal (IBN) if applicable. As of 2025, DOI applications for foreign investment can be done through a One Stop Service Center (OSSC), which includes an online system. If your project qualifies for the Automatic Route, make sure to opt for that in your application. Under the automatic route, investors can apply online from abroad and receive immediate pre-approval if the investment is up to NPR 500 million and in one of the prescribed sectors. Essentially, you’ll fill out an online form and upload scanned copies of your documents via the OSSC portal. The system will automatically issue an initial approval letter (sometimes within a day or two) if everything is in order. This fast-track process bypasses the need for a long review committee meeting for eligible cases. (Even with automatic approval, you may need to submit physical copies or follow up with original documents later, but the key is you get a go-ahead almost instantly to proceed.)

  If your investment does not qualify for automatic approval – for instance, if it exceeds NPR 500 million, or if it’s in a sector outside the seven automatic-route sectors – then your application will go through the regular approval channel. The DOI will circulate your proposal to relevant ministries for comment (if needed) and then issue an approval decision. This traditional process can take a few weeks to a couple of months. On average, expect around 1–2 months for FDI approval via the regular route, though this timeline can be faster or slower depending on the project’s complexity and government workload. The good news is that for most typical business types foreign investors pursue, the sectors are likely covered by the automatic route (manufacturing, IT, services, tourism, etc.), so you can significantly cut down waiting time by leveraging the new system.

• Approval Decision and Conditions: Upon approval, you will receive a Foreign Investment Approval Letter from DOI or IBN. This letter is a crucial document – you will need it for company registration and later for bank and NRB procedures. The approval letter may specify the allowed investment amount, the business activities, and any sector-specific conditions. For example, if you’re investing in a regulated sector (say education or telecommunication), the letter might instruct you to obtain an additional license from the line ministry. In most cases, the approval is straightforward and simply references FITTA’s terms. One standard condition is the one-year deadline to bring in the investment funds. Typically, at least a certain percentage of the total approved amount must be remitted in that timeframe (e.g. an initial 15–25% as per regulations). The approval might also mention employment commitments (for large projects) or environmental clearance requirements (if applicable).

• Security Deposit: At the time of receiving the approval, the DOI requires a refundable security deposit of NPR 20,000 (about USD $150). This is essentially a guarantee to ensure you proceed with the investment. Once you bring in the committed capital, this deposit can be refunded. It’s a small cost but don’t overlook it – you’ll pay this to DOI when they issue the approval letter (or right before obtaining the letter).

• Using Investment Board (for large projects): If your project went to Investment Board Nepal due to size or nature, the process is similar in spirit but handled at a higher level. IBN may negotiate a Project Investment Agreement for very large projects. But for the purposes of incorporation, once IBN approves your investment, you’ll get an approval letter just like from DOI. You can then move forward to incorporate the company.

Pro Tip: While not strictly required at the FDI approval stage, it’s wise to have a local consulting firm or legal advisor review your application documents. They can ensure your projected financials and proposed activities align with what Nepali authorities expect. Engaging a local partner (even as a consultant, not necessarily an equity partner) early on can smooth out cultural and bureaucratic hurdles – they know the unwritten rules and can follow up on your application in person if needed.

With your foreign investment approved, you are now ready for the next step: registering the actual company.

Step 2: Name Reservation and Company Registration with the OCR

Armed with your FDI approval letter, the next step is to legally incorporate the company in Nepal through the Office of the Company Registrar. This involves choosing a company name, preparing incorporation documents (like Memorandum and Articles of Association), and filing an application for registration. Here’s how to proceed:

• Reserve a Unique Company Name: First, decide on a suitable name for your new company. Nepal’s regulations require that the name be unique among registered companies and not misleading or offensive. It also must include a suffix indicating the business structure (e.g., "Private Limited" for a private company, which is the most common type for foreign investors). You can check name availability on the OCR’s website. As of 2025, name reservation can be done online via the OCR e-Services portal – you’ll need to create an account, propose a name (usually providing two or three alternatives in order of preference), and submit the request. The portal will ask for the name in both English and Nepali (Devanagari script), so have a translated Nepali version of the name ready if your name is in English. Once submitted, the OCR typically reviews name requests within a day or two. Upon approval, you’ll receive a name reservation confirmation (valid for a certain period, often 45 days) during which you must complete the company registration using that name.

• Prepare Incorporation Documents: With the name reserved, prepare the constitutional documents of the company – the Memorandum of Association (MOA) and Articles of Association (AOA). The MOA defines the company’s name, registered office address in Nepal, objectives (business activities), authorized capital, and initial shareholders with their shareholdings. The AOA outlines the governance structure and rules (e.g., how directors are appointed, meeting procedures, etc.). For foreign-owned companies, you’ll draft these in English; however, you may need to provide a Nepali translation or at least ensure a Nepali version is prepared for filing (many firms do a dual-language document). Ensure that the objectives stated in the MOA align with what was approved in your FDI letter – OCR will cross-check that you’re registering a company for the purpose that DOI/IBN approved. Also, set an appropriate authorized capital in the MOA. This should be at least equal to (or greater than) the amount of foreign investment you plan to bring, because OCR charges registration fees based on authorized capital, and you want enough headroom to issue shares for the full investment. For example, if you plan to invest NPR 50 million over time, you might keep authorized capital NPR 50 million or slightly more.

  In addition to MOA/AOA, you’ll fill out the OCR’s application forms (which include details of directors, shareholders, and the registered office). Every promoter (shareholder) needs to sign the MOA/AOA, and a witness must also sign. Commonly, your local lawyer or representative will act as the witness; you’ll attach a copy of that witness’s citizenship ID. If the foreign shareholder is an individual, attach a notarized copy of their passport. If the shareholder is a company, attach the company’s incorporation certificate, and a board resolution from that company authorizing the share subscription in the Nepali entity. Since you likely already prepared these for the DOI application, it’s mostly reusing them. You’ll also attach a copy of your FDI Approval Letter from DOI/IBN.

  Lastly, if you have appointed someone (like a lawyer or consultant) to handle the registration on your behalf, include a Power of Attorney authorizing them. This POA should be signed by the investor (or an authorized representative of the investor company) and notarized. It will allow the agent to submit documents and sign on your behalf during the registration process.

• Submit the Company Registration Application: Submit your complete application to the OCR. This can now be done online – you’ll upload all the documents through the OCR portal and even pay the fees electronically. Alternatively, you (or your agent) can submit hard copies at the OCR office in Kathmandu if required. The application will include the reserved name approval, MOA, AOA, copies of supporting documents, and the forms. At submission, you’ll need to pay the company registration fee. The fee is based on the amount of authorized capital you chose. For a private limited company, the fee ranges from NPR 1,000 (for very small capital) upwards on a sliding scale. For example, authorized capital up to NPR 500,000 incurs a fee of NPR 4,500, while a capital of NPR 10 million would have a fee of NPR 16,000. There is a fee table – to illustrate, if you register with NPR 20 million capital, your fee is NPR 22,000; for NPR 50 million, it’s NPR 28,000, and so on. (Note: As mentioned, in 2023/24 these fees were waived by a government incentive, but unless such a waiver is extended, you should budget for the standard fees.) After fee payment, OCR will formally process your application.

• Receive the Certificate of Incorporation: The OCR will review the documents for compliance. If everything is in order, they will issue the Certificate of Incorporation (also known as the Company Registration Certificate). This certificate confirms that your company is legally registered in Nepal as of a certain date and it provides your company registration number. You can often download a digital certificate from the OCR portal once approved, and later collect the original hard copy if needed. If there are any issues (e.g. a document needs clarification or correction), OCR will notify you (through the portal or by contacting your local agent). Common issues might include needing a clearer objective wording or a minor spelling fix on the forms. These can be resolved by providing additional information or resubmitting corrected documents.

Congratulations – once you have the incorporation certificate, you officially have a Nepali company (most likely a “[YourName] Pvt. Ltd.”). At this point, your company is a locally incorporated entity, albeit with foreign ownership. You can now proceed to the post-incorporation formalities to make the company operational.

Note: The Company Registrar will automatically record the details of shareholders (foreign investor in this case), directors, and the company’s registered address. Keep your company’s MOA/AOA and registration certificate safely, as you’ll need to present them for many subsequent tasks (opening bank accounts, registering with tax office, etc.). Also, remember that any changes in these details (e.g. changing directors or increasing capital) must be filed with OCR as ongoing compliance.

Step 3: Post-Registration Compliance and Additional Registrations

After incorporation, there are several post-registration steps to complete before your company can fully operate and before you bring in your investment funds. These include tax registrations, industry-specific registrations, central bank approval for the capital inflow, and more. Let’s break these down:

Tax Registration: Obtain PAN and VAT from IRD

Every company in Nepal must register with the Inland Revenue Department to obtain a Permanent Account Number (PAN). The PAN will be your business’s tax ID for all tax filings (income tax, withholding taxes, etc.). The process is straightforward:

• Visit the IRD’s office (or a Small Taxpayer Office) for your area or use the online tax registration portal if available. Submit an application for PAN registration along with copies of your company registration certificate, MOA/AOA, and the citizenship or ID of the company’s managing director or authorized signatory. If you have an official company stamp, you might need it to stamp the forms.

• The IRD will issue a PAN Registration Certificate with your unique PAN number. This is often available within a day or two of application. In fact, some one-stop service centers have an IRD desk that can issue PAN on the spot once the company is registered.

Next, determine if your company needs to register for Value Added Tax (VAT). VAT registration is required if your company will engage in the sale of goods or services that exceed the annual turnover threshold (currently NPR 2 million for goods or NPR 2 million for services, or if you deal in certain specified sectors). Many foreign-invested companies choose to register for VAT upfront if they anticipate doing business at scale, especially in trading or manufacturing. To register, you’ll file a VAT application (often alongside PAN application). The IRD will provide a VAT Certificate and assign you a VAT number (usually the same as your PAN, just with a VAT section).

Having PAN (and VAT, if applicable) is crucial. You will need the PAN to open bank accounts, sign contracts, and issue invoices. Also note that Nepal’s tax year runs from mid-July to mid-July, and companies must file annual income tax returns by the following October. VAT filings are monthly or quarterly. So obtaining these registrations is the first step in ongoing compliance.

Industry Registration and Local Authority Registration

Depending on the nature of your business, you may need to register the “industry” and obtain additional local permits:

• Industry Registration with DOI: When your company was incorporated, you created a legal entity. However, certain businesses – particularly manufacturing, tourism, energy, or large projects – are also expected to register the industry at the Department of Industry. This is basically a step to inform the DOI that “the company we approved is now established and ready to operate.” Upon industry registration, DOI will issue you an Industry Registration Certificate. To get this, you typically need to fill out an industry registration form at DOI and provide your company documents (registration certificate, FDI approval letter, PAN, etc.). Crucially, you’ll also need a Recommendation Letter from the local Ward Office for your business address. This letter confirms that you have informed the local authorities of your business and, if required, have local municipal permission to operate at that location. To get the ward recommendation, you visit the ward office of the city/village where your company’s registered office is, fill a simple form, and pay a fee (the annual local registration fee mentioned earlier, e.g. NPR 5,000+). The ward will stamp and provide a recommendation letter addressed to DOI.

  With the ward recommendation, you submit the industry registration request to DOI. DOI will then formally register your industry and give you a certificate with an industry registration number. This step is often done in parallel with or soon after PAN registration. Why is it important? Because being registered as an “industry” can entitle you to certain government incentives (like tax concessions under the Industrial Enterprise Act) and is required for you to import machinery or equipment under any duty concessions, etc. It also completes the loop of the FDI approval process – demonstrating to DOI that the company was established as per the approval. In some cases, DOI might not release your NPR 20k deposit until you complete the industry registration and bring in the capital.

• Local Government Compliance: As noted, register your company with the local Ward Office or Municipality. Even outside of getting the recommendation letter, you are generally required to register your business locally for the purpose of local taxes (like business registration tax, signage tax if any, etc.). The process usually is combined with getting that recommendation – you pay the annual fee and they update their record that your business exists in their jurisdiction. They may issue a local registration certificate or ID. Keep this for your records. Each subsequent fiscal year, you’ll renew this by paying a small fee to the ward/municipality.

• Sector-Specific Licenses: Nepal has certain industries that require separate operating licenses from specific regulators. For example, if your business is a tourism agency or hotel, you might need to get a license from the Department of Tourism or Tourism Board. If you are opening a bank or financial institution (which foreigners rarely do without special approval), you’d need a Nepal Rastra Bank license. A healthcare facility would need Ministry of Health permissions, etc. Most typical FDI businesses (like IT software companies, manufacturing units, trading companies) do not require any extra license beyond industry registration – they can operate nationwide with the company registration alone. But always double-check if your sector is regulated. Common additional registrations include: IT companies might register with the Department of IT for any IT park benefits, export businesses might register with the Trade and Export Promotion Center, and so on. An experienced local attorney can guide you based on your specific sector.

NRB Registration and Inward Capital Remittance

Now to the money part – bringing your foreign capital into Nepal. Even though your company exists on paper, it needs funding to actually conduct business. Nepal Rastra Bank (NRB) monitors all foreign currency coming in as investment. Here’s what to do:

• Register the Foreign Investment with NRB: Using your DOI approval letter and your company incorporation certificate, you (or your Nepali bank) will apply to NRB for registering the intended foreign investment. NRB has a Foreign Investment and Foreign Loan Management Bylaw (2021) that outlines procedures for this. In practice, you will coordinate with a commercial bank in Nepal where you plan to open the company’s account. Provide the bank with your approval letter, incorporation docs, and personal KYC for the account. The bank will often forward these to NRB or guide you through NRB’s requirements. NRB will issue an Investment Registration Certificate or a letter of approval, indicating that you are allowed to bring in up to the approved amount in foreign currency for equity investment.

• Open a Company Bank Account: Open a bank account in the name of your new company (most likely a current account). Since your company directors or signatories may not yet have a local credit history, the bank might ask for copies of all these documents plus the passports of the foreign signatories. You might need an introduction or reference, but usually, the FDI approval suffices as credibility. Inform the bank that this account will receive foreign investment.

• Remit the Capital from Abroad: Now the foreign shareholder (whether an individual or parent company abroad) should wire transfer the capital funds from their bank to the Nepali company’s bank account. It’s important to send it in the currency approved (usually in a convertible currency like USD, EUR, etc.) and clearly mention in the remittance details that it is for equity investment in [Company Name], pursuant to the DOI approval. The receiving bank in Nepal will credit the money to your account and issue a Foreign Inward Remittance Certificate (FIRC) or similar documentation. This is proof that $X amount came in on Y date for investment.

• Update NRB and DOI: After the money arrives, you typically inform NRB (through the bank) that the fund has been received. NRB will then formally record that amount against your company’s foreign investment quota. It’s crucial because your ability to repatriate dividends or sell your shares and take money out later depends on the amount recorded as having come in. Nepal allows repatriation of profits, dividends, and even the principal investment, but only up to the amount officially brought in and recorded after paying applicable taxes. So accuracy here is key.

  You may also need to inform DOI that you have injected the capital. In some cases, the DOI will ask for a copy of the bank remittance advice and then they will release the NPR 20k deposit back to you, and update their records that the investment is “realized.”

• Issuance of Shares: With the capital in the bank, your company should officially allot shares to the foreign investor equal to that investment. For instance, if your company’s authorized capital was NPR 50 million and you just brought NPR 20 million as the initial injection, you would issue shares worth NPR 20 million to the foreign shareholder. This process involves passing a Board resolution in the company, updating the share register, and (in some cases) filing a return to OCR about the issued capital (especially if it’s the first issuance, the incorporation documents might have already listed the initial shares, so just ensure it matches). Consult with your company secretary or lawyer on whether any filing is needed to show paid-up capital.

• Subsequent Injections: If you aren’t sending the full amount at once (say you plan to bring capital in phases for a large project), be mindful of the timeline. FITTA rules say the investment should start coming within one year of approval. For larger projects, authorities might accept staged investments over a few years (as per the “schedule for investment” you likely provided in your application). Always keep NRB in the loop and get each tranche recorded. If you delay too long, you may need to request extension of the approval from DOI.

After completing these steps, your company is now fully operational and capitalized. You have an incorporated entity, you’ve registered with tax authorities, and you have the funds in your Nepali bank to start business activities (buy equipment, hire staff, etc.).

Other Compliance: Labor, Visas, and Ongoing Obligations

• Hiring and Labor Compliance: As you begin operations, remember that employing people in Nepal triggers labor law compliance. You’ll need to register employees with the government’s Social Security Fund (SSF) and contribute to social security on their behalf. Employment contracts must meet Labor Act standards. If you intend to bring in expatriate staff, those individuals will need work permits from the Department of Labor and work visas from Immigration – which are only granted if you can show that the expertise is not available locally. Typically, though, a foreign investor (as a director or shareholder) can obtain a Business Visa fairly easily, which is a multiple-entry visa for doing business (not employment). Nepal often grants a year-long renewable business visa to foreign investors and their key foreign personnel, especially if the investment is above the minimum threshold.

• Annual and Ongoing Filing Requirements: Running a company in Nepal comes with ongoing duties:

  • Annual General Meeting (AGM): You are required to hold an AGM of shareholders every year (within 6 months of fiscal year end). For a single foreign shareholder, this might be a mere formality, but minutes should be prepared.

  • Financial Statements and Audit: Companies must maintain proper books of account. If your authorized capital is above a certain limit (which almost all FDI companies will be, since NPR 20 million is the minimum investment), you are required to appoint a certified auditor. An annual audit of your financial statements is mandatory. The audited statements need to be submitted to the IRD (with your tax return) and often to the OCR as well for record-keeping.

  • Tax Filings: File your annual income tax return by the due date (typically within 3 months of fiscal year end). Pay any taxes due in quarterly installments during the year to avoid interest. If you’re VAT-registered, file VAT returns monthly (or quarterly if eligible) and remit collected VAT. Also deduct and deposit TDS (tax deduction at source) on payments like rent, services, or salaries as per tax laws.

  • Renewals and Updates: Renew your local Ward registration each year (pay the small fee). Renew any sector licenses annually if applicable (e.g. a trading license, if required by municipalities for certain trades). If your company details change (say you increase capital, or change directors, or change address), you must notify the OCR by filing the appropriate forms within the prescribed time (usually 30 days of the change). Keeping OCR records up to date is important to avoid penalties and to ensure you can get letters or approvals when needed (like tax clearance or dividend repatriation approval often require OCR up-to-date docs).

  • NRB Reporting: If you take any foreign loans or if you reinvest profits, those also need NRB approval or reporting under the foreign investment regulations. For purely equity investments, just ensure that if you repatriate dividends, you follow NRB procedure (which includes securing a tax clearance certificate and NRB’s permission for each outward remittance of dividends).

• Maintaining Compliance: Nepal’s corporate compliance environment is improving with digital systems, but it’s still paperwork-heavy. Missing a filing or a renewal can result in fines or complicate matters later (for instance, trying to remit profits without a tax clearance because you missed filing returns would be an issue). It’s highly advisable to hire a local accountant or firm to handle routine filings and to keep you updated on compliance deadlines. Many foreign investors retain their consulting firm or company secretary long-term for this purpose.

By diligently following these post-incorporation steps, you’ll ensure your Nepal entity remains in good standing and is positioned to operate smoothly.

Typical Timelines and Costs for Company Incorporation in Nepal

One of the biggest questions foreign investors have is: “How long will this all take, and how much will it cost?” Let’s break down the typical timeline and fees involved in incorporating a company in Nepal as of 2025:

Timeline: Thanks to recent streamlining, the overall incorporation process can be completed in as little as 4 to 8 weeks for many standard investments, though complexities can extend it. Here’s an approximate timeline assuming documents are in order:

• FDI Approval: Under the automatic route, initial approval is virtually immediate – often just a few days or even the same day online. For the regular route, expect around 2–4 weeks for DOI to issue the approval (it could be longer if multiple ministries’ consents are needed, but many reports indicate roughly a month is typical). Very large projects via IBN might take a few months due to negotiations. (Time elapsed: ~1 week to 1 month).

• Name Reservation: 1–3 days (can be done in parallel while waiting for FDI approval, to save time). The OCR name approval is quick if the proposed name is unique.

• Company Registration: Once you have the approval and your documents ready, the OCR’s registration process can be done in about a week. The review of documents might take a few business days; if using the online system, you could get the certificate within 5–7 working days. Occasionally, queries or document revisions can add another week. (Time elapsed: ~1 week).

• Post Registration (PAN, Bank, etc.): Getting a PAN is 1–2 days. Opening a bank account is also quick (1–3 days, depending on the bank’s internal KYC). NRB approval for bringing funds can sometimes be obtained within a week – often the bank and NRB coordinate this in parallel while your company registration is happening. Remitting the money internationally might take a few days of bank processing. (Time elapsed: ~1–2 weeks).

• Industry Registration & Others: Ward registration and recommendation letter might take a few days of local running around. Industry registration at DOI could be parallel and usually is issued within a week of application. (Time elapsed: ~1 week, can overlap with above steps).

In sum, if well-coordinated, 1.5 to 2 months is a reasonable timeframe to have everything done (from the day you submit the FDI application to the day your capital is in Nepal and the company is fully ready). This aligns with guidance from Nepal’s agencies that the entire FDI and incorporation process generally takes about 1–2 months. In more cumbersome cases (or if you’re not on the automatic route), it could stretch to 3–5 months, but that is becoming less common with the new efficiencies.

Costs: Below are the typical costs (in Nepalese Rupees, NPR) you should budget for the incorporation process, excluding any private professional fees:

• FDI Application Fee: The DOI/IBN themselves do not charge a hefty processing fee, but there is the refundable deposit of NPR 20,000 you must put up when the approval is granted. Assume this is part of your initial outlay (it will come back to you later if all goes well).

• Company Registration Fee: This depends on your authorized capital. For a Private Limited Company, the fees as of 2025 are:

  • Up to NPR 100,000 capital: NPR 1,000 fee.

  • NPR 100,001 to 500,000: NPR 4,500 fee.

  • NPR 500,001 to 2,500,000: NPR 9,500 fee.

  • NPR 2,500,001 to 10,000,000: NPR 16,000 fee.

  • NPR 10,000,001 to 20,000,000: NPR 19,000 fee.

  • NPR 20,000,001 to 30,000,000: NPR 22,000 fee.

  • ...and so on, increasing modestly for larger capitals. (For reference, a NPR 100 million capital company pays NPR 43,000.) These are one-time fees at incorporation. If you later increase capital, additional fees apply for the increment.

• Notary and Document Costs: Notarization of foreign documents and their translation (if required) will have varying costs. Notarizing in your home country then legalizing for Nepal (if needed) might incur costs per document. In Nepal, notarizing a translated document is cheap (maybe a few hundred NPR per page). Budget a few hundred dollars for all document prep and notarizations internationally.

• PAN/VAT Registration: There’s usually no fee for PAN or VAT registration – it’s a free government service.

• Local Ward Registration Fee: Ranges from NPR 5,000 to NPR 15,000 typically, annually. For example, in Kathmandu Metropolitan City, a common fee is around NPR 10,000 per year for a typical small company. This might be less in rural municipalities.

• Industry Registration Fee: Generally minimal – DOI usually doesn’t charge a big fee for issuing the Industry Registration Certificate (it may even be free; any fees would be nominal stamp fees).

• Bank Account Minimum Deposit: Some banks require a minimum balance to open a current account (could be a few thousand NPR, which is negligible when you are bringing in a large investment). Also, banks might charge swift transfer fees or commission when the foreign funds arrive (maybe $50-$100 equivalent).

• Professional Service Fees: While not a government cost, realistically foreign investors will engage law firms or consulting companies for assistance. These can vary widely – from a few thousand dollars for end-to-end service for a small project, to tens of thousands for complex projects. Always clarify the scope of services (some quote a package that includes everything from approvals to office setup). Since this is a DIY guide, we assume you are aware that doing it yourself is possible, but having local help speeds things up.

• Miscellaneous: If you plan to lease office space early, note that landlords often ask for 2-3 months rent as deposit. Also, when you rent, you must pay a 10% rental tax each month via your landlord to the government (the landlord usually factors this in). This isn’t an incorporation cost per se, but good to know for budgeting once you start operations.

Exchange Rates: A quick note – NPR is the currency in Nepal. Many fees we mention in NPR might seem small in USD (e.g., NPR 1,000 ≈ $8). The exchange rate hovers around NPR 130 = $1 (as of 2025). When remitting your capital, consider exchange rate fluctuations and bank charges. It’s wise to send a little over the minimum required amount to account for any currency conversion differences, so you don’t fall short of the threshold due to forex fees.

2025 Investment Climate: Incentives and Updates

Nepal’s government is keen on attracting foreign investment, and the investment climate in 2025 reflects several positive changes. Here are some incentives, policy updates, and trends to be aware of:

• Automatic FDI Approval (Online One-Stop System): Perhaps the most notable reform is the implementation of the Automatic Route for FDI up to NPR 500 million. By leveraging an online one-stop service, investors can bypass bureaucratic delays. This not only speeds up approval but also provides greater transparency – you can track your application status online. The introduction of this system in late 2023 has already shown results: early data indicated a near doubling of FDI commitments in the months following, as investors took advantage of the simpler process (according to local news reports). For you, this means less waiting and more clarity.

• Sector-Specific Incentives: The IT sector is a big winner in recent policies. As mentioned, there’s no minimum investment requirement for IT industries under the automatic route. Additionally, the government has been supportive of startups – IT or tech companies may find incubation centers or government-backed programs that provide subsidized office space or seed funding. Outside of IT, the government promotes renewable energy projects (like solar or hydropower) with customs duty exemptions on equipment and guaranteed power purchase agreements, etc. Tourism projects in less-developed areas might get tax breaks. If your business falls in a priority sector (energy, infrastructure, agriculture processing, etc.), research specific incentives – e.g., income tax holidays for 5 to 10 years are granted to industries established in certain remote regions or special economic zones.

• Tax and Fee Concessions: The budget for fiscal year 2024/25 introduced some welcome concessions. The government waived registration and capital increment fees for new companies in FY 2023/24 as a temporary relief, and while that was time-bound, it signals a trend. There are ongoing discussions to reduce or simplify corporate tax rates for export-oriented companies. Nepal’s corporate tax rate is generally 25%, but industries get 20% or lower effective rates with rebates if they meet criteria (like 30% rebate for manufacturing industries outside Kathmandu, etc.). Also, dividend repatriation is allowed after paying a 5% withholding tax on dividends – a relatively reasonable rate.

• Legal Reforms for Ease of Business: In mid-2024, Nepal passed the “Investment Facilitation and Investment Protection” amendment which updated several laws, including FITTA and the Industrial Enterprise Act. Some key changes beneficial to foreign businesses: Contract Manufacturing is now fully allowed (earlier restrictions on manufacturing under contract have been lifted). This is great if you want to outsource production in Nepal. They also recognized technology transfer through “reverse engineering” as a valid form, encouraging tech firms to partner and innovate locally. These changes won’t affect your incorporation directly, but they indicate a more modern and flexible business environment.

• Improved One-Stop Service: The One Stop Service Center (OSSC) at DOI, which houses desks from OCR, IRD, NRB, Immigration, and other departments in one location, has been strengthening its capabilities. It aims to provide foreign investors a single window to handle procedures. Feedback from investors suggests the one-stop center has made procedures like industry registration, PAN issuance, and even work permit recommendations much faster than before. Essentially, the government is trying to cut down the notorious “red tape” that investors used to face.

• Foreign Exchange and Repatriation: NRB has been gradually liberalizing foreign exchange rules. Repatriating profits is generally allowed in convertible currency after taxes – this has been the case since FITTA 2019 and continues. In 2025, what’s notable is that Nepal’s foreign currency reserves have been stable, so the central bank is comfortable facilitating genuine repatriation. They are also allowing more flexibility in things like allowing foreign investors to easily reinvest profits into new ventures in Nepal or take partial exits. If you ever choose to exit and sell your equity, you can repatriate the sales proceeds with NRB approval (ensuring the valuation is fair market-based). Just be aware: dealing in cryptocurrency or bringing crypto investment is illegal – stick to recognized banking channels.

• Environmental and Social Governance (ESG): Nepal is placing emphasis on sustainable investment. While not a direct “incentive,” if your project is environmentally friendly or has social benefits, highlight that in your proposals. There are fast-track approvals for projects that align with sustainable development (for instance, a solar energy company might get quicker sign-offs). Also, Nepal mandates Environmental Impact Assessments (EIA) for certain industries (like large factories or hydropower). It’s good to incorporate these compliance steps early if they apply, to avoid surprises later.

• Post-Pandemic Recovery and Opportunities: After the global pandemic, Nepal’s economy is rebounding. There is pent-up demand in tourism, infrastructure development, and consumer goods. The government has identified foreign investment as key to fueling this growth. As a result, there’s a generally positive sentiment and support for credible foreign investors in 2025. You might find government agencies more welcoming than in years past, and there are frequent investment summits and networking events organized by bodies like the Nepal Investment Board or FNCCI (Federation of Nepalese Chambers of Commerce and Industry). Engaging in these can provide soft benefits – connections, information, and sometimes fast-tracking if your investment promises jobs and exports.

In summary, 2025 is an opportune time to invest in Nepal, with the government actively trying to make incorporation and operation easier for foreign companies. By taking advantage of the new automatic approval system, reduced capital barriers, and various incentives, foreign investors can set up in Nepal with less hassle and more support than before.

Tips for Smooth Incorporation and Compliance

Incorporating a company in a foreign country can be challenging, but a few smart practices can make the process much smoother. Here are some tips and best practices for success in Nepal:

• Engage Local Expertise: Consider hiring a local law firm or business consultancy with experience in foreign company registration. They can guide you through document preparation, represent you at government offices, and ensure compliance with local formalities. A local professional will know the unwritten nuances – for example, how to phrase your company objectives to satisfy the OCR, or which officials to follow up with at DOI. While this guide empowers you with knowledge, having a local partner on the ground often accelerates things significantly.

• Prepare Thorough Documentation: Make sure all your documents are complete, consistent, and notarized where required. Incomplete documentation is a leading cause of delays. Double-check that the names, addresses, and amounts are consistent across your MOA, FDI approval, and other papers. If your documents from home (e.g., your company’s Certificate of Incorporation) are in a foreign language, get an official English translation. Also, keep multiple sets of photocopies of everything – you’ll be submitting copies to OCR, IRD, NRB, etc., and it’s easier when you have them ready.

• Plan Your Shareholding Structure and Capital Wisely: Decide early how you will structure the investment. Nepal allows 100% foreign ownership in most permitted sectors, so you might not need a local partner (unless you want one for business reasons). If you do include Nepali partners, ensure you have solid agreements in place. Regarding capital, don’t just stick to the minimum NPR 20 million if your business plan needs more – you can always bring more, and registering a higher authorized capital from the start may avoid later paperwork to increase it. However, note that if you vastly overstate the capital (say, NPR 1 billion authorized but you only plan to bring NPR 50 million), you might pay higher registration fees unnecessarily. Find a balance.

• Utilize the One-Stop Center and Online Systems: When possible, use the online portals (for name reservation, FDI approval, tax registration). They save time and create a digital paper trail. If you’re in Nepal, do visit the One Stop Service Center at DOI in Kathmandu. Having all agencies under one roof means you can literally move from one desk to another in a day to sort out multiple registrations. Be polite and patient with officers; showing that you are serious (and polite) can sometimes lead them to go the extra mile to help, especially in a culture that values personal rapport.

• Mind the Deadlines and Conditions: Mark key dates on your calendar, especially the 1-year deadline to bring in capital after approval. If you foresee any delays in remitting funds, communicate with DOI and NRB proactively – they may grant extensions if justified (for example, if your country had capital control issues or you faced unavoidable project delays). Also, remember annual compliance dates: financial year-end in Nepal is mid-July, tax returns due by mid-October, VAT monthly filings by 25th of the next month, etc. Using accounting software or hiring an accountant early on can keep you organized.

• Local Office and Staff Considerations: Even if you’re not immediately starting operations, having a local address (even a small rented office or a virtual office service) is important for registration and receiving official correspondences. Ensure someone checks the mail or notices at that address. When hiring local staff or appointing a director, understand local HR norms – for example, Nepal has festivals and public holidays which might slow work at times; being respectful of local culture goes a long way with employees and officials alike.

• Financial Management: All transactions for the company should ideally go through the company’s bank account (especially the capital infusion and any expenses paid from that capital). Maintain clear records from day one. It will make audits and any profit repatriation audits by NRB much smoother. If you incur pre-incorporation expenses (feasibility studies, etc.), account for them properly – you might be able to capitalize them or reimburse post-incorporation, but follow the proper process (e.g., do not just wire money to a personal account in Nepal for expenses – that won’t count as FDI and can’t be repatriated easily).

• Stay Informed and Connected: Laws and regulations can update frequently (as we saw with big changes around 2022–2024). Stay in touch with organizations like FNCCI or consulting firms’ newsletters for any changes in investment policy, tax law, or procedures. Joining a business chamber or investor forum in Nepal can also keep you updated and provide a network of peers who have gone through similar processes.

• Patience and Persistence: Lastly, approach the process with patience. Nepal’s bureaucracy, while improving, can still be slow or require gentle nudges. Don’t be afraid to politely follow up on your applications. Sometimes a visit or a call to an office to “check on the status” shows them you’re actively waiting and can expedite an idle file. Keep copies of all receipts and letters – so if one office says they didn’t get a document, you have proof. Persistence (again, done politely and respectfully) is often key to navigating any bureaucratic system successfully.

By following these tips, you’ll reduce friction in setting up and running your company. Many foreigners have successfully established businesses in Nepal – from boutique hotels to tech companies to manufacturing units – and with the right preparation, you can join their ranks and tap into Nepal’s growing market.

Company Incorporation in Nepal (2025) – Quick Checklist

To conclude, here’s a handy step-by-step checklist summarizing the key steps to incorporate a company in Nepal as a foreign investor:

1. Research and Plan – Verify that your business sector is open to FDI (not on the Negative List). Decide your company structure (typically a Private Limited) and investment amount. Gather necessary documents (investor’s incorporation docs or passport, bank reference letter, project plan, etc.).

2. FDI Approval Application – Submit an application under FITTA to the Department of Industry (DOI) or Investment Board (IBN) as appropriate. If eligible, apply via the automatic route online for investments ≤ NPR 500 million in permitted sectors. Include all required documents (notarized investor papers, financial credibility certificate, investment schedule, power of attorney). Pay the NPR 20,000 deposit and obtain the Foreign Investment Approval Letter.

3. Name Reservation – Apply online on the OCR portal to reserve your company name in both English and Nepali. Ensure the name is unique and conforms to regulations (e.g., ends with “Pvt. Ltd.” for a private company).

4. Prepare Incorporation Documents – Draft the Memorandum and Articles of Association aligning with your approved objectives. Get them signed by all shareholders and a witness. Complete the OCR forms (with details of registered office, directors, shareholders). Gather supporting docs: FDI approval letter, ID/passport copies of promoters, investor company’s charter and board resolution (if applicable), and a power of attorney for your local representative.

5. Company Registration with OCR – Submit your application (online or in-person) to the Office of the Company Registrar. Pay the registration fee based on authorized capital (e.g., NPR 16,000 for ~NPR 10 million capital). Receive the Certificate of Incorporation and company registration number once approved.

6. Post-Incorporation Tax Registration – Register your new company with the Inland Revenue Department to obtain a PAN (Permanent Account Number) for tax purposes. Also register for VAT if your business will meet the threshold or if required for your operations. This gives you your tax identification to legally operate and invoice.

7. Local and Industry Registrations – Register your company at the local Ward Office (municipality) where your office is located; pay the local business registration fee and obtain a recommendation letter. If applicable, complete Industry Registration at DOI by submitting the required forms and the ward’s recommendation, and obtain your Industry Registration Certificate.

8. Open Bank Account & Bring Capital – Open a company bank account in Nepal. Coordinate with the bank and Nepal Rastra Bank (NRB) to register your intended foreign capital. Remit the investment funds from abroad into the company’s account. Obtain a remittance certificate from the bank and ensure NRB records the full amount. Issue shares to the foreign investor corresponding to the funds received.

9. Additional Licenses/Permits – Acquire any sector-specific licenses needed (e.g., tourism license, if in the travel/hospitality sector; export license for trading, etc.). Register with any relevant industry bodies or ministries as required by your business line.

10. Compliance Setup – Put in place an accounting and legal compliance system. Hire an accountant or company secretary. Schedule annual requirements: board meetings, Annual General Meetings, audit of accounts, tax filings, etc. Maintain compliance by renewing your local registration each year and filing any changes with OCR.

11. Operational Readiness – With all the above done, your company can legally operate. Proceed to hire employees (register them for social security), start business activities, and integrate into Nepal’s business ecosystem. Monitor for any new regulations or incentives in future budgets (the government regularly updates policies impacting foreign businesses).

By following this checklist, you’ll cover all the essential steps to set up a foreign-owned company in Nepal. Company incorporation in Nepal as a foreigner may seem complex, but with the right guidance and the 2025 improvements in place, it can be accomplished efficiently.