How to Register a Foreign Company in Nepal Legally

Foreign company registration in Nepal is no longer a niche move. It is a strategic expansion decision. Nepal offers competitive labor costs, strong English proficiency, and full foreign ownership in many sectors. With the right legal structure, foreign companies can operate compliantly and repatriate profits.

This guide explains how to register a foreign company in Nepal legally. It covers entity options, FDI approvals, timelines, costs, and compliance. The content is written for founders, CFOs, and international executives planning market entry.

Why Foreign Companies Are Registering in Nepal

Nepal has emerged as a serious destination for international expansion. Key drivers include:

• Cost-efficient skilled workforce

• Liberalized foreign direct investment (FDI) regime

• Access to South Asian markets

• Government focus on IT, services, and manufacturing

Foreign companies commonly enter Nepal for outsourcing, shared services, technology development, and regional support functions.

Legal Framework Governing Foreign Company Registration in Nepal

Foreign investment and company registration are governed by a clear legal framework.

Key legislation includes:

• Foreign Investment and Technology Transfer Act

• Companies Act

• Industrial Enterprises Act

• Income Tax Act

• Nepal Rastra Bank regulations

Together, these laws define who can invest, how entities are registered, and how capital is repatriated.

Entry Options for Foreign Companies in Nepal

Foreign companies can choose different entry models based on control, revenue intent, and risk profile.

1. Private Limited Company With FDI

This is the most common structure for foreign companies.

Key features:

• Up to 100% foreign ownership

• Can generate revenue locally

• Can hire staff directly

• Eligible for profit repatriation

Best for long-term operations and scaling.

2. Branch Office

A branch is an extension of the foreign parent.

Key features:

• No separate legal personality

• Can conduct commercial activities

• Parent company bears liability

Best for companies executing specific projects.

3. Liaison Office

A liaison office is strictly non-commercial.

Key features:

• No revenue-generating activities

• Limited to marketing and coordination

• Funded entirely by parent company

Best for market research and relationship building.

4. Employer of Record (EOR)

An EOR allows hiring staff without entity registration.

Key features:

• No FDI approval required

• Fastest market entry

• Not suitable for revenue operations

Best for testing Nepal before committing to registration.

Comparison of Foreign Company Registration Options

Step-by-Step: Foreign Company Registration in Nepal

Step 1: Confirm Sector Eligibility

Nepal maintains a negative list. Some sectors restrict or prohibit foreign investment.

Always confirm eligibility under FITTA before proceeding.

Step 2: Prepare FDI Application

FDI approval is submitted to the Department of Industry.

Required documents include:

• Parent company incorporation certificate

• Board resolution approving Nepal investment

• Project report and financial projections

• Passport copies of foreign shareholders

Step 3: Obtain FDI Approval

Once approved, DOI issues an FDI Approval Letter. This is the legal basis for company registration.

Step 4: Register the Company

Company registration is completed with the Office of the Company Registrar.

This step legally creates the Nepal entity.

Step 5: Capital Inward Remittance

Approved capital must be remitted through a Nepali bank and certified by Nepal Rastra Bank.

Step 6: Tax and Statutory Registrations

After incorporation:

• PAN and VAT registration

• Social Security Fund enrollment

• Local ward registration

Minimum Capital Requirements

Minimum FDI thresholds depend on sector and investment type.

General guidance:

• NPR 20 million minimum for most service and trading companies

• Higher thresholds may apply for manufacturing

Capital can be injected in tranches, subject to approval terms.

Timelines and Practical Expectations

Typical timelines for foreign company registration in Nepal:

• FDI approval: 2–4 weeks

• Company registration: 1–2 weeks

• Bank and tax setup: 1–2 weeks

Delays often occur due to incomplete documentation or unclear project scope.

Taxation for Foreign-Owned Companies in Nepal

Key tax considerations include:

• Corporate income tax at standard rates

• Withholding tax on dividends

• Transfer pricing compliance for related-party transactions

Nepal allows repatriation of dividends, capital, and royalties, subject to tax clearance and NRB approval.

Ongoing Compliance Obligations

Foreign companies must maintain strict compliance.

Core obligations include:

• Annual financial statements

• Tax filings and audits

• SSF and payroll compliance

• Industry-specific reporting

Non-compliance can delay repatriation and future approvals.

Common Mistakes Foreign Companies Make

Avoid these frequent errors:

• Choosing the wrong entity type

• Underestimating compliance costs

• Poorly drafted project reports

• Informal payroll arrangements

Professional guidance significantly reduces risk.

Why Professional Support Matters

Nepal’s regulatory system is documentation-driven. Authorities expect precision.

Working with a local specialist ensures:

• Faster approvals

• Reduced compliance risk

• Bank-ready documentation

• Smooth profit repatriation

Frequently Asked Questions (People Also Ask)

Is 100% foreign ownership allowed in Nepal?

Yes. Most sectors allow 100% foreign ownership, except restricted industries listed under FITTA.

How long does foreign company registration in Nepal take?

Typically 4–8 weeks, depending on sector and document readiness.

Can foreign companies repatriate profits from Nepal?

Yes. Profits, dividends, and capital can be repatriated after tax clearance and NRB approval.

Is a local director required?

No. Foreign nationals can be directors. A local authorized representative is usually required.

Can a foreign company hire employees directly?

Yes, once the company is registered and enrolled with SSF and tax authorities.

Conclusion

Foreign company registration in Nepal is a structured and legally secure process when done correctly. With the right entry model, compliant documentation, and ongoing support, Nepal offers strong long-term value for foreign investors.

Whether you are setting up an FDI company, branch office, or starting with an EOR, informed decisions make all the difference.

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