Nepal, strategically located between India and China, has been progressively opening its economy to foreign investors. With recent policy reforms and a more streamlined registration process, 2025 presents an opportune time for foreign companies to establish a presence in Nepal. This guide provides a detailed overview of the procedures, legal frameworks, and compliance requirements for foreign company registration in Nepal.
Foreign investment in Nepal is primarily governed by:
Foreign Investment and Technology Transfer Act (FITTA), 2019: Outlines the provisions for foreign investment and technology transfer.
Companies Act, 2006: Details the procedures for company registration and operation.
Industrial Enterprises Act, 2020: Defines industrial classifications and related provisions.
Foreign Exchange Regulation Act, 1962: Regulates foreign exchange transactions.
These laws collectively facilitate and regulate the establishment and operation of foreign businesses in Nepal.
Foreign investors can choose from the following business structures:
Private Limited Company: Suitable for small to medium-sized enterprises.
Public Limited Company: Ideal for large-scale operations with the potential to raise capital from the public.
Branch Office: An extension of the parent company, allowed to conduct business activities in Nepal.
Liaison Office: Acts as a communication channel; not permitted to engage in commercial activities.
The choice depends on the nature of the business, investment size, and long-term objectives.
Foreign investors must secure approval from the relevant authority:
Department of Industry (DoI): For investments below NPR 6 billion.
Investment Board Nepal (IBN): For investments above NPR 6 billion.
Submit the following documents:
Application form.
Project proposal and feasibility study.
Company incorporation documents.
Audited financial statements (last 3 years).
Board resolution authorizing investment.
Power of Attorney.
Note: As of October 2023, Nepal introduced an automatic route for foreign investments up to NPR 500 million (~USD 3.8 million), streamlining the approval process.
Apply to the Office of the Company Registrar (OCR) to reserve a unique company name. Ensure the name aligns with the company's objectives and complies with naming conventions.
Submit the following to the OCR:
Memorandum and Articles of Association.
Passport copies of directors and shareholders.
Upon verification, the OCR will issue a Certificate of Incorporation.
Register with the Inland Revenue Department (IRD) to obtain:
Permanent Account Number (PAN): Mandatory for all businesses.
Value Added Tax (VAT) Registration: Required if annual turnover exceeds NPR 2 million or for specific sectors.
For manufacturing or industrial businesses, register with the Department of Industry to obtain an Industry Registration Certificate.
Coordinate with Nepal Rastra Bank (NRB) for:
Remittance of investment capital.
Repatriation of profits.
Compliance with foreign exchange regulations.
Timeline: The entire registration process typically takes 4 to 6 weeks, depending on the completeness of documentation and efficiency of the authorities.
Costs: Government fees vary based on the company's authorized capital and other factors. Additional costs may include legal fees, notarization, and translation services.
Post-registration, companies must adhere to the following:
Annual Financial Statements: Prepare and submit audited financial statements.
Tax Filings: File periodic tax returns and pay applicable taxes.
Renewals: Renew business licenses and registrations as required.
Labor Compliance: Adhere to labor laws, including minimum wage and employee benefits.
Q1: Can a foreigner own 100% of a company in Nepal?
Yes, foreign investors can own 100% of a company in most sectors, subject to sector-specific restrictions and compliance with FITTA.
Q2: What is the minimum investment required for foreign investors?
The minimum investment threshold is NPR 20 million (~USD 150,000). However, this requirement is waived for Information Technology-based industries.
Q3: Are there any sectors restricted for foreign investment?
Yes, certain sectors like retail trading (excluding international franchises), personal services, and small-scale agriculture are restricted.
Q4: How long does the registration process take?
Typically, it takes 4 to 6 weeks, depending on documentation and regulatory approvals.
Q5: Can profits be repatriated?
Yes, after fulfilling tax obligations and obtaining necessary approvals from Nepal Rastra Bank.
Registering a foreign company in Nepal in 2025 is a structured process facilitated by recent policy reforms and digitalization efforts. By understanding the legal requirements, preparing the necessary documentation, and adhering to compliance obligations, foreign investors can successfully establish and operate their businesses in Nepal's growing market.