How to Start a Business in Nepal from Abroad (For NRNs and Expats)

If you want to start a business in Nepal from abroad, you are not alone. Nepal is emerging as a strategic destination for NRNs, expats, and foreign companies seeking cost efficiency, skilled talent, and access to South Asia.

This guide explains exactly how to start a business in Nepal while living overseas. It covers legal structures, foreign investment rules, timelines, costs, and compliance. Everything is written for decision-makers who need clarity, not theory.

By the end, you will know the safest and fastest way to enter Nepal legally.

Why Foreigners and NRNs Are Starting Businesses in Nepal

Nepal offers a rare combination of affordability and opportunity.

Key advantages for overseas founders

• Competitive labour and operating costs

• English-speaking professional workforce

• Government-approved foreign investment framework

• Growing IT, outsourcing, fintech, and services sectors

• Strategic access to India and China

For NRNs, Nepal also offers emotional and strategic advantages. You can invest, build, and contribute while earning globally.

Can Foreigners and NRNs Legally Start a Business in Nepal?

Yes. Foreigners and NRNs can start a business in Nepal under clearly defined laws.

Who is eligible?

• Non-Resident Nepalis with foreign passports

• Foreign nationals and foreign companies

• Joint ventures between Nepali and foreign partners

However, foreigners cannot operate informal sole proprietorships. A formal legal structure is mandatory.

Legal Business Structures Available to Foreigners

Choosing the right structure determines your taxes, risk, and scalability.

1. Private Limited Company (FDI Company)

This is the most common structure.

Best for: Long-term operations, hiring staff, revenue generation.

Key points:

• Requires foreign direct investment approval

• 100% foreign ownership allowed in most sectors

• Separate legal entity

2. Branch Office

Best for: Executing parent-company projects.

Key points:

• Cannot conduct unrelated commercial activity

• Operates under parent company liability

3. Liaison Office

Best for: Market research and coordination.

Key points:

• No revenue generation allowed

• Limited scope

Comparison: Best Entry Model for Foreign Companies

Step-by-Step Process to Start a Business in Nepal from Abroad

This is the standard and compliant process.

Step 1: Confirm Sector Eligibility

Nepal restricts foreign investment in certain sectors such as retail trading and small local services. Most IT, consulting, manufacturing, and outsourcing sectors are open.

Step 2: Foreign Investment Approval

Foreign investment approval is required under the Foreign Investment and Technology Transfer framework.

You must submit:

• Company profile

• Shareholding structure

• Proposed investment amount

• Business plan

Step 3: Company Registration

Once approved:

• Reserve company name

• Register with the Company Registrar

• Issue share certificates

Step 4: Tax and Regulatory Registration

You must obtain:

• Permanent Account Number

• VAT registration if applicable

• Local ward registration

Step 5: Capital Inward Remittance

Foreign capital must be remitted through formal banking channels into Nepal.

Step 6: Employment and Payroll Compliance

Hiring staff requires:

• Employment contracts

• Social security registration

• Monthly tax filings

Minimum Investment Requirements for Foreigners

Nepal sets a minimum foreign investment threshold.

Current benchmark

• Minimum foreign investment: NPR 20 million

• Applies to most FDI companies

• Must be brought in via bank transfer

NRNs may access some flexibility depending on structure and sector.

Taxation Overview for Foreign-Owned Businesses

Understanding tax early prevents costly mistakes.

Corporate taxes

• Corporate income tax: 25% standard

• Withholding taxes on services and dividends

• VAT at 13% for applicable services

Employee taxes

• Monthly TDS withholding

• Mandatory social security contributions

Nepal’s tax regime is stable but compliance-driven.

Hiring Employees While You Are Abroad

Many foreign founders worry about remote oversight.

You can legally hire:

• Local Nepali staff

• Remote global employees

• Outsourced teams

Options include:

• Direct employment

• Employer of Record services

• Project-based contracts

Banking and Repatriation of Profits

Foreign companies can legally repatriate profits.

What can be repatriated?

• Dividends

• Loan repayments

• Management fees

Repatriation requires:

• Tax clearance

• Central bank compliance

• Proper documentation

Common Mistakes Foreigners Make When Starting in Nepal

Avoid these issues early.

1. Using informal nominee arrangements

2. Skipping foreign investment approval

3. Underestimating payroll compliance

4. Poor sector eligibility checks

5. Improper capital remittance

These mistakes often delay operations by months.

How Long Does It Take to Start a Business in Nepal?

Typical timelines:

• Foreign investment approval: 2–4 weeks

• Company registration: 1 week

• Tax and banking setup: 1–2 weeks

Total: 4–6 weeks with proper planning.

Cost Breakdown for Starting a Business in Nepal

Typical setup costs include:

• Government registration fees

• Legal and compliance advisory

• Capital remittance costs

• Accounting setup

Costs vary by structure and sector.

Compliance Obligations After Incorporation

Once you start a business in Nepal, compliance is ongoing.

Ongoing obligations

• Monthly tax filings

• Annual audit

• Social security payments

• Regulatory renewals

Professional support is strongly recommended.

Why Nepal Is Attractive for NRNs in 2026 and Beyond

Nepal is modernising its investment framework.

Key trends:

• Digital company registration

• Improved foreign investor protection

• Growing startup ecosystem

• Increased demand for outsourced services

NRNs are uniquely positioned to bridge global markets and local execution.

Frequently Asked Questions

Can NRNs start a business in Nepal without visiting?

Yes. With a local power of attorney, the entire process can be completed remotely.

Can foreigners own 100% of a Nepali company?

Yes. Many sectors allow full foreign ownership with approved investment.

Is Nepal safe for foreign investment?

Nepal has a structured legal framework and central bank oversight for foreign investment.

Can profits be sent back overseas?

Yes. Profits can be legally repatriated after tax compliance.

What is the easiest business to start in Nepal?

IT services, consulting, and outsourcing are the fastest and most compliant sectors.

Conclusion

To start a business in Nepal from abroad, you need more than ambition. You need legal clarity, compliant structures, and local execution.

Nepal rewards well-planned foreign founders with access to talent, cost efficiency, and long-term growth. With the right setup, Nepal can become a powerful extension of your global business.

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