How to Start a Business in Nepal: Step-by-Step Guide (2026)

If you are planning to start a business in Nepal, 2026 is one of the most strategic times to enter the market. Nepal is opening rapidly to foreign investment, supported by regulatory reforms, competitive labor costs, and growing demand for global services. From IT and outsourcing to manufacturing and renewable energy, foreign companies are finding Nepal both accessible and scalable.

This step-by-step guide is written specifically for foreign companies. It explains how to start a business in Nepal legally, efficiently, and compliantly, while avoiding common mistakes that delay approvals or increase risk.

Why Foreign Companies Are Choosing Nepal in 2026

Nepal sits between two of the world’s largest economies and offers cost efficiency without sacrificing talent quality. English is widely used in business, and the government actively encourages foreign direct investment.

Key advantages

• Strategic access to South Asia
• Competitive labor and operating costs
• Strong talent pool in IT, finance, engineering, and operations
• Liberalized foreign ownership rules
• Full profit and capital repatriation under law

According to Nepal Rastra Bank data, approved FDI projects have steadily increased year-on-year, particularly in services and technology.

Legal Framework for Starting a Business in Nepal

Foreign companies must operate within Nepal’s investment and corporate laws. Understanding this framework is essential before committing capital.

Core legislation governing foreign businesses

• Foreign Investment and Technology Transfer Act
• Companies Act
• Department of Industry
• Office of Company Registrar
• Nepal Rastra Bank

These laws define who can invest, how companies are registered, and how profits can be repatriated.

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

Step 1: Choose the Right Entry Model

Foreign companies can enter Nepal using different structures depending on risk appetite, timeline, and long-term plans.

Common entry options

• Liaison office
• Branch office
• Private Limited Company with FDI
• Employer of Record as a market-entry bridge

Step 2: Decide the Business Structure

Private Limited Company with FDI

This is the most common structure for foreign companies planning long-term operations.

• Up to 100 percent foreign ownership in most sectors
• Separate legal entity in Nepal
• Eligible for profit repatriation

Branch Office

• Extension of the foreign parent
• Restricted scope of activities
• Suitable for project-based work

Liaison Office

• Non-commercial presence
• No revenue-generating activity
• Used for market research and coordination

Comparison of Business Structures

Step 3: Obtain FDI Approval

Foreign investment requires approval from the Department of Industry.

Documents typically required

• Parent company incorporation documents
• Board resolution approving Nepal investment
• Shareholder details
• Business plan and financial projections
• Technology transfer details if applicable

Approval timelines typically range from 15 to 30 working days when documentation is complete.

Step 4: Register the Company in Nepal

Once FDI approval is granted, the company is registered with the Office of Company Registrar.

Key registration steps

1. Name reservation

2. Memorandum and Articles of Association filing

3. Company registration certificate issuance

4. PAN and VAT registration

This step legally establishes your Nepal entity.

Step 5: Capital Injection and Bank Account Setup

Foreign investors must bring capital through formal banking channels.

• Open a capital account with a licensed Nepali bank
• Inward remittance through SWIFT
• Capital confirmation by Nepal Rastra Bank

This step is mandatory before business operations begin.

Step 6: Obtain Sector-Specific Licenses

Depending on your industry, additional approvals may be required.

Examples

• IT and software companies may require registration with sector bodies
• Manufacturing requires environmental clearance
• Financial services face additional regulatory oversight

Step 7: Hire Employees and Comply With Labor Law

Nepal has a structured labor regime that protects both employers and employees.

Mandatory employment compliance

• Written employment contracts
• Social Security Fund registration
• Payroll tax withholding
• Leave and working hour compliance

The Labour Act governs all employment matters.

Taxation for Foreign Companies in Nepal

Understanding tax exposure is critical when you start a business in Nepal.

Corporate taxes

• Corporate income tax generally at 25 percent
• VAT at 13 percent for applicable services
• Withholding taxes on dividends and services

Incentives

• Tax holidays for priority industries
• Reduced rates for export-oriented businesses
• Incentives in Special Economic Zones

Profit Repatriation and Exit Rules

Nepal allows full repatriation of profits and capital, subject to compliance.

Repatriation permitted for

• Dividends
• Royalties and technical fees
• Loan repayments
• Capital gains on exit

Approval from Nepal Rastra Bank is required, supported by audited financials.

Common Mistakes Foreign Companies Should Avoid

• Choosing the wrong entry structure
• Underestimating compliance timelines
• Poor documentation for FDI approval
• Informal capital remittance
• Non-compliant employment contracts

Avoiding these mistakes can save months of delay.

When Employer of Record Makes Sense

Many foreign companies start with an Employer of Record model before committing to FDI.

EOR is ideal when

• You want to test the market
• You need quick hiring
• You want compliance without entity setup

EOR can later transition into a full FDI company.

Timeline Overview

• Market entry planning: 1 to 2 weeks
• FDI approval: 2 to 4 weeks
• Company registration: 1 week
• Bank and capital setup: 1 to 2 weeks

Total estimated timeline: 4 to 8 weeks

Frequently Asked Questions

Can foreigners fully own a company in Nepal?

Yes. Most sectors allow up to 100 percent foreign ownership under FDI laws.

What is the minimum investment to start a business in Nepal?

The standard minimum FDI threshold is NPR 20 million, subject to sector rules.

How long does company registration take in Nepal?

With proper documentation, registration usually takes one to two weeks after FDI approval.

Can profits be repatriated outside Nepal?

Yes. Nepal permits full repatriation of profits and capital with central bank approval.

Is Nepal suitable for outsourcing and IT businesses?

Yes. Nepal has a strong English-speaking talent pool and competitive operating costs.

Conclusion

To start a business in Nepal, foreign companies must balance opportunity with compliance. Nepal offers strong growth potential, cost advantages, and full foreign ownership in many sectors. With the right structure and expert guidance, market entry can be smooth and scalable.

Call to Action

If you are planning to start a business in Nepal, book a confidential consultation with our market-entry specialists. We help foreign companies with FDI, company registration, payroll, and ongoing compliance so you can focus on growth.