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.
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.
• 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.
Foreign companies must operate within Nepal’s investment and corporate laws. Understanding this framework is essential before committing capital.
• 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.
Foreign companies can enter Nepal using different structures depending on risk appetite, timeline, and long-term plans.
• Liaison office
• Branch office
• Private Limited Company with FDI
• Employer of Record as a market-entry bridge
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
• Extension of the foreign parent
• Restricted scope of activities
• Suitable for project-based work
• Non-commercial presence
• No revenue-generating activity
• Used for market research and coordination
| Structure | Revenue Allowed | Ownership | Best For |
|---|---|---|---|
| Liaison Office | No | 100% foreign | Market research |
| Branch Office | Limited | Parent company | Projects |
| FDI Company | Yes | Up to 100% | Long-term operations |
| EOR Model | Yes | No entity | Fast entry |
Foreign investment requires approval from the Department of Industry.
• 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.
Once FDI approval is granted, the company is registered with the Office of Company Registrar.
Name reservation
Memorandum and Articles of Association filing
Company registration certificate issuance
PAN and VAT registration
This step legally establishes your Nepal entity.
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.
Depending on your industry, additional approvals may be required.
• IT and software companies may require registration with sector bodies
• Manufacturing requires environmental clearance
• Financial services face additional regulatory oversight
Nepal has a structured labor regime that protects both employers and employees.
• Written employment contracts
• Social Security Fund registration
• Payroll tax withholding
• Leave and working hour compliance
The Labour Act governs all employment matters.
Understanding tax exposure is critical when you start a business in Nepal.
• Corporate income tax generally at 25 percent
• VAT at 13 percent for applicable services
• Withholding taxes on dividends and services
• Tax holidays for priority industries
• Reduced rates for export-oriented businesses
• Incentives in Special Economic Zones
Nepal allows full repatriation of profits and capital, subject to compliance.
• Dividends
• Royalties and technical fees
• Loan repayments
• Capital gains on exit
Approval from Nepal Rastra Bank is required, supported by audited financials.
• 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.
Many foreign companies start with an Employer of Record model before committing to FDI.
• 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.
• 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
Yes. Most sectors allow up to 100 percent foreign ownership under FDI laws.
The standard minimum FDI threshold is NPR 20 million, subject to sector rules.
With proper documentation, registration usually takes one to two weeks after FDI approval.
Yes. Nepal permits full repatriation of profits and capital with central bank approval.
Yes. Nepal has a strong English-speaking talent pool and competitive operating costs.
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.
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.