Starting an import/export business in Nepal as a foreign investor involves navigating Nepal’s company registration process, foreign investment regulations, and import licensing requirements. This comprehensive guide covers company incorporation in Nepal for import-focused operations, outlining each step from registering a company to obtaining the necessary import/export licenses. It also highlights the sectors open to foreign investment, key legal requirements (like minimum capital and tax registration), and recent regulatory updates as of 2025. The goal is to help foreign companies plan their Nepal entry strategy with clear, up-to-date information and practical guidance.
Nepal welcomes foreign direct investment (FDI) in many industries, allowing up to 100% foreign ownership in permitted business sectors. Import and trading businesses are generally open to foreign investors as long as they operate in the “wholesale” or trading sector (business-to-business distribution of goods) rather than retail. Notably, retail trade (direct sales to consumers within Nepal) is on the restricted list for FDI, meaning foreign companies cannot run local retail shops. However, foreign-owned companies can import products and sell them wholesale or to distributors in Nepal. Other sectors fully open to foreign investment include manufacturing, tourism, services, energy, infrastructure, and technology, among others. Before proceeding, investors should ensure their planned business is not in a restricted sector (e.g. small cottage industries, primary agriculture, real estate trading, and a few others are barred for foreign investment).
Minimum Capital Requirement: As of 2025, Nepal’s regulations mandate a minimum FDI investment of NPR 20 million (approximately USD 150,000) for any foreign-owned company. This threshold, reduced from NPR 50 million in recent years to encourage investment in small and medium enterprises, means foreign shareholders must bring in at least NPR 20 million as equity capital into the Nepali company. This rule is crucial for import businesses, as it effectively sets the minimum size of the investment. The required capital can fund company setup, initial imports, and operations, but it must be brought into Nepal through formal banking channels (and will need to be verified by Nepal’s central bank).
Local Partner or Director: Nepal’s laws do not require a local Nepalese partner for company ownership – foreign investors may own 100% of the shares. However, in practice it is often advisable (and sometimes required by regulators in specific cases) to appoint at least one Nepali citizen director or contact person in the company. Having a Nepali director helps with local administrative matters and regulatory compliance. At minimum, a local registered office address in Nepal is required for any company. All companies must also have at least one shareholder (which can be the foreign investor themselves) and one director. Corporate directors are not allowed, so the director must be an individual. It’s recommended to engage a local legal or consulting firm during incorporation to navigate language and procedural nuances.
Several government agencies and regulatory bodies in Nepal oversee the company incorporation and import business licensing process. As a foreign investor, you will interact with the following authorities:
Office of the Company Registrar (OCR): The OCR is the primary agency for company incorporation in Nepal. It is responsible for approving company names and issuing the Certificate of Incorporation for new companies. All companies (including those with foreign ownership) must be registered with the OCR under the Companies Act 2006. The OCR now offers an online registration portal for name reservation and document submission, streamlining the process.
Department of Industry (DoI): The Department of Industry (under the Ministry of Industry, Commerce, and Supplies) oversees foreign investment approvals for most projects up to a certain capital limit. Under the Foreign Investment and Technology Transfer Act 2019, any company with foreign shareholders must obtain a Foreign Investment Approval from DoI (unless the investment is very large, in which case the Investment Board handles it). The DoI evaluates whether the proposed business is in a permitted sector and meets the minimum capital requirement. Once satisfied, it issues an approval letter needed to formally register the company and to bring in foreign funds.
Investment Board of Nepal (IBN): For very large foreign investments (generally above NPR 6 billion in capital, roughly USD 45–50 million), the Investment Board Nepal – a high-level government body – will handle project approval instead of the DoI. Most import/export trading businesses will fall below this threshold, so they will work with the DoI. However, the IBN’s involvement is good to note for sizeable infrastructure or industrial projects.
Nepal Rastra Bank (NRB): NRB is Nepal’s central bank. It regulates the inflow of foreign currency and capital. After company incorporation, foreign investors must report and register their investment with NRB. This involves showing proof that the required capital (e.g., the NPR 20 million or more) was remitted through official banking channels into Nepal. NRB registration is important because it entitles the foreign investor to repatriate dividends or investment proceeds later under Nepal’s foreign exchange rules. NRB also issues necessary approvals for opening foreign currency accounts or taking loans from abroad if needed.
Inland Revenue Department (IRD): The IRD handles tax registrations, including issuance of the Permanent Account Number (PAN) for income tax and the Value Added Tax (VAT) registration. Every company in Nepal must obtain a PAN (which serves as the tax ID for corporate income tax). For import/export companies, VAT registration is mandatory because imports are subject to VAT and the company will likely be crossing the threshold of annual transactions that require VAT. The IRD’s local offices will process these registrations and later monitor tax compliance (filings of VAT returns, income tax, etc.).
Department of Customs: Once your company is established and ready to conduct import/export operations, it must register with the Department of Customs. Customs registration involves providing your company details, tax registration, and other documents to create an account in the customs system (sometimes referred to as obtaining a Customs Client Code). The Customs Department monitors all import/export activities, collects import duties and VAT at entry, and enforces import regulations.
Department of Commerce (Trade) – Import/Export Licensing: Under the Ministry of Industry, Commerce and Supplies, the Department of Commerce (sometimes referred to together with Supplies or Trade Department) is responsible for issuing the Import-Export Code (EXIM code) or license. Any business engaging in international trade in Nepal must have this license. The Department of Commerce coordinates with Customs to issue the EXIM code, which uniquely identifies your company as a registered importer/exporter. This process includes requirements like a bank guarantee (described later) and ensures that only properly registered businesses can import goods.
(Note: There is also a One-Stop Service Center in Nepal, housed at the Department of Industry, aimed at facilitating foreign investors. It helps streamline approvals by providing multiple agency services under one roof – including company registration, industrial licensing, tax, and visa guidance. Foreign investors may utilize this center for guidance, though the actual registrations still involve the above departments.)
Setting up an import/export company in Nepal involves multiple steps, from initial company registration to obtaining trade licenses. Below is a step-by-step breakdown of the process as of 2025, tailored for foreign investors establishing an import-focused business:
Reserve a Company Name with the OCR: Begin by choosing a unique company name and reserving it with Nepal’s Office of the Company Registrar. This can be done online through the OCR’s portal or in person. The name should be distinctive and not conflict with any existing company names. Once you submit a name reservation application, the OCR typically approves it within a couple of days if the name is available. After approval, you will receive a name reservation confirmation which is valid for a certain period (commonly 45 days) to proceed with incorporation.
Obtain Foreign Investment Approval: If any of the company’s promoters/shareholders are foreign (individuals or companies), you must secure approval for foreign investment before full incorporation. This involves preparing a proposal or application to the Department of Industry (DoI) outlining the business plan, proposed capital (must meet the NPR 20 million minimum), sources of funding, and company details (including the reserved name). The DoI will review to ensure the business is in an allowed sector and meets legal requirements. As of 2025, Nepal has introduced an automatic approval system for FDI up to NPR 500 million (~USD 38 million) in many sectors: foreign investors can apply online (even from abroad) and receive a fast-track preliminary approval if the sector and investment size qualify. This reform has made approvals quicker for typical mid-sized investments. Once the DoI (or Investment Board, for very large projects) approves your foreign investment, they will issue an FDI approval letter. This document is crucial moving forward – it will be needed for company registration at OCR and to open bank accounts for bringing in funds. (If the investor is Nepali-origin or the investment is structured as a loan, different rules may apply, but generally any foreign equity investment triggers this approval requirement.)
Prepare Documents and Register the Company with OCR: With the name reserved and FDI approval in hand, the next step is to formally register your company with the Office of the Company Registrar. You will need to draft the company’s Memorandum of Association (MOA) and Articles of Association (AOA), which detail the company’s objectives (import/export of specified goods, etc.), share structure, and governance rules. Other required documents include: copies of IDs/passports of all shareholders and directors, proof of the registered office address in Nepal, and the foreign investment approval letter from the DoI. If any shareholder is a foreign company, you must provide certified incorporation documents of that company. All documents in foreign languages should be translated into English or Nepali. Submit the complete incorporation application (either online via OCR portal or by paper submission as required). The OCR will scrutinize the documents to ensure compliance with the Companies Act. Tip: One of the directors typically must sign the application; if all directors are foreign, you may need a local representative to liaise with OCR during this stage. Upon satisfaction, the OCR will issue a Certificate of Incorporation and a company registration number. At this point, your private limited company is legally formed in Nepal, and you can proceed to make it operational.
Register for PAN and VAT (Tax Registrations): After obtaining the incorporation certificate, register your company with the tax authorities. Visit the Inland Revenue Office (IRO) (a local branch of the IRD) to obtain a Permanent Account Number (PAN) for your company. The PAN registration is essentially the tax ID for the company and is required for all financial transactions, opening bank accounts, etc. You will need your company registration certificate and documents like the MOA/AOA and identification of directors to apply. In parallel, apply for VAT registration at the same office (or a designated VAT office). For an import/export business, VAT registration is compulsory regardless of turnover, since you cannot import goods without a VAT account. The current VAT rate in Nepal is 13%, and your company will need to charge (and be charged) VAT on applicable transactions, and file periodic VAT returns. The tax office will issue a PAN certificate and VAT certificate, usually within a few days of application.
Open a Corporate Bank Account and Inject Capital: With your legal entity and tax registrations in place, open a company bank account in Nepal (in Nepalese Rupees, and possibly a foreign currency account if needed) at a commercial bank. This bank account will be used to receive the foreign investment funds. Nepal’s regulations require that the paid-up capital from foreign investors be brought in from abroad in foreign currency and deposited into the company’s bank account. Coordinate with your bank to ensure you follow the proper procedure: typically, the bank will ask for your company documents, FDI approval letter, and identification of account signatories. Once the account is open, the foreign investor will remit the investment amount (at least NPR 20 million) from their home country into this account. The funds should be remitted in convertible currency (e.g. USD, EUR) and will be converted to NPR by the receiving bank. Make sure to get the remittance documentation from the bank (SWIFT receipt, credit advice) as proof.
Nepal Rastra Bank Reporting: After the foreign capital is transferred into the company account, it is essential to report this to Nepal Rastra Bank to formalize the investment. The bank that received the funds will usually assist by issuing a letter (often called a BB acknowledgment form or credit information form) stating the amount received, the investor details, and that it’s for share investment in the company. You will submit this, along with the FDI approval letter and company documents, to NRB. NRB will then issue a certificate or letter of foreign investment registration, which confirms that the investment is recorded. This document is critical for future purposes – it grants the company and investor the legal avenue to repatriate dividends, profits, or sale proceeds later, as per NRB rules. Essentially, it’s evidence that the foreign currency came in properly. Failing to register with NRB can lead to difficulties in profit repatriation down the line, so this step should not be skipped.
Register with the Department of Customs: Now, to actually start importing goods, your company must be recognized by Nepal’s Customs system. You need to register as an importer with the Department of Customs. The customs registration process involves submitting an application along with supporting documents, which typically include: your company registration certificate, PAN/VAT certificates, a recent tax clearance or tax filing proof (if available), the list of authorized signatories who will handle customs documentation, and identification of directors. Importantly, a Bank Guarantee of NPR 300,000 is required at this stage. This is a security deposit (usually arranged through your bank as a guarantee) mandated by Nepali authorities for import businesses. The guarantee is meant to ensure that importers fulfill their tax and duty obligations. You’ll arrange with your commercial bank to issue a guarantee in favor of the Department of Customs for the amount (NPR 300k), and submit the guarantee letter as part of your customs registration. Once Customs processes your application, they will register your firm in their database. You may receive a Customs Client Number or be simply registered under your PAN/VAT. This allows you to declare imports and interact with customs electronically (through Nepal’s online customs portal, if applicable).
Obtain the Import-Export License (EXIM Code): The final step to legally operate an import/export company is to obtain your EXIM Code. This is the import-export license code issued by the Department of Commerce (Trade) but often applied for via the Customs online system or through the ministry’s Trade Office. With your customs registration completed and bank guarantee in place, you can apply for the EXIM code by filling out the required forms (many applicants do this online on the Nepal Trade Information Portal or Customs portal). You will provide details of your company (registration number, address, directors), tax details (PAN/VAT numbers), and banking details, along with attaching copies of your company registration certificate and VAT certificate. Once submitted, the application is reviewed by the Department of Commerce in coordination with Customs. The EXIM code certificate is then issued, usually within a few days to a couple of weeks. This code is a unique identifier that must be quoted on all import/export customs declarations. It essentially licenses your company to engage in international trade. Without an EXIM code, customs will not clear goods in your company’s name. After receiving your code, your import/export business in Nepal is fully set up – you can start contracting suppliers abroad, arranging shipments to Nepal, and getting your goods cleared through customs.
Each of the above steps can involve detailed paperwork and interaction with Nepali officials. In total, the timeline for company incorporation and licensing can range from around 4 to 6 weeks (about one month to one and a half months). Name reservation and company registration might take 1–2 weeks, FDI approval can take a couple of weeks (though faster under the automatic route for smaller investments), and obtaining the EXIM license and customs registration might add another 1–2 weeks. It’s prudent to plan for some flexibility. Engaging a local consultant or law firm can expedite document preparation and follow-ups.
When operating an import/export company in Nepal, understanding the tax obligations and import duty structure is crucial for cost planning and compliance:
Corporate Taxes: Nepal’s corporate income tax rate for standard businesses (including trading companies) is 25% of net profits. After incorporation, your company will be subject to annual tax filings. Certain industries have different rates (for example, manufacturing businesses enjoy a slightly lower rate of 20%, while banks or telecom have higher rates around 30%), but a trading/import company will generally fall under the 25% bracket. Additionally, a Dividend Distribution Tax (currently 5%) is applied at the time of profit repatriation as dividends to foreign shareholders. All companies must maintain proper accounts and will typically need to undergo an independent audit each fiscal year (Nepali fiscal year runs July to July) before filing tax returns.
VAT on Imports and Sales: Value Added Tax (VAT) at the rate of 13% applies to most goods and services in Nepal. For importers, VAT is levied on the cost, insurance, and freight (CIF) value of goods at the point of import, together with any applicable customs duty. The importer (your company) pays this VAT to Customs when clearing the goods. This import VAT is the same VAT you would later charge when selling the goods domestically, meaning it can be claimed as input credit in the VAT return (VAT is ultimately passed on to the end consumer). Your company must file monthly or quarterly VAT returns (depending on turnover) with the tax office, reporting sales, purchases, output VAT, and input VAT paid (including that on imports).
Customs Duties: Nepal imposes customs import duties on most imported goods, with rates varying widely depending on the product category. Common import duty rates range from about 5% up to 30% (of the goods’ value) – for example, basic raw materials or capital equipment might incur lower duties (5–10%), while finished consumer goods can be higher (20–30%). Some specific items such as automobiles, alcohol, or luxury goods may attract even higher duties or additional excise taxes. Nepal uses the international Harmonized System (HS) codes to classify products; each HS code has a specified duty rate in Nepal’s Customs Tariff Schedule. It’s important to identify the correct HS code for your import products and review any applicable tariffs or quantitative restrictions. Certain goods may also require special permits or fall under quotas (for instance, pharmaceutical imports need Department of Drug Administration approval, and firearms are prohibited). Be sure to consult the latest customs tariff book or a customs broker to determine the exact duty rates on your goods.
Other Import Charges: In addition to customs duty and VAT, some imports may incur an Agricultural Reform Fee or Infrastructure Development Fee (usually a small percentage) especially on goods coming via India under certain trade agreements. There are also customs service charges (typically nominal processing fees) on each import declaration. All duties and taxes are paid at the time of customs clearance, usually through the bank or via an e-payment linked to the customs system.
Tax Incentives: While import/trading businesses do not enjoy significant tax holidays (those are more for manufacturing or special industries), Nepal does offer some incentives for businesses in certain sectors or locations (like special economic zones or export-oriented units). However, for a general import company, the main financial planning revolves around efficient tax compliance – e.g., making sure to claim input VAT credits properly and using any bilateral treaty benefits if importing from countries with special trade arrangements (Nepal, for instance, has duty-free or reduced-duty privileges for many products from South Asian Association countries and some preferential trade programs).
In summary, foreign companies should factor in roughly 25% profit tax, 13% VAT (which is largely pass-through), and varying import duties depending on their goods. Working with a customs clearing agent can help accurately calculate duties and ensure compliance with import regulations. It’s also recommended to have a qualified accountant or accounting service to handle routine tax filings once the business is operational, as timely compliance will avoid penalties.
Incorporating and licensing the company is just the beginning. Foreign investors need to be aware of ongoing compliance obligations to operate smoothly in Nepal:
Annual Reporting: Every company in Nepal must file an annual report and tax return. With the OCR, you are required to report annual financial statements and any changes in the company’s registered particulars (directors, shareholders, etc.). This is often accompanied by paying a small annual renewal fee to the OCR. Similarly, you’ll file annual income tax returns with the IRD and clear any taxes due. Make sure to maintain proper bookkeeping from the start, and note that an audit by a certified auditor is generally required annually for companies – the auditor’s report is submitted along with the tax return.
Renewal of Licenses: The Import-Export (EXIM) code issued to your company typically remains valid as long as your company is active and compliant with tax filings. However, you might need to renew certain registrations or licenses periodically. For example, some import-related licenses (if you obtained any sector-specific import permits) could have expiry dates. The customs registration and bank guarantee may need updates if there are changes in company details or after a number of years. Always keep track of communication from the Department of Customs or Commerce regarding any renewal procedures.
Repatriation of Funds: Profits earned by your Nepal company can be repatriated to the foreign parent or shareholders in the form of dividends, but only after taxes and after complying with NRB procedures. To send dividends abroad, the company must produce the NRB registration of the investment, audited financial statements showing the profit, board resolution declaring the dividend, tax clearance, and an application to NRB through your commercial bank. NRB will then approve the conversion of NPR to foreign currency for remittance. This process can take some time, so plan ahead when intending to pull out profits. Similarly, if the foreign investor ever sells shares or liquidates the company, repatriation of the sale proceeds requires NRB approval. Having that initial FDI approval and NRB registration certificate will be essential in these cases.
Foreign Personnel and Visas: If you plan to station foreign staff in Nepal to run the operations, note that work permits and business visas are required. After the company is incorporated and the investment is in, the Department of Industry can recommend a certain number of work permits for foreign specialists or managerial personnel in the company. Typically, one or two senior foreign nationals can get a work permit relatively easily if the company is of a certain size. The individuals will then obtain a business visa or employment visa through the Department of Immigration. Ensure any foreign employees go through these legal channels, as working in Nepal on a tourist visa is not permitted.
Operational Compliance: Import businesses must comply with all operational regulations: ensure proper import documentation (commercial invoice, packing list, bill of lading, certificates of origin, etc. for each shipment), maintain records of imports and sales (for VAT and customs audits), and adhere to product standards (some products might need certification or standard marks). The Department of Customs can conduct audits or inspections to verify you’re not under-invoicing or violating import rules. Likewise, the tax office may audit VAT records. Maintaining transparent records and using reputable freight forwarders and customs brokers can help in staying compliant.
Staying in good standing with these requirements will ensure your business runs without legal hiccups. Non-compliance, such as failing to file taxes or renew registrations, can result in fines, penalties, or even suspension of your import license.
Foreign investors should be aware of a few recent regulatory changes and trends (as of 2025) that impact company incorporation and import businesses in Nepal:
Lowered FDI Capital Threshold: The minimum investment requirement for foreign-owned companies was recently reduced to NPR 20 million (from NPR 50 million previously). This change, implemented in 2022, makes it easier for smaller foreign ventures to enter Nepal. Ensure your planned capital meets this threshold. Bringing in more than the minimum can signal commitment, but also be mindful that all FDI must come through banking channels and will be monitored.
Automatic FDI Approval System: In late 2023, Nepal introduced an online automatic route for approving foreign investments up to NPR 500 million. Under this system, investors can apply via an online platform and receive instant preliminary approval if the investment is within the limit and in a permitted sector (which includes most industries like services, manufacturing, agriculture, energy, tourism, etc.). This has significantly reduced the waiting time and bureaucracy for moderate-sized investments. As a foreign company planning an import business, you should take advantage of this streamlined process – consult the DoI’s online portal or the One-Stop Service Center for guidance on filing your application electronically.
Digitalization of Company Registration: The Office of the Company Registrar has fully adopted an e-registration system. Name reservation and submission of incorporation documents can be done online, and the OCR issues electronic certificates. This means you can initiate some steps remotely (though at least one visit may be needed for verification or signing). The push towards digital government services is ongoing, so check the latest procedures on official websites. For example, by 2025, even the Department of Customs has an online system (ASYCUDA World) for customs declarations, and the government is integrating systems for business registrations and tax to improve ease of doing business.
Changes in Customs and Tax Policies: Nepal’s annual budget often brings tweaks to customs duty rates and tax policies. Keep an eye on the fiscal year budget announcements (typically in May/June each year) for any changes to import tariffs or tax rates that might affect your business. For instance, duty rates on certain goods could be revised or new facilities (like duty exemptions for certain industries) might be introduced. As of 2025, no drastic changes have occurred in standard rates (VAT remains 13%, corporate tax 25%), but ongoing reforms aim to simplify tax filing and offer some incentives for export-oriented businesses. It’s wise to consult a tax advisor each year to stay updated on any new tax compliance requirements.
Industrial Enterprise Act 2020: The relatively new Industrial Enterprise Act classifies industries and offers some facilities like easier approval for industry-classified businesses. While trading companies don’t directly benefit like manufacturing units do, being aware of this law is important. Your import business, if it includes any light processing or packaging, could qualify for some incentives under industrial classification. Moreover, Nepal is exploring special economic zones (SEZs) and bonded warehouse facilities – if your import business plans to re-export goods or operate a bonded warehouse, watch for regulations under this regime.
Tips: Always maintain a proactive approach in dealing with Nepali bureaucracy. Ensure all your paperwork is complete and organized at each step. Patience and local knowledge go a long way – having a Nepali consultant or liaison staff who can promptly follow up with government offices is very helpful. Furthermore, networking with local business chambers (like FNCCI – Federation of Nepalese Chambers of Commerce and Industry) or the Nepal-foreign country business councils can provide insights and support as you establish your operations. Nepal’s processes are improving, but sometimes face-to-face meetings and persistence are needed to get things done.
Incorporating an import/export company in Nepal can be a rewarding venture if done correctly. Nepal’s strategic location between large markets, a growing consumer base, and increasing openness to foreign investment present significant opportunities. By thoroughly understanding the incorporation steps, legal requirements, and compliance obligations detailed above, foreign investors can navigate Nepal’s regulatory environment confidently. Remember to leverage the recent improvements (online systems and automatic approvals) to your advantage, and don’t hesitate to seek local professional assistance for complex processes like legal documentation or tax setup.
Once your company is up and running, focus on building good relationships with your local stakeholders – from government officials and banks to customers and distributors. Compliance should be viewed not just as a legal formality but as good business practice that will enhance your company’s reputation in the long run. With proper planning and adherence to Nepal’s regulations, a foreign-owned import/export business can thrive and contribute positively to Nepal’s trade ecosystem while yielding profits for the investors.
Starting an import business abroad involves a learning curve, but Nepal’s reforms are gradually making it easier. Stay informed, plan diligently, and your company incorporation in Nepal can be the gateway to tapping into a vibrant and growing market for years to come. Good luck with your business venture in Nepal!