Incorporating a Company in Nepal: What Every Entrepreneur Needs to Know

If you plan to incorporate a company in Nepal, you need clear rules, not guesswork. This guide explains entity choices, foreign direct investment approvals, timelines, fees, taxes, visas, and post-registration compliance in plain English. It is written for founders, CFOs, and expansion teams who want a compliant, low-friction setup that scales.

Quick snapshot: your 9-step playbook

1. Choose entry route — subsidiary (Private Limited), branch office, or liaison office.

2. Name check and reservation at the Office of Company Registrar portal.

3. FDI approval — Department of Industry for mid-size projects; Investment Board Nepal for large projects.

4. Notify Nepal Rastra Bank and remit capital through banking channels.

5. Draft and file MoA/AoA and complete OCR incorporation.

6. Tax registration — PAN for all; VAT once thresholds or business model require.

7. Local registrations — ward office, Social Security Fund, labor compliances.

8. Open bank accounts and record capital receipt for repatriation trails.

9. Hire legally — labor permits and working visas for foreign staff where applicable.

Entry routes compared: which structure fits your plan?

Decision tip: If you will sell, hire, or sign customer contracts, choose a Private Limited or Branch. Use a Liaison Office only for non-revenue activities.

The legal ground rules (what regulators expect)

• Companies Act 2063 (2006) and amendments. Sets the framework for private and public companies, foreign company registration, board duties, filings, and penalties.

• Foreign Investment and Technology Transfer Act (FITTA) 2019. Governs FDI approvals, investor rights, timelines, and technology transfer.

• Nepal Rastra Bank Foreign Investment regulations. Cover remittance of investment, recording, and repatriation of dividends and capital gains.

• Investment Board Nepal thresholds. Large projects and certain sectors require IBN approval rather than DOI.

• PAN and VAT under Inland Revenue Department. PAN is mandatory. VAT registration depends on activity and turnover thresholds.

• Labor and Social Security laws. Employer obligations include contracts, Social Security Fund enrollment, and health and safety.

• Immigration rules. Foreign nationals need labor permits and working or non-tourist visas before commencing work.

Compliance changes over time. Confirm current thresholds and forms before filing.

How to Incorporate a Company in Nepal — step-by-step

Step 1: Name check and reservation

Create an OCR account and search for available names. Avoid restricted words and near-matches to existing companies or trademarks. Prepare two backup names. Keep the name consistent across MoA/AoA, bank letters, and seals.

Checklist:

• Proposed English name and Nepali transliteration

• Business activity summary

• Shareholding plan and initial capital

• Local office address and contact person

Step 2: Choose the right entry route

Decide between subsidiary, branch, and liaison based on revenue model, risk, and timeline. For most operating businesses, a Private Limited is the default. A Branch fits contract-based projects tied to the parent company. A Liaison is for non-commercial outreach.

Consider: customer billing, tax exposure, compliance volume, and ability to scale.

Step 3: Obtain FDI approval

FDI approval is required before incorporation if foreign equity is involved. Prepare a complete file to reduce queries.

Typical contents:

• Project note and business plan

• Draft MoA/AoA with objects aligned to activities

• Shareholder KYC and credential letters

• Source-of-funds declaration

• Investment schedule and projected employment

• Board resolution from parent company if applicable

Timing and practice: The law envisions a quick decision for complete applications. Build buffer time for clarifications, sector consultations, or translations.

Step 4: Notify NRB and remit capital

After FDI approval, notify the central bank. Remit capital through banking channels in convertible currency or INR where permitted. Keep bank advices, swift messages, credit notes, and approval letters together. These documents are essential for dividend and capital repatriation later.

Step 5: Draft MoA and AoA that future-proof operations

Write objects that cover today and the next two years. Include clear reserved matters, share transfer rules, pre-emptive rights, drag and tag clauses, and dispute resolution. Align board powers with group governance policies. Use a capitalization table that reflects the minimum FDI thresholds and working capital.

Step 6: Incorporate at the Office of Company Registrar

File promoters’ details, office address, affidavits, and the MoA/AoA. Pay OCR fees linked to authorized capital. Upon approval, receive the Certificate of Incorporation. Obtain company stamps and letterheads. Start maintaining statutory registers from day one.

Step 7: Register for PAN and VAT

PAN is mandatory. VAT depends on your activity and turnover thresholds and on procurement needs. Many B2B companies register early for input credits and to meet vendor requirements. Keep a VAT invoicing and record-keeping system ready before go-live.

Step 8: Local and labor registrations

Register at the ward or municipal office where required. Enroll in the Social Security Fund as an employer. Set up payroll with TDS, leave policies, and health and safety measures. Maintain employee files and attendance registers as per the Labor Act.

Step 9: Hiring and visas for foreign nationals

Secure a labor permit before applying for the working or non-tourist visa. Many sectors need a line-ministry recommendation. Start early. Build realistic timelines into your hiring plan. Do not let foreign staff start work on a tourist visa.

Fees and capital: what to budget

Key principles:

• OCR registration fees scale with authorized capital.

• No universal minimum paid-up capital for private companies unless sector rules apply.

• FDI minimum thresholds apply to foreign investors.

• Professional costs for translation, notarization, and legal drafting are separate.

Illustrative OCR fee structure by authorized capital
(Indicative brackets; confirm current rates before filing)

Budget planner (example categories):

• Government fees: OCR, PAN, VAT, ward registration

• Professional: legal, tax, translations, notary, consulting

• Banking: account opening, foreign exchange charges

• Office setup: lease, fit-out, utilities, internet

• Payroll setup: HRIS, contracts, SSF enrollment

VAT and PAN: practical guidance

• PAN is required to operate and to open bank accounts.

• VAT registration is triggered by activity and turnover thresholds. Many corporate buyers require VAT invoices. If you import, export, or sell to VAT-registered customers, early registration can unlock input tax credits.

• Implement a monthly VAT calendar. Reconcile input and output VAT before filing. Maintain tax invoices, credit notes, and purchase registers.

Governance: build compliance into day one

Board and meetings

• Appoint directors and define powers and duties.

• Schedule board and shareholder meetings with proper minutes.

• Maintain registers of members, directors, charges, and share transfers.

Financial controls

• Keep Nepali books and select an accounting system that handles multi-currency.

• Appoint an auditor where required.

• File annual financial statements and returns on time.

Tax calendar

• VAT monthly, TDS periodic, and corporate income tax annually.

• Maintain evidence for withholding and remittance.

• Track advance tax obligations if applicable.

Employment

• Written contracts, job descriptions, and probation terms.

• Leave, overtime, and benefits aligned to the Labor Act.

• Social Security Fund deductions and employer contributions.

Foreign exchange

• Keep a complete investment file.

• Record capital receipts properly for repatriation.

• Ensure dividend declarations comply with NRB rules.

Branch and liaison offices: special notes

Branch Office

• An extension of the foreign company.

• Can invoice and execute contracts in Nepal.

• Activities must match the parent company’s objects.

• May require sectoral permissions beyond OCR registration.

• Nepal-source income is taxable.

Liaison Office

• Non-commercial presence.

• Cannot sell, invoice, or sign sales contracts.

• Suitable for research, sourcing, and relationship management.

• Expenses funded by inward remittances from the parent company.

• Maintain simple ledgers and ensure visa and reporting compliance.

Timelines: a realistic plan

• Name reservation: about 1–2 working days with clean options.

• FDI approval: quick in law for complete files; allow extra time for queries.

• OCR incorporation: about 3–10 working days with correct documentation.

• PAN and VAT: typically 3–5 working days for standard cases.

• Visas and labor permits: plan 3–6 weeks depending on sector and file quality.

Common pitfalls (and how to avoid them)

• Objects too narrow. Draft MoA objects that cover expected pivots.

• Inadequate FDI file. Missing investment schedules or bank letters trigger queries.

• Wrong entry route. A liaison office cannot earn revenue.

• VAT timing issues. Late registration can block input credits and vendor onboarding.

• Visa sequencing errors. Foreign staff must not start work before permit and visa.

Risk management for foreign directors

• Use directors’ indemnity and D&O insurance where appropriate.

• Keep a delegation of authority matrix for local sign-off.

• Implement two-signatory banking for payments over a set limit.

• Store complete original documents in a secure, accessible place.

• Run a quarterly compliance review against filings and tax calendars.

Bank accounts and capital control tips

• Open an operating account and a capital account if your bank offers this structure.

• Keep inward remittance documentation complete.

• Track equity vs. intercompany loans separately.

• For dividends, prepare audited financials, board resolutions, and tax clearance where needed.

• Confirm withholding tax obligations on service fees, royalties, or interest.

Sector-specific notes 

• IT and BPO. Early VAT registration helps with input credits on equipment and vendor onboarding. Data security clauses should sit in the MoA objects.

• Manufacturing. Consider bonded warehousing, customs processes, and environmental clearances.

• Hydropower and infrastructure. Expect IBN oversight, environmental studies, and longer lead times.

• Education and healthcare. Additional ministry approvals and stricter facility standards may apply.

• Financial services. Separate regulators and licensing; foreign shareholding caps may exist.

DD checklist before you press go

Corporate and regulatory

• Confirm sector is open to foreign investment.

• Map the correct FDI route and approving body.

• Validate name availability in both English and Nepali.

Banking and tax

• Shortlist banks with strong trade and FX desks.

• Confirm KYC and document requirements.

• Draft a tax calendar with responsibilities and due dates.

People and office

• Select an employer of record or internal HR path for first hires.

• Prepare standard employment contracts and handbooks.

• Lock a compliant registered office address.

Frequently asked questions 

1) What is the minimum foreign investment to start a company?
Nepal applies a minimum equity foreign investment threshold per foreign investor. Plan your cap table to meet or exceed the floor. Smaller tickets may need structuring via local partners or staged subscriptions. Confirm the current number before filing.

2) Who approves my FDI — DOI or IBN?
Mid-size projects usually go to the Department of Industry. Large projects and many strategic or infrastructure deals are handled by the Investment Board Nepal. Check your sector and investment size to determine the correct authority.

3) How fast can I get FDI approval?
The law targets a prompt decision once the file is complete. Real timelines depend on sector checks, translation quality, and how fast you answer queries. Build buffer time into your plan.

4) Do I need VAT from day one?
Not always. PAN is mandatory. VAT depends on activity and turnover thresholds. Many B2B firms register early for input credits and for vendor onboarding. Plan VAT alongside your first customer contracts.

5) Can a liaison office sign sales contracts?
No. A liaison office cannot earn income in Nepal. It can coordinate, research, and engage with partners. Use a subsidiary or branch if you will sell, invoice, or sign local sales contracts.

Compliance references cited in this guide

• Companies Act 2063 (as amended): private vs. public company rules, foreign company provisions, filings, penalties.

• Foreign Investment and Technology Transfer Act 2019: approvals, investor rights, and timelines.

• Nepal Rastra Bank foreign investment and foreign exchange regulations: remittances and repatriation.

• Inland Revenue Department guidelines: PAN and VAT processes and periodic filings.

• Labor and Social Security laws: employment contracts, SSF, and health and safety.

• Immigration directives: labor permits and visa categories for foreign employees.