Post-incorporation checklist in Nepal: payroll, PAN, VAT, banking

If you plan to incorporate a company in Nepal, the real work begins after your Certificate of Incorporation arrives. The next ninety days set your long-term compliance posture. You must lock down PAN, VAT decisions, banking, payroll, TDS, social security or provident fund, and NRB steps for FDI. This guide gives you a practical, sequenced checklist built for foreign-owned entities. It reflects current laws and best practice used by professional teams in Nepal.

Key legal anchors referenced (no links):
Companies Act, 2063 (2006) • Foreign Investment and Technology Transfer Act, 2019 (FITTA) • Nepal Rastra Bank (NRB) foreign investment directives • Income Tax Act, 2058 (2002) and Rules • Value Added Tax Act, 2052 (1996) • Labor Act, 2074 (2017) and Labor Regulations, 2075 • Social Security Act, 2075 and SSF Procedures.

TL;DR — Your first 90-day action plan

• Get PAN from IRD. Decide on VAT immediately.

• Open NPR account. Add FCY account if you have FDI or imports.

• For FDI: complete capital remittance, share allotment, and NRB filings on time.

• Set payroll. Choose SSF or EPF + CIT. Draft contracts and policies.

• Start TDS and payroll withholding. File monthly on schedule.

• Issue share certificates. Maintain statutory registers and minutes.

• Configure accounting, e-invoicing, and document retention.

• Track monthly, quarterly, and annual filing windows from day one.

Why the post-incorporation phase matters in Nepal

Compliance in Nepal is document-led. Authorities expect timely filings, accurate registers, and clean audit trails. VAT in Nepal is 13% under the VAT Act. TDS runs through the year on salaries and supplier payments under the Income Tax Act. Labor compliance sits on the Labor Act, the Labor Regulations, and the Social Security Fund (SSF) framework. For FDI, NRB notices and FITTA approvals govern capital flows and share allotment. Getting this right early saves cost and risk later.

The first 90 days, sequenced

Days 0–30: Identity, banking, governance

1. PAN registration with the Inland Revenue Department.

2. Board setup: first board meeting, authority matrix, bank signatories.

3. Open bank accounts: NPR current account; add FCY account if needed.

4. FDI capital (if applicable): confirm remittance path and purpose codes.

5. Share certificates: design, numbering, and issue workflow.

6. Statutory registers: members, shares, directors, charges, minutes.

7. Policies: finance policy, document retention, anti-bribery, data handling.

Days 31–60: Indirect tax, payroll, HR, systems

1. VAT decision: register or remain PAN-only.

2. Invoice format: VAT invoice template, serial control, QR or e-invoice if required.

3. Payroll foundation: grade structure, CTC map, taxable allowances.

4. Choose SSF or EPF + CIT. Register and configure deductions.

5. Employment contracts: bilingual recommended; include probation and notice.

6. Attendance and leave: registers and monthly approval cadence.

7. Accounting system: Nepal fiscal calendar, chart of accounts, tax codes.

Days 61–90: Filing rhythm and audits

1. Monthly returns live: VAT, TDS/eTDS, SSF or EPF/CIT.

2. Vendor TDS routines: services, rent, contractors, and interest.

3. Internal compliance audit: sampling for gaps before the first external audit.

4. OCR annual calendar: AGM planning and annual return windows.

5. NRB closure (FDI): share allotment report, updated cap table, and BO records.

How to incorporate a company in Nepal and stay compliant after registration

Incorporation is step one. Sustained compliance is the real advantage. Below is a practical framework to hold the line on risk and cost.

1) Tax identity: PAN, then VAT

• PAN is mandatory for all companies. Use it for all tax filings.

• VAT (13%) is business-model driven. Register when you cross the threshold, need input credit, or must charge output VAT.

• Core tasks: set your VAT place of supply logic, reverse charge checks, and tax code mapping in your accounting tool.

Expected records

• PAN certificate, VAT certificate (if registered).

• VAT invoice template and sequence log.

• Bound VAT and TDS return files by month.

2) Banking and treasury setup

• NPR current account for domestic flows.

• FCY account if you handle FDI, exports, or imports.

• Authority matrix: dual controls, maker-checker, and limits for treasury.

• FDI discipline: keep evidence of inward remittances and purpose codes. You will need these for share allotment and repatriation in the future.

Good practice

• Separate accounts by business line if volume is high.

• Automate bank feeds into accounting, with locked monthly reconciliations.

3) FDI and NRB steps (when you have foreign shareholding)

• Before remittance: secure FITTA approval through DOI/IBN as applicable.

• Receive capital: inward remittance through banking channels with correct purpose.

• Share allotment: board approval, updated member register, share certificates.

• NRB reporting: lodge capital receipt and allotment details as per directives.

• BO information: maintain Beneficial Ownership records where applicable.

Why it matters
Proper FDI paperwork enables future dividend repatriation and exits. NRB will look for a clean trail.

4) Payroll and HR compliance

Contracts and policies

• Issue written contracts in clear language.

• Include salary structure, leave, probation, confidentiality, and IP.

• Publish HR policy, code of conduct, and grievance channel.

Choose your social security path

• Option A: SSF (Social Security Fund).

  • Covers provident, gratuity, medical, and accidental insurance under one framework.

  • Typical contributions used in practice: employer around 20% of basic; employee around 11% of basic. Confirm the current official split before payroll runs.

• Option B: EPF + CIT (Employees Provident Fund and Citizen Investment Trust), when SSF is not adopted.

  • Common pattern: 10% employee and 10% employer to Provident Fund, plus separate gratuity accruals and insurance as per the Labor Act.

• Select one path and keep it consistent. Dual running creates gaps.

Payroll withholding and filings

• Compute payroll TDS using the progressive slabs in the Income Tax Act.

• Deposit TDS and file eTDS monthly.

• Pay SSF or EPF/CIT on the monthly cycle.

• Maintain leave register, overtime approvals, and attendance.

Records to maintain

• Employee master file, KYC, and PAN.

• Payroll register, payslips, TDS workings.

• SSF/EPF/CIT deposit proofs.

5) Supplier payments and TDS

Nepal requires withholding (TDS) on many payments. Typical categories include services, rent, contractors, interest, and royalties. Identify TDS status before payments. Obtain vendors’ PAN. Issue TDS certificates. File monthly eTDS.

Tip
Build a vendor master with TDS category and rate logic baked in. Avoid manual overrides.

6) Invoicing and documentation

• Use pre-approved invoice formats.

• Assign unique series per branch or business line if needed.

• Store all invoices, debit notes, and credit notes for statutory retention.

• For VAT: log export invoices, input credit, and reverse charge where relevant.

7) Corporate secretarial, registers, and governance

• Share register, members register, directors register.

• Minute books for board and shareholders.

• Share certificate issue and transfer registers.

• BO register where applicable.

• AGM within the Companies Act timeline.

• Annual return to the OCR within the prescribed window after AGM.

8) Accounting, audit, and the Nepal fiscal year

Nepal’s fiscal year runs mid-July to mid-July. Configure your system accordingly. Close months with reconciliations. Prepare for annual audit. Retain audit-ready files: bank confirmations, ledgers, tax filings, and minutes.

Audit readiness

• Signed trial balance and lead schedules.

• VAT and TDS tie-outs to GL.

• Fixed asset register with depreciation.

• Inventory counts and valuation basis.

Comparison table — SSF vs EPF + CIT 

Note: Confirm the exact contribution split and thresholds before onboarding staff. Rules and circulars update from time to time.

Compliance calendar — first 90 days 

Original insight — “decision lens” for VAT registration

Use this quick lens to decide VAT status:

1. B2B sales with input VAT on costs? Register to claim credits.

2. Selling to VAT-registered customers? Registration improves acceptability.

3. Primarily exports? Consider zero-rating and refund implications.

4. Retail B2C with small margins? Model the price impact carefully.

5. Services from non-residents? Assess reverse charge and place of supply.

Common pitfalls and how to avoid them

• Late VAT/TDS filings: create calendar invites and internal cut-offs.

• Unmapped TDS: encode TDS rules into the vendor master.

• Dual benefit schemes: choose SSF or EPF/CIT, not both.

• Weak board minutes: template your minutes and resolutions.

• FDI paper gaps: keep a single FDI binder with all proofs.

• Loose invoice control: pre-print series and secure stationers.

• Ignoring labor registers: keep attendance, leave, overtime, and warnings.

Numbered master checklist you can run today

1. Hold the first board meeting.

2. Approve bank signatories and limits.

3. Apply for PAN at IRD.

4. Choose VAT strategy.

5. If VAT-registered, set invoice templates.

6. Open NPR account.

7. Open FCY account if needed.

8. Finalize chart of accounts and tax codes.

9. Draft finance policy and document retention schedule.

10. Prepare contracts and HR policy.

11. Select SSF or EPF + CIT.

12. Register with SSF or EPF/CIT.

13. Create payroll structure and calendars.

14. Build employee files and collect PAN.

15. Configure TDS in the accounting system.

16. Build vendor master with TDS categories.

17. Issue share certificates and update registers.

18. Record beneficial owners if applicable.

19. For FDI, plan capital remittance path.

20. Receive capital with correct purpose code.

21. Allot shares and record in minutes.

22. Complete NRB filing package.

23. Start monthly VAT and TDS routines.

24. Run internal pre-audit for month one.

25. Lock a recurring compliance review meeting.

On-page SEO checklist baked in

• Primary keyword appears in the first paragraph.

• It also appears in one H2 and in the conclusion.

• LSI terms used: company registration Nepal, business registration, PAN, VAT, NRB, FITTA, TDS, payroll, SSF, EPF, CIT, OCR, Inland Revenue Department, Labor Act, audit.

• Short sentences enhance readability.

Frequently asked questions

1) When should I register for VAT after incorporation?
Register when your model requires input credit, your customers demand VAT invoices, or you cross the threshold. Early registration avoids input loss.

2) Do I need both SSF and EPF/CIT?
No. Choose one path. SSF is unified. EPF/CIT requires separate gratuity and insurance handling.

3) What are the monthly filings I should never miss?
VAT return (if registered), TDS/eTDS, and SSF or EPF/CIT deposits. Keep proof of payment and submission for audit.

4) Can I pay foreign suppliers without FCY account?
You need correct banking channels and documentation. FCY accounts streamline settlements and evidence for audits.

5) How does FDI repatriation work later?
Maintain perfect FDI records now. NRB will check capital trails and share allotment. Clean records enable dividends or exit proceeds later.