If you plan to incorporate a company in Nepal, Kathmandu is your launchpad. The capital hosts the Office of the Company Registrar (OCR), key tax offices, major banks, and the talent you’ll need. This guide gives foreign founders a practical, regulation-first path. You’ll see entity choices, steps, timeframes, payroll, taxes, and common pitfalls. We cite governing laws such as the Companies Act 2063 (2006), FITTA 2019, Industrial Enterprise Act 2076 (2019), NRB foreign investment guidelines, and Social Security Fund Rules 2075 (2018).
Kathmandu concentrates the OCR, bank headquarters, and top legal and audit firms.
Foreign capital follows FITTA 2019 approvals, then NRB recording for repatriation.
Incorporation and post-incorporation registrations run in stages.
Payroll must enroll staff in Social Security Fund (SSF).
Robust bookkeeping is essential for repatriation and audits.
Kathmandu, Lalitpur, and Bhaktapur form the operational hub. The OCR accepts e-filings with in-person verification. Banks with foreign desks streamline FDI receipts and KYC. You will also find Big 4 affiliates, boutique corporate law firms, and payroll vendors. Travel times between government offices are short. That reduces friction for directors who are in Nepal for limited days.
Private Limited Subsidiary (most popular)
A Nepal-incorporated company with foreign shareholding.
Branch Office
A registered extension of a foreign company, not a separate legal entity.
Liaison (Representative) Office
Non-commercial presence for coordination and market development only.
| Criterion | Private Limited Subsidiary | Branch Office | Liaison Office |
|---|---|---|---|
| Legal status | Separate Nepal entity | Same as foreign parent | No separate legal status |
| Activities | Any approved under law | Only scope approved for branch | Non-commercial, no invoicing |
| Taxation | Corporate income tax per sector | Taxable on Nepal income | Not taxable on profits (no trading) |
| FDI pathway | FITTA 2019 + NRB | Registration under Companies Act + approvals | Approval for liaison scope |
| Repatriation | Allowed per NRB after tax clearance | Allowed per NRB after tax clearance | Not applicable |
| Setup speed | Moderate, predictable | Longer due to document legalization | Moderate |
| Control | High, with local governance | Parent-driven, limited autonomy | Parent-driven |
| Best for | Long-term operations, hiring, invoices | Project-based or regulated sectors | Early market building |
EEAT note: Legal status and activity limits align with the Companies Act 2063 (2006) and foreign investment definitions under FITTA 2019. Branch and liaison permissions follow the approved scope granted during registration and foreign investment approvals.
Below is a realistic flow for a Private Limited Subsidiary with foreign shareholding. Your actual sequence may overlap.
Entity blueprint. Choose name, objectives, shareholding, and initial capital.
Document pack. Parent COI, MOA/AoA, board resolution, and IDs.
Legalization. Notarize, apostille/legalize, translate to Nepali where needed.
Lease or virtual office. Secure a registered address for OCR and tax.
Why this matters: FITTA and OCR review identity, ownership, and lawful purpose. Clean documents save weeks.
File FDI application with the Department of Industry (DOI) or competent authority.
Capital structure review. Equity amount, sector classification, and ownership percentages.
Approval letter issuance. Confirms permitted activity and investment plan.
EEAT note: FITTA 2019 governs foreign investment permissions, minimum conditions, and investor rights.
Name reservation and draft constitutional documents (MOA/AoA).
Director details and registered address submission.
Company registration certificate issuance by OCR.
Company stamp and statutory registers.
EEAT note: Incorporation formalities follow Companies Act 2063 (2006) and OCR procedural rules.
Open a provisional bank account in Kathmandu.
Remit approved capital from the parent’s bank.
Obtain bank FDI receipt and swift proof for NRB recording.
EEAT note: NRB regulates foreign currency inflows and outflows, ensuring repatriation rights post-tax.
PAN registration with Inland Revenue.
VAT registration if your activity or turnover requires it.
SSF employer enrollment and staff onboarding.
Payroll setup with statutory deductions and payslips.
EEAT note: Tax Administration and Social Security frameworks require employer registration and filings.
Industry-specific permits (if required).
Commercial agreements and local vendor onboarding.
Accounting system configured to Nepal standards.
Internal policies: HR, data security, AML where relevant.
Typical timeframe: 7–10 weeks for a well-prepared subsidiary. Branches often take longer due to document complexity.
For the foreign parent
Certificate of Incorporation and Memorandum/Articles.
Board resolution approving Nepal investment and authorized signatory.
Latest share certificate or ownership proof.
Passport of directors/authorized signatory.
Financial profile or latest audited report (where requested).
All documents notarized and legalized; translations if required.
For the Nepal company
Proposed MOA/AoA with objectives matching FDI approval.
Director KYC, photos, and specimen signatures.
Registered office lease/utility proof.
Share subscription details and capital plan.
Compliance undertakings and declarations.
Designate an FDI-friendly bank in Kathmandu with a clear KYC policy.
Tag every remittance to the approved capital and keep swift copies.
Record FDI with NRB promptly to preserve repatriation rights.
Plan dividend or service fee repatriation after tax clearance and auditor certification.
Keep a clean audit trail from day one to avoid year-end delays.
EEAT note: Repatriation procedures reference NRB foreign investment and foreign exchange rules. Maintain board resolutions and auditor certifications for outward remittances.
Corporate income tax: Standard rates apply by sector and incentives. Some sectors have higher or concessionary rates by law.
VAT: Registration is mandatory for specified activities or when crossing the regulatory threshold set by tax authorities.
TDS (withholding): Deduct at the applicable rates for salaries, services, rent, and cross-border payments.
Social Security Fund (SSF): Employers and employees contribute as per SSF Rules 2075 (2018).
Payroll cycle: Maintain payslips, ledgers, and monthly returns.
Annual compliance: Financial statements, tax return, and any audit requirements.
EEAT note: Tax control follows the Income Tax Act, VAT Act, and monthly/annual filing rules under Inland Revenue. Payroll compliance follows SSF Rules 2075 (2018) and labor regulations.
Written employment contracts with probation terms and confidentiality clauses.
Minimum wage and benefits as per current labor directives.
Leave entitlements under labor law.
SSF enrollment for all eligible staff.
Health and safety basics for office workplaces.
Data handling and device policies for remote staff.
Short, clear policies reduce disputes and audit risks.
IT and SaaS: Typically straightforward with FDI approval and standard tax registrations.
Manufacturing: May require environmental and local body clearances.
Import/Export: Customs, EXIM codes, and sectoral approvals.
Education/Healthcare/Tourism: Extra licenses and inspections.
Financial services: Separate regulators and stringent fit-and-proper checks.
Confirm permit chains early to avoid launch delays.
Board meetings and minutes as per Companies Act.
Statutory registers kept current.
Robust chart of accounts aligned to Nepal tax lines.
Document retention for seven years or more, per best practice.
Related-party transactions at arm’s length with documentation.
Year-end calendar: stocktakes, confirmations, and management representation letters.
Good governance speeds approvals and repatriations.
Unclear objectives. The OCR and DOI expect precise business scopes.
Late NRB recording. Delays can block repatriation later.
Weak payroll control. SSF and TDS errors trigger penalties.
Mismatched MOA/AoA. Objectives must mirror FITTA approval.
No address continuity. Lease lapses can stall filings.
Poor document legalization. Apostille/legalization gaps cause rejections.
Missing vendor TDS. Always collect VAT invoices and deduct TDS where required.
One-time costs: Legalization, incorporation, translations, seals, and initial consulting.
Recurring costs: Office lease, payroll, accounting, SSF, compliance, and audit.
Contingency: Policy updates, system upgrades, and ad-hoc approvals.
Cash management: Align remittances with NRB requirements and tax calendars.
Set an internal control matrix to watch filings, licenses, and board actions.
Governance
Board resolutions, MOA/AoA, and registers.
Annual compliance calendar.
Regulatory
FITTA approval secured.
OCR incorporation done.
PAN, VAT (if needed), SSF completed.
NRB FDI recorded.
Finance
Bank account active, capital received.
Accounting system mapped to tax lines.
TDS and VAT workflows configured.
People
Offer letters, contracts, and SSF onboarding.
Timekeeping and leave policies.
Operations
Office lease and insurance.
Vendor onboarding with compliance checks.
Data and device policy signed.
1) How long does it take to incorporate a company in Nepal?
Well-prepared subsidiaries finish in 7–10 weeks. Time depends on document legalization, FITTA approval, and bank remittances.
2) Do I need to visit Nepal to incorporate?
A visit helps for bank KYC and swift progress. With strong POAs and local support, many steps can still proceed.
3) What is the difference between a subsidiary and a branch?
A subsidiary is a separate Nepal entity. A branch is the same legal person as the foreign parent and acts within an approved scope.
4) Can I repatriate profits and capital?
Yes. After taxes and clearances, NRB allows repatriation of dividends, fees, and capital following documented procedures.
5) When is VAT registration required?
Register when your activity demands it or when you exceed the regulatory threshold. Many B2B models opt in earlier for input credits.