---
title: "How to incorporate a company in Nepal: step-by-step (2025)"
description: Learn how to incorporate a company in Nepal in 2025. Step-by-step approvals, documents, timelines, costs, and FDI rules for foreign companies.
---

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# [How to incorporate a company in Nepal: step-by-step (2025)](https://digitalconsultingventures.com/insights/incorporate-company-in-nepal-step-by-step-2025)

 Written by [Pjay Shrestha](https://digitalconsultingventures.com/insights/author/pjay-shrestha) | Sep 16, 2025 5:36:19 AM

If you plan to **incorporate a company in Nepal**, this guide gives you a clear, practical path. It is written for foreign companies. It explains FDI approvals, company types, bank and tax steps, and post-incorporation tasks. You will learn the sequence, documents, and pitfalls. Short sentences. Plain language. Compliant with current laws and best practice.

## The quick answer 

- **Entity of choice:** A **Private Limited Company** suits most foreign investors for speed, control, and liability protection.
- **FDI approvals:** Most foreign shareholders require approval under **FITTA 2019** through the **Department of Industry (DOI)** or **Investment Board Nepal (IBN)** for very large projects, plus currency compliance with **Nepal Rastra Bank (NRB)**.
- **OCR registration:** Incorporation is filed at the **Office of the Company Registrar (OCR)** after name reservation and document prep.
- **Tax setup:** Obtain **PAN** from the **Inland Revenue Department (IRD)**; register for **VAT** if your activity or turnover requires it.
- **Post-incorporation:** Open the bank account, bring in capital via formal banking channels, issue share certificates, appoint auditor, enroll for HR and Social Security where applicable, and begin statutory filings.
- **Indicative timeline:** Commonly **3–8 weeks** end-to-end for a straightforward project once documents are ready. Complex sectors or large FDI can take longer.
- **Indicative cost:** Government fees are modest. Total budgets vary by sector and professional support. See the cost table below.

## Nepal company choices for foreign investors

### When to use a Nepal company vs branch vs liaison office

| Factor | Private Limited Company (Subsidiary) | Branch Office | Liaison (Representative) Office |
| --- | --- | --- | --- |
| Legal personality | Separate Nepalese legal entity | Same legal person as foreign parent | Not a legal person; no revenue |
| Revenue in Nepal | Yes | Yes | No (promotion, coordination only) |
| Contracts and invoicing | Company signs and invoices | Parent contracts via branch | Not permitted to invoice |
| FDI approval | Required if foreign shareholding | Sector approval plus branch permissions | Approval for establishment and scope |
| Tax profile | Corporate income tax on profits | Corporate taxation on Nepal source | No CIT on revenue (no revenue allowed) |
| Best for | Long-term operations, hiring, scaling | Limited-scope projects with parent liability | Market study, liaison, brand presence |

**Tip:** Most foreign SMEs choose a **Private Limited Company**. It balances flexibility, control, and compliance. It also simplifies banking and HR.

## Step-by-step: How to incorporate a company in Nepal (2025)

> The steps split into **FDI track** (foreign shareholding) and **domestic track** (no foreign shareholders). If you are a foreign investor, follow the **FDI track**.

### 1) Define your structure and scope

- Shareholding split, authorized and paid-up capital.
- Directors and authorized signatories.
- Registered office address in Nepal.
- Business activities and any sector approvals.
- Fiscal year alignment and auditor approach.

### 2) Name reservation at OCR

- Propose the company name.
- Ensure it is distinct and matches business scope.
- Reserve the name through the OCR system.
- Keep the reservation slip for your incorporation file.

### 3) FDI approvals (FDI track)

**Who needs this:** Any foreign shareholder or foreign parent.  
**What happens:**

1. Prepare the investment proposal, project profile, and draft constitutional documents.
2. Apply to **DOI** (or **IBN** for very large projects).
3. Provide KYC documents for shareholders and directors.
4. Submit sector-specific approvals, if any.
5. Receive the **Foreign Investment Approval Order**.

**Note on minimum FDI threshold:** Nepal prescribes a **minimum investment threshold** for most sectors under FITTA and related rules. As of recent policy, this has been **NPR 20 million** for many projects, subject to change. Sensitive or regulated sectors may set higher bars. Always confirm your sector’s current threshold in advance.

### 4) Draft constitutional documents

- **Memorandum of Association (MOA).**
- **Articles of Association (AOA).**
- **Shareholders’ resolutions** and board approvals from the parent, if applicable.
- **Power of Attorney** for local filing, if needed.
- Clear share subscription language, par value, and transfer rules.

### 5) Prepare director and shareholder KYC

- Passports of foreign directors and subscribers.
- Proof of address and recent photographs.
- Board resolution from parent company with seal.
- For corporate shareholders: Certificate of incorporation, constitutional documents, and good standing evidence.
- Notarization or legalization where applicable.

### 6) Incorporation filing at OCR

- Upload or file the complete set: MOA, AOA, name reservation slip, shareholder and director details, registered office proof, and promoter declarations.
- Pay the OCR fees based on authorized capital slab.
- Respond to OCR queries or clarifications.
- Receive the **Certificate of Incorporation**.

### 7) PAN (tax) registration at IRD

- Apply for **Permanent Account Number (PAN)** at IRD.
- Provide incorporation certificate, MOA/AOA, director details, and office address.
- **VAT registration** applies if your goods or services require it or when turnover thresholds are met.
- Set up your tax e-account for returns and payments.

### 8) Bank account opening and capital remittance

- Open the company bank account.
- For FDI, route **equity capital** via formal banking channels in the approved currency.
- Bank issues **inward remittance advice**.
- Record the investment with **NRB** to establish proof of equity for future **repatriation** of dividends or capital.

### 9) Appoint auditor and set your compliance calendar

- Appoint a **licensed auditor**.
- Create a compliance calendar for company, tax, and FDI filings.
- Prepare board minutes and statutory registers.

### 10) HR and Social Security onboarding

- Offer letters and employment contracts aligned with the **Labor Act**.
- Workplace policies and code of conduct.
- Enroll eligible employees into the **Social Security Fund (SSF)**.
- Set up payroll, withholding tax, and leave records.

### 11) Sector and municipal permits (where relevant)

- Obtain sector clearances for regulated industries.
- Register local trade license where required by municipality.
- Ensure environmental or technical approvals if your activity triggers them.

### 12) Post-incorporation filings and share certificates

- Issue **share certificates** to subscribers.
- Update the statutory registers.
- Complete any **technology transfer** or **service agreements** filings if applicable.
- Keep copies of all approvals and remittance proofs in a master compliance file.

## Required documents checklist (master list)

**Corporate information**

- Proposed company name and business activities.
- Shareholding pattern and director list.
- Registered office address and contact.

**Constitutional and approvals**

- Draft MOA and AOA.
- FDI approval order (FDI track).
- Board resolution from foreign parent.
- Power of Attorney for filings, if used.

**KYC**

- Passports and photos for foreign directors and shareholders.
- Proof of address for directors.
- Parent company incorporation documents and good standing proof.
- Notarization or legalization as required.

**Banking and tax**

- PAN application documents.
- Bank account opening forms and specimen signatures.
- Inward remittance advice and NRB recording (FDI).
- VAT application materials, if applicable.

## Timeline and critical path

1. **Document preparation:** 1–2 weeks (parallel legal, KYC, and drafts).
2. **FDI approval (if required):** Often 1–3 weeks for standard cases; complex cases longer.
3. **OCR incorporation:** Many files complete in 3–7 working days after clean submission.
4. **PAN and tax setup:** 2–5 working days post-incorporation.
5. **Bank and NRB steps:** 3–10 working days once the bank KYC is complete.
6. **HR and SSF enrollment:** 1–2 weeks alongside hiring.

**Total:** A straightforward FDI project can complete **within 3–8 weeks** after documents are in order. Large or regulated projects may exceed this window.

## Cost and fees: an indicative budgeting model

> Government fees change by capital slab and document count. Professional fees vary by scope and urgency. Use this as a planning tool.

| Cost head | What it covers | Indicative range (NPR) | Notes |
| --- | --- | --- | --- |
| Name reservation & OCR filing | Reservation and incorporation filing slabs | 5,000–35,000 | Varies by authorized capital |
| FDI processing | Application handling and approvals | 10,000–50,000 | Project size affects this |
| PAN & tax setup | PAN; VAT if needed | 3,000–10,000 | Excluding VAT security deposits, if any |
| Bank onboarding | KYC, inward remittance support | 0–10,000 | Bank charges differ |
| Professional support | Drafting, filings, liaison, advisory | 150,000–500,000 | Scope and fast-track needs |
| Miscellaneous | Notary, translations, courier | 15,000–60,000 | Buffer for extras |

**Foreign currency note:** Budget a **buffer** for currency conversion and bank charges when remitting capital.

## Banking, capital remittance, and NRB compliance

- Bring **equity capital** via formal channels under your specific FDI approval.
- Bank provides **inward remittance advice**. Keep it safe.
- Report the investment to **NRB** to anchor future **dividend** and **capital repatriation**.
- Use the same approved route for any **shareholder loans** or **technology transfer** fees.
- Maintain a clean audit trail: approval order, swift copy, bank credit, NRB record, and share issue.

## Tax basics: PAN, VAT, withholding, and accounting

- **PAN** is mandatory for all companies.
- **VAT** registration is required for VAT-covered activities or once you cross the turnover threshold.
- **Withholding tax (TDS)** applies to salaries, services, rent, and certain payments.
- Keep **proper books** and source documents.
- File returns on time to avoid penalties and preserve tax credit.
- Engage a licensed **auditor** and align your reporting calendar to Nepal’s fiscal year.

## HR compliance and Social Security

- Offer letters, contracts, and policies must align with the **Labor Act** and current rules.
- Register employees for **Social Security Fund (SSF)** if applicable.
- Maintain attendance, leave, and payroll tax records.
- Observe working hour rules, holidays, and health and safety duties.
- For expatriates, secure the correct **visa and work permits** before starting work.

## Sector restrictions and special approvals

- Nepal maintains a **negative list** and **restricted activities** for foreign investment under **FITTA** and related rules.
- Some sectors require **technical, environmental, or financial sector** approvals.
- Large infrastructure or high-value projects may fall under the **IBN** regime.
- Check your **NICE classification**, HS codes, or sector code to map permits early.
- If you transfer know-how or IP, file **technology transfer agreements** in line with the rules.

## Common mistakes to avoid

- **Skipping FDI approval** before OCR filing.
- **Under-documented KYC** for foreign shareholders.
- **Incorrect MOA scope** that blocks VAT or sector permits later.
- **Missing NRB recording,** which complicates remittances.
- **No auditor appointment** until year-end.
- **VAT timing errors** and late return penalties.
- **Weak HR files** and missing SSF enrollment.

## Frequently asked questions (2025)

**Q1. How long does it take to incorporate a company in Nepal?**  
Most straightforward cases complete within **3–8 weeks** from document readiness. Complex sectors or large FDI can take longer.

**Q2. What is the minimum capital to start?**  
There is no blanket statutory minimum for private companies. FDI policy prescribes a **minimum investment threshold** for most foreign investments. Confirm your sector’s current threshold.

**Q3. Can a foreign company own 100% of a Nepal subsidiary?**  
Yes, in many sectors. Some sectors are restricted or capped. Always check the negative list and sector rules.

**Q4. When do I need VAT registration?**  
When your supplies are VAT-covered or you cross the turnover threshold. Many B2B services register early to claim input credit.

**Q5. How do I repatriate profits?**  
Declare dividends, ensure tax clearance, and use the bank channel aligned with **NRB** rules. Proper FDI and remittance records are essential.

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