Expanding to a new market is exciting. It’s also risky if you skip foundations. If you plan to incorporate a company in Nepal, this guide explains what to check before you commit. You’ll see the critical due-diligence steps, the errors foreign founders repeat, and a practical compliance path that aligns with FITTA, NRB, tax, labor, and sector rules.
Nepal offers strategic access to South Asia. Costs are competitive. Digital adoption is rising. The talent pool is young and multilingual. Sectors like IT services, light manufacturing, hydropower, tourism, and education services are growing. Government systems are more digitized than before, with online name reservation, filings, and tax portals. Opportunity is real—if you structure the entry correctly.
Treat setup as a controlled project. Build a clear checklist, owners, and dates. Test every assumption before you invest.
Identify every authority that could matter:
Office of the Company Registrar (OCR) for incorporation.
Department of Industry (DOI) or Investment Board Nepal (IBN) for foreign investment approvals under FITTA (2019).
Nepal Rastra Bank (NRB) for inward equity, foreign currency controls, and repatriation approvals.
Inland Revenue Department (IRD) for PAN, VAT, TDS, and corporate tax.
Sector bodies (e.g., health, education, insurance, telecom, hydropower) if applicable.
Deliverable: One-page map of approvals, forms, and decision timelines.
Collect certified KYC for all shareholders and ultimate beneficial owners:
Passports, proof of address, corporate registration extracts.
Board resolutions authorizing investment and signatories.
Shareholding structure chart down to natural persons.
Goal: Zero gaps in KYC so OCR, DOI/IBN, and banks can clear your file.
Confirm your investment falls within Foreign Investment and Technology Transfer Act (2019):
Equity shares and reinvested earnings are typical routes.
Check minimum investment thresholds where applicable.
Review negative or restricted lists for sectors with caps or special approvals.
Deliverable: A signed regulatory memo with the investment route, thresholds, and any sector conditions.
Run three to five alternative names. Avoid protected words or names too close to incumbents. Keep a clean primary name and two backups to prevent delays.
Decide authorized vs issued capital. Align with forecasted burn and sector norms. Confirm:
Bank readiness to open a capital-in account.
NRB documentation for inward remittance of equity.
Evidence of fund origin for AML.
Before filing, decide:
VAT registration need and timing (standard rate is 13% for taxable supplies).
Corporate income tax baseline rate for general companies (commonly 25%, sector-specific deviations exist).
TDS obligations on salaries, contractors, rent, services, and cross-border payments.
Transfer pricing guardrails if you have related-party transactions.
Deliverable: A two-page tax memo with rates, registrations, and a first-year filing calendar.
Nepal’s Labor Act and rules govern contracts, working hours, leave, and termination. Prepare:
Written employment contracts with probation and confidentiality.
Payroll structure with TDS, social security where applicable, and leave accruals.
Workplace policies and registers.
Confirm eligibility and responsibilities. Record board meeting cadence, minutes, and statutory registers. Secure a registered office with a lease and utility evidence.
Register trademarks early. Include IP assignment in employment and vendor contracts. Implement basic security controls, backups, and access logs.
If you need physical premises, check zoning. For manufacturing or labs, confirm environmental and safety standards and get municipal clearances.
| Area | Typical risk | Quick test | Owner | Doc evidence | Mitigation |
|---|---|---|---|---|---|
| FITTA coverage | Sector not eligible or capped | Check FITTA negative/restricted lists | Legal | Sector memo | Seek DOI/IBN pre-view or alternate activity code |
| NRB forex | Repatriation blocked by gaps | Trace equity and bankability | Finance | Inward remittance plan | Pre-agree bank KYC pack; keep FIRC/Swift trails |
| Tax scope | Missed VAT or TDS | Map transactions and vendors | Tax | Tax memo | Register on time; set ERP TDS defaults |
| KYC | Missing beneficial owner proof | Build UBO chart | Legal | UBO chart + affidavits | Obtain certified extracts and apostilles |
| Name | Rejection due to conflict | Run three backups | PMO | Name screenshots | Use neutral keywords; avoid restricted terms |
| Payroll | Non-compliant contracts | Legal review | HR | Offer + contract templates | Issue letters; set probation clauses |
| IP | Brand or code disputes | Search registry | Legal | Trademark filing | File TM early; add IP clauses |
| Timeline | Slippage across agencies | Gantt with buffers | PMO | Master plan | Weekly standups; single owner per step |
Starting filings before FITTA scope is cleared.
Underestimating NRB documentation for capital-in and repatriation.
Skipping VAT analysis and registering too late.
Incorrect share capital mix vs working capital needs.
Only one name option submitted to OCR.
No board resolution authorizing investment and signatories.
Weak UBO evidence that stalls bank KYC.
Missing transfer pricing logic for group service fees.
No local registered office proof ready.
Employment contracts copied from other countries.
Ignoring sector regulators until after incorporation.
Unplanned fiscal year close and audit engagement.
Vendor VAT status unknown, causing input tax issues.
Loose IP assignments for staff and freelancers.
Ad-hoc project control with no critical path or buffers.
IT/Outsourcing: Usually OCR + FITTA + NRB + PAN/VAT. Limited sector permits.
Manufacturing: Add environmental, municipal, and sometimes industrial estate approvals.
Education services: Check education regulators for training center approvals.
Tourism/hospitality: Tourism Board, local municipality, hygiene/safety clearances.
Hydropower/energy: Detailed licensing via DoED/IBN routes and power purchase norms.
Healthcare equipment: Quality standards, import permits, labeling, and possible warehousing rules.
Tip: Maintain a single “approvals table” with forms, signatories, SLAs, and fees.
1) Pre-filing (1–2 weeks):
Name options.
KYC pack, UBO chart, board resolution.
Draft MOA/AOA aligned to planned activities.
2) Incorporation filings (1–2 weeks):
OCR submissions.
Company registration certificate.
3) Foreign investment approval (2–6 weeks):
DOI/IBN filings under FITTA (2019).
Capital plan and share subscription terms.
4) Bank account + capital-in (1–2 weeks):
Open account.
Inward remittance of equity.
Keep SWIFT/FIRC proofs.
5) Tax registrations (1 week):
PAN mandatory.
VAT if applicable.
TDS defaults in payroll and vendor payments.
6) Post-incorporation (continuous):
Board meetings, auditor appointment, contracts, payroll, VAT returns, and TDS statements.
Note: Durations vary by sector, documentation quality, and agency workload. Build buffers.
| Cost head | Notes |
|---|---|
| Government fees | Name reservation, incorporation, stamp duties, and sector permits |
| Professional fees | Legal, tax, NRB/forex, sector compliance, translation/notary |
| Bank charges | Account opening, remittance receipts, foreign currency handling |
| Office setup | Lease, utilities, registered office evidence, basic fit-out |
| Technology stack | Accounting, payroll, invoicing, document management |
| HR and payroll | Contracts, onboarding, salary processing, HRIS |
| Audit and tax | Annual audit, corporate tax returns, VAT filings |
| IP protection | Trademarks, filings, renewals |
Foreign equity must enter Nepal through formal channels. Keep a clean audit trail:
SWIFT messages and Foreign Inward Remittance Certificates.
Board and shareholder resolutions for subscriptions and allotments.
Share register entries and share certificates.
For dividend or capital gains repatriation, NRB usually requires:
Proof of original investment.
Tax clearance, audited accounts, and board approvals.
Compliance with Foreign Investment and Technology Transfer Act (2019) and NRB directives.
Best practice: Maintain a “repatriation file” from day one to avoid last-minute scrambles.
Corporate income tax: A baseline 25% for many general businesses. Certain sectors have concessions or higher rates.
VAT: Standard 13% on taxable supplies. Exemptions exist by schedule.
TDS: Withhold on salaries, services, rent, interest, royalties, and contractor payments. Rates vary by nature of payment.
Transfer pricing: Related-party services must be priced at arm’s length with supporting documentation.
Invoicing: Use compliant tax invoices with PAN and VAT details.
Build a monthly tax calendar with filing and payment dates. Automate reminders.
First board meeting: Approve bank accounts, share allotments, and signatory matrix.
Auditor appointment: Appoint a statutory auditor within the required period and before the annual cycle.
Financial year: Runs mid-July to mid-July (Nepali fiscal calendar).
Registers: Maintain share register, director register, minutes, and seal custody.
Annual return: File company annual return and financial statements within statutory deadlines.
Employment contracts with IP assignment and confidentiality.
Vendor MSAs and SOWs with VAT and TDS clauses.
Intercompany service agreement with pricing basis and documentation.
Leases with clarity on maintenance and fit-out.
Data processing addendums if handling personal data.
Founder agreements if multiple foreign shareholders are involved.
Define activities and Nepali ISIC codes that match services.
Write the regulatory memo: OCR, FITTA, NRB, IRD, and sector bodies.
Collect KYC for shareholders, UBOs, and signatories.
Approve the capital plan: authorized vs issued, repatriation logic, and milestones.
Draft MOA/AOA aligned to activities and future pivots.
Prepare three name options with rationale.
Select bank and complete pre-KYC.
Set tax stance: VAT, TDS, transfer pricing, and ERP setup.
Contract templates: employment, vendors, and intercompany.
File incorporation with OCR and obtain the certificate.
Secure FITTA approval via DOI/IBN with clean packs.
Open bank account; remit capital; keep SWIFT/FIRC proofs.
Register PAN/VAT; set TDS defaults; build a filing calendar.
Kick off payroll and HR policies; enroll staff as required.
Book auditor; schedule board and annual filings.
1) How long does Nepal incorporation take?
Most projects finish in four to eight weeks. Sector permits or incomplete KYC can extend that. Build buffers into your timeline.
2) Do I need Nepal VAT registration?
Register if your taxable supplies cross the threshold or your customer base demands VAT invoices. Many B2B models choose early registration.
3) Can I repatriate profits from Nepal?
Yes, after meeting NRB conditions. Keep clean equity trails, audited accounts, and tax clearances for dividends or exit.
4) What is the base corporate tax rate?
A general baseline is 25% for many companies. Sector rates and incentives differ. Confirm your exact rate in a tax memo.
5) What documents do banks ask for?
Expect passports, corporate extracts, board resolutions, UBO charts, incorporation papers, PAN, and where relevant, FITTA approvals.