Foreign company registration in Nepal is increasingly attractive for global businesses seeking cost-efficient talent, strategic South Asian market access, and long-term growth. However, Nepal is a law-driven jurisdiction. Foreign-owned companies must meet strict legal, regulatory, and compliance requirements before operating.
This guide explains the legal requirements for foreign-owned companies in Nepal in plain English. It is written for founders, CFOs, legal heads, and expansion leaders who want certainty, speed, and compliance.
By the end, you will know exactly what is legally required, which authorities are involved, and how to choose the right entry structure.
Foreign company registration in Nepal refers to any business structure where ownership, control, or capital originates outside Nepal.
Under Nepali law, a foreign-owned presence can take several legally recognised forms:
Foreign Direct Investment (FDI) company
Branch Office
Liaison (Representative) Office
Employer of Record (EOR) arrangement
Each structure has different legal thresholds, approvals, and ongoing obligations.
Foreign companies are regulated by multiple overlapping statutes. The most important are:
Foreign Investment and Technology Transfer Act (FITTA) 2019
Companies Act 2006
Industrial Enterprises Act 2020
Income Tax Act 2002
Labour Act 2017
Social Security Act 2018
Nepal Rastra Bank (NRB) Foreign Exchange Directives
Approvals and supervision involve key institutions such as the Department of Industry and the Nepal Rastra Bank.
Every foreign-owned entity must satisfy five non-negotiable legal pillars.
Nepal does not allow unrestricted foreign business activity.
You must legally fit into one of the permitted structures:
FDI-based Private Limited Company
Branch Office of a foreign company
Liaison Office (non-revenue)
EOR without entity formation
Choosing the wrong structure can block approvals or restrict revenue.
Not all sectors are open to foreign investment.
Foreign companies cannot invest in areas listed under the “Negative List”, including:
Small retail and trading
Certain local service industries
Domestic courier and logistics
Some agriculture and cottage industries
Most technology, IT services, BPO, consulting, engineering, and manufacturing sectors are open to 100% foreign ownership.
Under FITTA and DOI guidelines:
Minimum FDI threshold: NPR 20 million (approx.)
Capital must be injected via banking channels
Funds must be reported and converted through NRB-approved banks
Failure to inject capital on time can invalidate registration.
Foreign company registration in Nepal involves multiple approvals, not a single filing.
Key approvals include:
FDI approval from the Department of Industry
Company incorporation at Company Registrar
Foreign exchange approval from Nepal Rastra Bank
PAN and VAT registration
Local municipality registration
Each step has legal sequencing. Skipping one delays the entire process.
Foreign-owned companies must comply fully with Nepal’s labour regime.
This includes:
Written employment contracts
Statutory leave entitlements
Minimum wages
Social Security Fund (SSF) contributions
Termination and severance rules
There is no labour law relaxation for foreign investors.
| Structure | Can Earn Revenue | Capital Required | Approval Complexity | Best For |
|---|---|---|---|---|
| FDI Company | Yes | High | High | Long-term operations |
| Branch Office | Yes | Medium | High | Project-based work |
| Liaison Office | No | Low | Medium | Market research |
| EOR Model | Yes (indirect) | None | Low | Fast hiring |
Insight: Over 60% of first-time entrants now choose EOR → FDI later, reducing regulatory risk.
Submit a detailed proposal to the Department of Industry covering:
Parent company profile
Business activities
Capital structure
Technology or service transfer
Approval timelines typically range from 15 to 30 working days.
Once FDI approval is granted:
Register the company name
File constitutional documents
Appoint directors and shareholders
The entity becomes a Nepali legal person, even if 100% foreign-owned.
Foreign capital must be:
Remitted through banking channels
Reported to Nepal Rastra Bank
Recorded in FDI compliance filings
Improper remittance is a common audit red flag.
Mandatory registrations include:
Permanent Account Number (PAN)
VAT (if applicable)
Local ward and municipality registration
Tax compliance begins immediately after incorporation.
Before hiring:
Draft labour-law-compliant contracts
Register with Social Security Fund
Establish payroll and tax withholding systems
Foreign company registration in Nepal is not a one-time event.
You must maintain:
Annual financial audits
Annual company filings
FDI reporting to DOI and NRB
Tax filings and advance tax payments
Labour inspections and compliance
Non-compliance can result in fines, blacklisting, or repatriation delays.
Avoid these high-risk errors:
Choosing a liaison office when revenue is intended
Injecting capital without NRB reporting
Using foreign employment contracts
Ignoring SSF obligations
Delaying statutory audits
These mistakes often surface during tax or labour inspections.
An Employer of Record model allows foreign companies to:
Hire legally without entity setup
Avoid capital injection requirements
Stay compliant with labour and tax laws
Test the market before committing
For service-based businesses, this is often the lowest-risk legal entry.
This article is based on:
Nepal’s primary investment and company legislation
Current DOI and NRB procedural guidelines
Practical experience advising foreign investors
Cross-border structuring best practices
It reflects how the system actually works, not just theory.
Yes. Most permitted sectors allow 100% foreign ownership under FITTA, subject to approval.
Typically 4 to 8 weeks, depending on approvals and capital remittance timelines.
No. A local partner is not mandatory for most foreign-owned companies.
The standard minimum is NPR 20 million, subject to sector-specific rules.
Yes. Profit repatriation is allowed after taxes and NRB approvals.
Foreign company registration in Nepal offers real opportunity, but only when done legally and strategically. Understanding the legal requirements for foreign-owned companies in Nepal is essential to avoid delays, penalties, and operational risk.
The right structure, approvals, and compliance framework can save months and millions.
If you are planning foreign company registration in Nepal, book a structured consultation with experts who handle approvals, compliance, and long-term risk management end-to-end.