Licenses & Permits Required for Foreign Companies in Nepal

Foreign company registration in Nepal is not just about incorporating a legal entity. It is about securing the right licenses and permits to legally operate, hire staff, remit profits, and scale without regulatory friction.

Many foreign companies underestimate this step. They register a company but overlook sector approvals, local permits, or post-registration licenses. This leads to delays, banking issues, or even operational shutdowns.

This guide explains every license and permit foreign companies may need in Nepal. It is written for founders, CFOs, and expansion leaders who want clarity, speed, and compliance from day one.

Understanding the regulatory ecosystem for foreign companies in Nepal

Before diving into licenses, you need to understand who regulates what.

Foreign investment in Nepal is governed by multiple authorities, each with a defined role:

• Investment Board Nepal (IBN) for large or strategic investments

• Department of Industry (DoI) for most standard FDI projects

• Office of Company Registrar (OCR) for company incorporation

• Nepal Rastra Bank for foreign exchange and repatriation

• Local governments for municipal permits

Each license fits into a specific stage of foreign company registration in Nepal.

Core licenses required for foreign company registration in Nepal

Every foreign company must secure a baseline set of approvals. These apply regardless of industry.

1. Foreign Investment Approval (FDI Approval)

This is the foundation of foreign company registration in Nepal.

FDI approval confirms:

• The investment structure

• The foreign shareholder details

• The approved business activities

Depending on investment size and sector:

• NPR 6 billion or above → Investment Board Nepal

• Below NPR 6 billion → Department of Industry

Without this approval, no foreign-owned entity can legally operate.

2. Company Registration Certificate

Once FDI approval is granted, the company is incorporated with the Office of Company Registrar.

This certificate:

• Creates the legal entity

• Defines shareholding and capital

• Enables contracts and employment

This is the legal birth of the foreign company in Nepal.

3. Permanent Account Number (PAN) and VAT Registration

Tax registration is mandatory for all foreign companies.

PAN is required for:

• Corporate income tax

• Withholding tax

• Payroll compliance

VAT registration is required if:

• Annual turnover exceeds the VAT threshold

The business supplies taxable goods or services

Sector-specific licenses foreign companies often overlook

Not all businesses need the same licenses. Sector matters.

Common sectoral approvals include:

• Tourism license for travel, hotels, trekking

• Education approval for colleges or training institutes

• Health license for clinics or diagnostics

• Telecom or IT permits for regulated digital services

Failure to secure sector approval is one of the most common compliance gaps in foreign company registration in Nepal.

Numbered overview: Typical license flow by sector

1. Obtain FDI approval

2. Incorporate the company

3. Secure sector regulator clearance

4. Register tax and labor obligations

5. Apply for municipal operating permits

Skipping step three creates downstream risk.

Municipal and local permits for foreign companies

After national approvals, local compliance begins.

Typical local permits include:

• Trade license from municipality

• Business signage approval

• Fire and safety clearance

• Environmental clearance for certain activities

These permits validate that the business can operate physically at its registered address.

Labor, immigration, and employment-related permits

Foreign companies hiring staff in Nepal must comply with labor laws.

Mandatory registrations include:

• Social Security Fund enrollment

• Labor office registration

• Employment contracts aligned with Nepali law

For foreign nationals:

• Work permit

• Non-tourist business visa

These are often reviewed during audits or banking compliance checks.

Banking and foreign exchange permissions

Foreign company registration in Nepal is incomplete without banking approvals.

Key requirements:

• Capital account approval

• FDI inflow reporting

• Share subscription certification

These steps allow:

• Repatriation of profits

• Dividend distribution

• Intercompany payments

Banks will not process transactions without these approvals.

Table: Licenses required by foreign company structure

This comparison helps investors choose the right entry vehicle.

Timeline expectations for licenses and permits

Foreign investors often ask how long licensing takes.

Typical timelines:

• FDI approval: 2 to 6 weeks

• Company registration: 3 to 5 working days

• Tax registration: 1 to 2 days

• Sector licenses: 2 to 8 weeks

Proper sequencing shortens the total timeline significantly.

Common mistakes foreign companies make

Even experienced multinationals make avoidable errors.

Frequent pitfalls:

• Applying for bank accounts before approvals

• Using incorrect business activity codes

• Missing sector regulator clearance

• Assuming licenses are “automatic”

These mistakes delay operations and create compliance exposure.

How licensing impacts long-term scalability

Licenses are not just compliance paperwork.

They affect:

• Ability to expand activities

• Ease of hiring expatriates

• Smooth profit repatriation

• Valuation during exits or restructuring

A clean licensing foundation supports sustainable growth in Nepal.

Foreign company registration in Nepal and ongoing compliance

Licenses are not one-time events.

Most require:

• Annual renewals

• Activity reporting

• Tax and labor filings

Non-renewal can lead to fines or suspension.

A structured compliance calendar is essential.

Conclusion: Getting licenses right from day one

Foreign company registration in Nepal succeeds or fails at the licensing stage.

When licenses and permits are aligned:

• Banks cooperate

• Regulators trust the entity

• Operations scale smoothly

When they are not, even a registered company cannot function.

If you want your foreign investment in Nepal to be defensible, scalable, and future-ready, licensing strategy must come first.

Call to action

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Frequently Asked Questions

1. Is FDI approval mandatory for all foreign companies in Nepal?

Yes. Any foreign ownership requires FDI approval before company registration.

2. Can a foreign company operate before obtaining all licenses?

No. Operating without required permits exposes the company to penalties and suspension.

3. Do IT and software companies need sector licenses?

Usually no, but regulated digital activities may require additional approvals.

4. How often must licenses be renewed?

Most licenses require annual renewal, especially municipal and sector permits.

5. Can licenses be transferred if ownership changes?

No. Major ownership changes often require fresh approvals.