Navigating the PAN Card Application Process in Nepal

If you are weighing a private vs public company in Nepal, the PAN card application is one of the first regulatory gates you must pass. Foreign companies often underestimate how entity type shapes PAN eligibility, timelines, and post-registration compliance. In this guide, we break it all down clearly. You will learn how PAN registration works for each structure, what documents you need, and how to avoid costly delays straight from Nepal’s regulatory playbook.

Why PAN Matters When Choosing a Company Type in Nepal

A Permanent Account Number (PAN) is the tax identity issued by Nepal’s tax authority. Without it, you cannot open operational bank accounts, issue invoices, hire staff, or file taxes.

For foreign investors, PAN is not a formality. It is the bridge between incorporation and lawful operations. The private vs public company in Nepal decision directly affects how fast you get PAN, how many disclosures you make, and what ongoing filings look like.

Understanding Private vs Public Company in Nepal

What Is a Private Company in Nepal

A private company is the most common structure for foreign investors entering Nepal.

Key traits

• Minimum 1 shareholder
• Maximum 101 shareholders
• No public share issuance
• Restricted share transfer

Private companies are preferred for subsidiaries, FDI projects, and operational entities.

What Is a Public Company in Nepal

A public company is designed for large capital mobilization.

Key traits

• Minimum 7 shareholders
• No maximum shareholder limit
• Can issue shares to the public
• Higher disclosure and governance standards

Public companies are rare for initial foreign entry due to complexity.

How Company Type Impacts PAN Card Registration

The PAN application process is administered by the Inland Revenue Department after incorporation with the Office of Company Registrar.

Core Difference at a Glance

Insight: For foreign companies, PAN delays almost always stem from choosing a structure misaligned with the investment size and timeline.

Legal Basis for PAN Registration in Nepal

PAN registration is governed by:

• Income Tax Act 2002
• Companies Act 2006
• Foreign Investment and Technology Transfer Act 2019

These laws collectively define who must register, when, and under what disclosures.

Step-by-Step PAN Card Application Process in Nepal

1. Company Incorporation

You must first incorporate the entity. PAN cannot be issued without a registration certificate.

2. Capital Commitment Evidence

Foreign investors must show capital commitment approval if applicable.

3. PAN Application Filing

Application is filed at IRD with prescribed forms.

4. Verification and Approval

IRD verifies documents and issues the PAN certificate.

Documents Required for PAN Card Application

For Private Companies

• Certificate of incorporation
• Memorandum and Articles of Association
• Board resolution for PAN registration
• Shareholder and director details
• Lease agreement for registered office

For Public Companies

• All private company documents, plus:
• Prospectus or issue approval
• Enhanced shareholder disclosures
• Additional board resolutions

Numbered Checklist: Common PAN Mistakes Foreign Companies Make

1. Applying before incorporation is complete
2. Mismatch between OCR and IRD records
3. Incomplete foreign shareholder disclosures
4. Wrong office address documentation
5. Assuming private and public rules are identical

Avoiding these saves weeks.

Timeline Expectations

Private company:

• Typical PAN issuance: 3–7 working days

Public company:

• Typical PAN issuance: 2–4 weeks

Timelines depend on document quality and regulatory load.

PAN Compliance After Registration

Once issued, PAN triggers ongoing obligations.

Key Ongoing Requirements

• Monthly withholding tax filings
• Annual income tax returns
• VAT registration if applicable
• Employee tax deductions

Failure to comply can freeze bank accounts.

Private vs Public Company in Nepal: Which Is Better for Foreign Companies

For most foreign investors, the answer is clear.

Private company advantages

• Faster PAN issuance
• Lower compliance cost
• Easier governance
• Better suited for subsidiaries

Public company drawbacks

• Heavy disclosures
• Slower regulatory approvals
• Higher audit burden

Unless you plan a public listing, private companies dominate.

How PAN Links to Banking and Capital Repatriation

Banks require PAN to:

• Activate operational accounts
• Process inward remittance
• Validate tax clearance for repatriation

No PAN means no lawful cash movement.

Role of PAN in Hiring Employees

You cannot legally:

• Register with the Social Security Fund
• Deduct employee tax
• Issue salary slips

PAN is the backbone of compliant payroll.

Strategic Insight for Foreign Investors

Choosing private vs public company in Nepal is not about prestige. It is about regulatory efficiency. PAN registration exposes the true compliance cost of your structure early.

Conclusion

When comparing private vs public company in Nepal, PAN card registration is where theory meets reality. Private companies offer speed, simplicity, and predictability. Public companies bring complexity and delay. For most foreign companies entering Nepal, a private company paired with a clean PAN registration strategy is the fastest path to lawful operations.

If you want a smooth PAN application without rework, structure matters first.

Frequently Asked Questions

Is PAN mandatory for all companies in Nepal

Yes. Every company must obtain PAN before conducting taxable activities.

Can a foreign company apply for PAN directly

No. PAN is issued only after local incorporation or registration.

How long does PAN registration take

Private companies usually receive PAN within a week. Public companies take longer.

Does PAN differ for private and public companies

The number is the same. Compliance and scrutiny differ.

Can PAN be cancelled

Yes. PAN can be cancelled upon company liquidation or deregistration.