Nepal’s Foreign Investment Process: What Foreign Companies Need to Know in 2025

Nepal has emerged as a promising investment destination in South Asia, offering access to untapped markets, abundant natural resources, and proximity to two economic giants—India and China. In recent years, the government has prioritized foreign direct investment (FDI), revising regulations and simplifying entry requirements for global investors.

In 2025, foreign company registration in Nepal is faster and more streamlined than ever before. However, navigating the regulatory landscape still requires strategic planning and a clear understanding of the country’s foreign investment laws, timelines, and compliance requirements.

This article provides a comprehensive, up-to-date guide to Nepal’s foreign investment process as it stands in 2025. It covers everything foreign companies need to know—from entry options and approvals to taxation, profit repatriation, and practical compliance steps.

1. Overview of Foreign Investment Policy in 2025

Nepal’s primary legal frameworks for foreign investment are:

• Foreign Investment and Technology Transfer Act (FITTA), 2019

• Industrial Enterprises Act, 2020

• Companies Act, 2006

• Foreign Exchange Regulation Guidelines (by Nepal Rastra Bank)

These laws collectively:

• Allow 100% foreign ownership in most sectors

• Set a minimum FDI threshold of NPR 20 million

• Guarantee profit repatriation and protection from nationalization

• Define sectoral restrictions and procedural timelines

Nepal operates on a positive-list approach, meaning foreign investment is allowed in all sectors unless explicitly restricted.

2. Types of Foreign Investment Allowed

In 2025, Nepal welcomes the following forms of FDI:

All forms of investment must be reported to and approved by the Department of Industry (DoI) and Nepal Rastra Bank (NRB).

3. Entry Options for Foreign Companies

Foreign investors can enter Nepal using any of the following structures:

1. Private Limited Company

• 100% foreign-owned or joint venture

• Most common option for long-term operations

2. Public Limited Company

• Required for regulated industries or large-scale projects

• Must meet higher capital and governance thresholds

3. Branch Office

• Suitable for temporary or project-based presence

• Not a separate legal entity

4. Liaison Office

• Representative presence for market research

• No income-generating activity allowed

4. Foreign Investment Approval Process (2025 Update)

Nepal’s 2025 process has been simplified with digital platforms and single-window systems. However, investors must still follow a sequence of legal steps:

Step 1: Prepare Documents

• Project Proposal

• Shareholder/Investor Details

• Financial Credentials

• Technology Transfer Agreements (if applicable)

Step 2: Apply to Department of Industry (DoI)

• Submit application via the DoI’s online portal

• Receive Foreign Investment Approval Certificate

Step 3: Company Incorporation

• Register business with the Office of Company Registrar (OCR)

• Obtain PAN (Permanent Account Number) and VAT registration from the Inland Revenue Department

Step 4: Capital Inflow Through NRB

• Transfer investment capital via SWIFT into a Nepal-based bank

• Submit inward remittance proof to Nepal Rastra Bank

• Receive NRB approval for capital registration

Step 5: Industry Registration

• Register under the Industrial Enterprises Act if the business qualifies as an industrial entity

Step 6: Commence Operations

• After receiving approvals and registering with required authorities

5. Timeline for Foreign Investment Approval

Most companies complete the process within 30–45 working days, provided all documents are complete and correct.

6. Sectoral Restrictions in 2025

Foreign investment is prohibited or restricted in the following sectors:

Always verify current sectoral restrictions with the DoI before investing.

7. Taxation for Foreign-Invested Companies

Nepal’s taxation policies treat foreign companies similarly to domestic firms, with some nuances.

Key Taxes Applicable:

Special Tax Incentives (2025):

• 5–10 year tax holidays for hydropower, tourism, ICT, and SEZ-based industries

• Reduced tax rates for exports and employment-generating industries

• Customs duty exemptions on machinery and raw materials

8. Repatriation of Profits and Capital

Nepal allows full repatriation of dividends, capital gains, and loan repayments for registered foreign investments.

Conditions:

• Tax clearance from Inland Revenue Department

• Board resolution declaring dividends

• Approval from Nepal Rastra Bank

Repatriation can be made in the original investment currency or any convertible currency. The process generally takes 2–3 weeks after documentation submission.

9. Reporting & Compliance Obligations

Once operational, foreign companies must adhere to:

Failure to comply can result in penalties, suspension of profit repatriation, or cancellation of business licenses.

10. Common Mistakes to Avoid

• Using informal channels to remit capital

• Missing VAT registration despite revenue activity

• Failing to document capital inflow with NRB

• Ignoring double taxation treaty benefits

• Delays in audit and tax filings

11. Strategic Tips for Foreign Investors

1. Choose the right structure: Branch vs. Subsidiary

2. Engage a licensed local CA firm

3. Open a foreign currency account with an NRB-authorized bank

4. Plan capital inflow in phases, with clear timelines

5. Use official DoI and NRB checklists to avoid rejections

Conclusion: Why Nepal is Worth the Investment in 2025

Nepal’s 2025 foreign investment process reflects a maturing economy eager to attract ethical, long-term global partnerships. With regulatory clarity, digital procedures, and investor protection, the country is offering a level playing field to international firms.

Whether you’re entering Nepal to harness its hydropower, serve its digital economy, or access South Asian trade corridors, understanding the investment process is your first step to success.

For companies seeking foreign company registration in Nepal, now is the time to move—while incentives are high and barriers are low. The future is open for those ready to act with compliance, clarity, and commitment.