Types of companies in Nepal matter more than many foreign investors expect. The legal structure you choose affects tax exposure, profit repatriation, compliance burden, hiring flexibility, and long-term exit options. Nepal welcomes foreign investment, but the right entity can mean the difference between smooth operations and regulatory friction.
This guide is written for foreign companies evaluating Nepal as a market or talent hub. It breaks down each business entity, with clear pros and cons, practical use cases, and compliance implications. You will also find a comparison table, FAQs, and expert guidance to help you decide confidently.
Foreign investors often focus on costs and timelines. Entity choice shapes far more:
Eligibility for foreign direct investment
Capital requirements and risk exposure
Tax treatment and dividend repatriation
Hiring and payroll compliance
Ease of scaling or exiting Nepal
Selecting the wrong structure can trigger unnecessary taxes or operational limits later.
Nepal recognizes several business forms under company, partnership, and investment laws. The most relevant types of companies in Nepal for foreign companies include:
Private Limited Company
Public Limited Company
Branch Office
Liaison Office
Partnership Firm
Sole Proprietorship
Non-Profit Company
Each serves a different commercial purpose.
A Private Limited Company is the most common entity for foreign investors operating in Nepal. It is a separate legal person with limited liability.
Allows up to 100 percent foreign ownership in approved sectors
Limited liability protects parent company assets
Eligible for profit repatriation
Suitable for hiring staff and signing contracts
Strong credibility with banks and regulators
Requires minimum capital for foreign investment
Ongoing compliance with tax, audit, and labor laws
Annual filings and statutory reporting
Long-term operations
IT, outsourcing, consulting, manufacturing, and services
Foreign companies building teams in Nepal
A Public Limited Company can issue shares to the public and typically supports large-scale operations.
Can raise capital from the public
High credibility and transparency
Suitable for infrastructure or regulated industries
High minimum capital requirements
Strict disclosure and compliance rules
Not practical for most foreign SMEs
Large multinational investments
Capital-intensive sectors
A branch office is an extension of a foreign company, not a separate legal entity.
Faster setup than a company
No local shareholding structure
Direct control by the parent company
Restricted to approved activities
Cannot freely engage in profit-making beyond scope
Higher scrutiny from regulators
Contract-based projects
Engineering, construction, or donor-funded work
A liaison office acts as a communication or coordination arm. It cannot generate revenue.
Lowest compliance burden
Useful for market research
No corporate tax on income
No commercial activities allowed
No invoicing or revenue generation
Operational costs must be funded from abroad
Market entry studies
Relationship management
Pre-investment presence
A partnership involves two or more individuals sharing profits and liabilities.
Simple formation
Low regulatory burden
Unlimited liability for partners
Not preferred for foreign investors
Limited scalability
Small local businesses
Professional practices
A business owned and managed by one individual.
Easy to register
Minimal compliance
Unlimited personal liability
Not suitable for foreign ownership
No separate legal identity
Micro-businesses
Local traders
A non-profit company operates for social, educational, or charitable objectives.
Tax exemptions in approved cases
Suitable for NGOs and INGOs
Profits cannot be distributed
Strict regulatory oversight
Development projects
Social enterprises without profit motives
| Entity Type | Foreign Ownership | Profit Allowed | Liability | Compliance Level | Best Use Case |
|---|---|---|---|---|---|
| Private Limited Company | Yes | Yes | Limited | Medium | Long-term operations |
| Public Limited Company | Yes | Yes | Limited | High | Large investments |
| Branch Office | Yes | Limited | Parent liable | Medium | Project work |
| Liaison Office | Yes | No | Parent liable | Low | Market research |
| Partnership Firm | Limited | Yes | Unlimited | Low | Local SMEs |
| Sole Proprietorship | No | Yes | Unlimited | Very low | Micro business |
| Non-Profit Company | Yes | No | Limited | Medium | NGOs, INGOs |
When evaluating types of companies in Nepal, foreign companies should consider:
Duration of investment
Revenue-generating intent
Hiring needs
Tax planning and repatriation goals
Testing the market? Choose a Liaison Office.
Executing a fixed project? Consider a Branch Office.
Building a long-term business? Form a Private Limited Company.
All commercial entities must comply with:
Corporate income tax rules
Withholding tax obligations
Social security and labor laws
Annual audits and filings
Private companies face the most balanced compliance regime for foreign investors.
Choosing a liaison office for revenue activities
Underestimating payroll and labor compliance
Ignoring repatriation planning at setup stage
Avoiding these mistakes saves time and regulatory risk.
This article reflects current practice under Nepal’s company, investment, labor, and tax framework. It is informed by advisory experience with foreign investors across technology, professional services, and outsourcing sectors.
Understanding the types of companies in Nepal is a strategic decision, not a paperwork exercise. For most foreign companies, a Private Limited Company offers the best balance of control, compliance, and scalability. However, the right choice depends on your investment horizon and business model.
Planning to enter Nepal or hire a team? Speak with a Nepal incorporation and compliance specialist to choose the right entity and avoid costly mistakes.
For most foreign investors, a Private Limited Company is the best option due to limited liability and profit repatriation rights.
Yes, in approved sectors, foreign investors can own 100 percent of a private company in Nepal.
A branch office suits project-based work, while a subsidiary is better for long-term commercial operations.
No. A liaison office cannot generate income or issue invoices in Nepal.
A liaison office is the fastest, but it is limited to non-commercial activities.