Requirements to Start a Business in Nepal for Locals & NRNs

If you are planning to start a business in Nepal, understanding the legal, regulatory, and procedural requirements is essential. Nepal offers growing opportunities across technology, services, manufacturing, tourism, and outsourcing. However, the setup process differs for local citizens, Non-Resident Nepalis (NRNs), and foreign investors. This guide delivers a clear, authoritative breakdown of what you need to comply with Nepali law, avoid delays, and launch with confidence.

Why Nepal Is an Attractive Business Destination

Nepal’s business environment has improved steadily due to regulatory reforms, digitisation of registrations, and foreign investment incentives.

Key advantages include

• Competitive labour and operating costs

• Access to South Asian markets

• Growing startup and outsourcing ecosystem

• Tax incentives in priority sectors

• Repatriation rights for approved investments

For NRNs, Nepal also offers preferential investment recognition and simplified ownership structures.

Who Can Start a Business in Nepal

Local Nepali Citizens

Nepali citizens can establish all standard business structures with minimal capital thresholds.

Non-Resident Nepalis (NRNs)

NRNs are legally allowed to invest and operate businesses under special recognition rules. They enjoy many of the same rights as foreign investors, including profit repatriation.

Foreign Companies

Foreign companies must comply with foreign investment laws and obtain approvals through designated authorities such as Department of Industry and Nepal Rastra Bank.

Legal Structures Available When You Start a Business in Nepal

1. Private Limited Company

The most common and scalable structure.

Best for

• Startups

• SMEs

• NRN-owned ventures

2. Partnership Firm

Suitable for professional services and small businesses.

3. Sole Proprietorship

Fast to register but limited in scale and liability protection.

4. Branch or Liaison Office

Used by foreign companies exploring the market before full incorporation.

Core Requirements to Start a Business in Nepal

Mandatory Requirements (Applies to All)

1. Business name approval

2. Registered office address in Nepal

3. Constitutional documents

4. PAN or VAT registration

5. Local bank account

Additional Requirements for NRNs and Foreigners

• Passport and NRN card

• Investment approval

• Capital inward remittance

• Industry-specific licences

Documents Required to Start a Business in Nepal

For Nepali Citizens

• Citizenship certificate

• Proposed company name

• Memorandum of Association

• Articles of Association

For NRNs

• Passport

• NRN identity card

• Investment commitment letter

• Bank remittance proof

For Foreign Companies

• Parent company documents

• Board resolution

• Power of Attorney

• FDI approval letter

Step-by-Step Process to Start a Business in Nepal

Step 1: Name Reservation

Apply through the Office of Company Registrar system.

Step 2: Company Registration

File incorporation documents with Office of Company Registrar.

Step 3: Tax Registration

Obtain PAN and VAT where applicable.

Step 4: Industry Registration

Mandatory for manufacturing, IT, outsourcing, and regulated sectors.

Step 5: Bank Account & Capital Injection

NRNs and foreigners must route funds via approved banking channels.

Timeframe to Start a Business in Nepal

Cost Breakdown: Starting a Business in Nepal

Costs vary by sector, capital size, and compliance complexity.

Key Laws Governing Business Setup in Nepal

• Companies Act, 2006

• Foreign Investment and Technology Transfer Act, 2019

• Industrial Enterprises Act, 2020

• Income Tax Act, 2002

• Labour Act, 2017

These laws regulate ownership, taxation, employment, and repatriation.

Compliance Obligations After You Start a Business in Nepal

Ongoing Requirements

• Annual returns filing

• Tax filings and audits

• Labour and social security compliance

• Industry licence renewals

Common Compliance Mistakes

• Missing annual filings

• Incorrect tax classification

• Non-compliant employment contracts

Special Considerations for NRNs

NRNs benefit from:

• Recognition as foreign investors

• Profit repatriation rights

• Ability to hold 100% ownership in approved sectors

However, documentation accuracy is critical to avoid regulatory delays.

Popular Sectors for New Businesses in Nepal

• IT and software services

• Outsourcing and shared services

• Tourism and hospitality

• Manufacturing and agro-processing

• Education and consulting

Each sector may require additional approvals.

Common Challenges When Starting a Business in Nepal

• Regulatory interpretation gaps

• Delays in approvals

• Banking documentation issues

• Labour compliance complexity

Professional advisory support reduces risk and timelines.

Conclusion

To start a business in Nepal, locals and NRNs must align with legal, tax, and regulatory frameworks from day one. While the process is straightforward, errors can be costly. With proper structuring, compliant documentation, and expert guidance, Nepal offers a stable and rewarding business environment for long-term growth.

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Frequently Asked Questions

Is it easy to start a business in Nepal?

Yes. With proper documents and guidance, most businesses can be registered within one week, excluding sector approvals.

Can NRNs own 100% of a company in Nepal?

Yes. NRNs can hold full ownership in most sectors, subject to foreign investment regulations.

What is the minimum capital requirement?

There is no fixed minimum for local companies. Foreign investment thresholds apply for NRNs and foreigners.

Do I need a local partner?

No. Locals and NRNs can own companies independently unless sector-specific rules apply.

Can profits be repatriated?

Yes. Approved foreign and NRN investments can legally repatriate profits through Nepal Rastra Bank procedures.