Incorporate a company in Nepal — SaaS expansion to Nepal: incorporation data and tax considerations (2025)

If you plan to incorporate a company in Nepal to serve South Asia, this guide is for you. We focus on SaaS founders and finance leaders. You will get clear steps, tax rules, and timelines. We keep sentences short. We avoid jargon where possible.

Nepal offers a young talent pool and competitive costs. Time zones align with Asia and Australia. English is common in tech teams. The regulatory path is structured. There are foreign investment and FX controls to respect. This article packages the essentials you need to decide and execute.

At a glance: why Nepal for SaaS

• Large pool of junior and mid-level engineers.

• Competitive wage-to-skill ratio for support and DevOps.

• Strategic time zone for APAC support windows.

• Predictable entity setup under the Companies Act.

• Clear foreign investment route under FITTA 2019.

• Stable VAT regime and corporate tax base rates.

What this guide covers

1. Market entry paths for SaaS and when to use them.

2. Minimum documents and approval sequence for foreign investors.

3. Corporate income tax, VAT, and withholding rules that affect SaaS.

4. Profit repatriation, transfer pricing, and intercompany charging.

5. Payroll, HR, and data compliance basics.

6. A 90-day execution timeline with milestones.

7. A comparison table you can share with your board.

Incorporate a company in Nepal: entry models for SaaS

Choosing the right vehicle sets your tax and compliance baseline. Pick one that matches your go-to-market and FX needs.

Private limited company 

• Best for long-term hiring and local sales.

• Can invoice Nepal customers with VAT, if applicable.

• Eligible for foreign investment under FITTA 2019.

• Can sign office leases, payroll, and vendor contracts.

• Can repatriate profits with supporting audit and tax clearance.

Branch office of a foreign company

• Best when contracts must stay with the foreign entity.

• Subject to Nepal tax on Nepal-source income.

• Requires sector approvals in some cases.

• Not ideal for wide domestic sales due to perceptions and process.

Liaison / representative office

• Non-commercial activities only.

• Market research, partner meetings, and coordination.

• No revenue in Nepal.

• Not a fit for SaaS sales and billing.

Contractor hub (no entity; EOR or vendors)

• Useful to test hiring and support hours.

• No direct Nepal legal presence.

• Creates PE risk if activities expand.

• FX is simple but control is limited.

Original insight table — choosing your SaaS entry model

The table reflects typical ranges and processes under the Companies Act, FITTA 2019, and related rules. Always verify sector-specific exceptions.

Foreign investment route (FITTA 2019): sequence and documents

Approvals and sequence

1. Name reservation at the Office of Company Registrar.

2. Foreign investment approval under FITTA 2019.

3. Company incorporation under the Companies Act 2063 (2006).

4. Tax registrations: PAN, then VAT if required.

5. Banking and capital injection via an A-class commercial bank.

6. Post-incorporation filings and share certificates.

7. Industry-specific permits, where needed.

Core document set

• Parent board resolution to invest.

• Constitutional documents of the parent.

• Passport copies and photos of directors and shareholders.

• Proposed Articles and Memorandum for the Nepal company.

• Investment plan, sources of funds, and cap table.

• Lease intent or virtual office confirmation, if used.

• Power of attorney for local filings.

Notarization, legalization, or apostille steps may apply. Plan for this early.

Capital, banking, and FX flow for SaaS

• Open a foreign investment account with a commercial bank.

• Inject capital through banking channels referenced to FITTA approval.

• Maintain bank advice and SWIFT copies for repatriation trails.

• Dividends and service fees can be remitted with tax clearance and audit support.

• Intercompany charges should follow a defendable transfer pricing policy.

Corporate taxation for SaaS in Nepal

Corporate income tax (CIT)

• Standard corporate tax base rate is around 25% for most sectors.

• Sector incentives may exist under industry laws.

• Losses can carry forward, subject to limits.

• Thin capitalization is monitored through related-party rules and audits.

VAT for SaaS

• Nepal’s VAT standard rate is 13%.

• Determine if your SaaS is an electronic service or software service for VAT.

• Place-of-supply and customer location drive VAT outcomes.

• Exported services are generally zero-rated, subject to proof and rules.

• Domestic B2B SaaS may need VAT registration if thresholds are crossed.

 Withholding tax (WHT) touchpoints

• Salaries, rent, and certain service payments attract TDS at set rates.

• Cross-border payments can attract non-resident WHT.

• Contract drafting should price WHT and gross-up logic.

• Double taxation relief may apply where treaties exist.

Confirm exact rates and current thresholds in your year of operation. Nepal updates schedules and practice notes from time to time.

Intercompany pricing for SaaS

Design your transfer pricing policy before go-live. Align with value creation.

• Development center model: cost-plus on engineering payroll and overhead.

• Support center model: cost-plus on support and success teams.

• Sales entity model: limited-risk distributor margin on local sales.

• Keep contemporaneous documentation and comparables.

• Year-end true-up with audit and tax filings.

Payroll, HR, and benefits for tech teams

• Employment contracts should define IP assignment and code ownership.

• Probation periods are standard; include performance goals.

• Social security and benefits must follow current labor rules.

• ESOP design should respect Nepal company law and FX controls.

• Remote and hybrid policies reduce office costs and widen hiring pools.

Data, IP, and info-sec for SaaS

• Register IP ownership and license flows in group documents.

• Classify data and set retention windows by system.

• Vendor DPAs and SCC-style clauses help cross-border data flows.

• Maintain secure code, CI/CD controls, and access hygiene.

• Keep an incident response runbook and drills.

Banking stack and collections

• Use a leading A-class bank for smoother FX and e-banking.

• Domestic collections can be through bank transfers and QR platforms.

• For cross-border subscriptions, align your payment flows with FX rules.

• Keep the GL mapping clean for VAT, WHT, and revenue recognition.

90-day plan to incorporate a company in Nepal (SaaS)

Days 1–15: Decision and prep

1. Choose entry model and shareholding.

2. Gather parent and director KYC.

3. Draft Articles, MOA, and shareholder agreement.

4. Prepare investment plan and forecasts.

5. Shortlist bank and auditor.

Days 16–45: Approvals and incorporation

1. File for foreign investment approval.

2. Reserve name and incorporate upon approval.

3. Obtain PAN and VAT (if needed).

4. Open bank accounts and inject capital.

5. Sign office lease or virtual office.

Days 46–90: Operational go-live

1. Hire first wave of engineers and support staff.

2. Register payroll and set benefits.

3. Configure ERP and chart of accounts.

4. Approve transfer pricing policy and intercompany contracts.

5. Launch invoicing and monthly close cadence.

Budget ranges for a SaaS subsidiary (first 12 months)

• One-time legal and filing: moderate five figures in USD equivalent.

• Banking and FX: minimal setup; standard transaction fees.

• Monthly payroll: depends on mix of engineers vs support.

• Office and utilities: flexible with hybrid or remote teams.

• Audit and tax: annual audit plus quarterly or monthly filings.

• Software stack: HRIS, accounting, and ticketing tools.

Budgets vary by team size and location. Treat these as planning anchors.

Risk control checklist for SaaS founders

• Confirm sector eligibility and ownership caps before filings.

• Keep all approvals, SWIFTs, and bank advices on file.

• Apply the right VAT and WHT on day one.

• Document transfer pricing with functional analysis.

• Secure IP assignment for all employees and contractors.

• Maintain an FX and repatriation calendar with the bank and auditor.

• Run quarterly tax health checks against filings.

Frequently asked questions (SaaS founders)

1) How long does it take to incorporate a company in Nepal for SaaS?
Plan 6–10 weeks for a subsidiary. The range covers name, FITTA approval, incorporation, PAN, VAT, and banking setup.

2) Do I need VAT for a pure export SaaS model?
Exports are generally zero-rated when conditions are met. Keep contracts, invoices, and proof of export of services ready.

3) Can I repatriate profits easily?
Yes, with a clean trail. You need audited accounts, tax clearance, and bank compliance files that match your investment records.

4) Is a branch better than a subsidiary for SaaS?
Usually no. A private limited subsidiary is cleaner for hiring, VAT, and local sales. Branch works when contracts must stay foreign.

5) What tax rate should I budget?
Budget around 25% corporate tax for planning. Confirm exact rates and any sector incentives in your operating year.