If you are planning to start a business in Nepal, you are entering one of South Asia’s most strategically placed and reform-driven markets. Nepal offers access to India and China, a young English-speaking workforce, competitive operating costs, and a steadily improving foreign investment regime.
This guide is written specifically for foreign companies. It explains the legal process, costs, documents, and compliance required to start a business in Nepal in 2026. You will also learn which entry model fits your goals, common mistakes to avoid, and how long everything takes.
Nepal is no longer just a tourism-led economy. It is actively positioning itself as a destination for foreign capital, outsourced operations, and regional service hubs.
Competitive labor costs with strong technical talent
English widely used in business and law
Full foreign ownership allowed in most sectors
Legal profit repatriation in foreign currency
Growing demand for IT, consulting, outsourcing, energy, and manufacturing
Nepal’s legal framework for foreign investment is anchored by the Foreign Investment and Technology Transfer Act, which guarantees investor rights, protection, and repatriation.
Before choosing a structure, foreign companies must understand the governing laws.
Companies Act
Foreign Investment and Technology Transfer Act
Income Tax Act 2002
Labour Act 2017
Social Security Act 2018
NRB Foreign Exchange Directives
These laws define company formation, ownership, employment, taxation, and capital repatriation.
Foreign investors cannot operate as sole proprietors. You must choose one of the legally recognized entities.
This is the most common option for foreign companies.
Best for:
Long-term operations, hiring staff, invoicing locally, scaling revenue.
Key features:
Up to 100% foreign ownership
Minimum FDI: NPR 20 million
Separate legal entity
Eligible for profit repatriation
A branch is an extension of a foreign parent company.
Best for:
Project-based work, donor-funded contracts, or fixed-scope engagements.
Limitations:
Cannot undertake unrelated commercial activities
Heavily regulated
Parent company bears liability
This is not a revenue-generating entity.
Best for:
Market research, relationship building, feasibility studies.
Restrictions:
No income
No commercial contracts
Limited staffing
| Criteria | Private Limited (FDI) | Branch Office | Liaison Office |
|---|---|---|---|
| Revenue generation | Yes | Limited | No |
| Hiring employees | Yes | Yes | Limited |
| Local invoicing | Yes | Yes | No |
| Profit repatriation | Yes | Restricted | Not applicable |
| Setup complexity | Medium | High | Low |
| Long-term scalability | High | Medium | Low |
You must first apply for foreign investment approval through the Department of Industry or Investment Board Nepal, depending on project size.
Documents include:
Parent company registration certificate
Board resolution approving Nepal investment
Project profile and financial forecast
Shareholder passport copies
Once FDI approval is issued, the company is registered with the Office of Company Registrar.
You will reserve the company name, submit constitutional documents, and receive the company registration certificate.
Every business must register with the Inland Revenue Department to obtain a PAN (Permanent Account Number).
This enables:
Corporate tax filings
VAT registration (if applicable)
Legal invoicing
Foreign capital must enter Nepal through a designated bank under approval of Nepal Rastra Bank.
This step is critical for:
Legal repatriation later
Dividend and royalty payments
Compliance audits
If you plan to hire:
Employment contracts must follow Nepal Labour Act
Mandatory Social Security Fund (SSF) registration
Work visas for foreign nationals
Below is a consolidated checklist foreign companies typically need.
Certificate of Incorporation (parent company)
Memorandum & Articles of Association
Board Resolution for Nepal investment
Shareholder structure
Passport copies of shareholders and directors
Recent photographs
Power of Attorney (if applicable)
FDI approval letter
Company registration certificate
PAN certificate
Bank account confirmation
Costs vary based on structure, sector, and advisory support.
Government registration fees
Legal drafting and filings
Bank compliance and approvals
Professional advisory fees
Indicative range:
USD 2,000 to USD 6,000 (excluding minimum capital)
For a properly prepared FDI company:
FDI approval: 2–4 weeks
Company registration: 3–5 working days
PAN and bank setup: 1 week
Total timeline: 4–6 weeks on average
Avoid these errors when you start a business in Nepal:
Injecting capital before approval
Choosing a liaison office for revenue activities
Ignoring labour and SSF compliance
Poor shareholder documentation
Not planning repatriation structure early
Corporate income tax: generally 25%
VAT: 13% (sector-specific)
Withholding taxes on dividends, royalties, and services
Transfer pricing rules apply for related parties
Nepal allows legal repatriation of profits, dividends, and capital, provided compliance is maintained.
Some foreign companies delay incorporation and start with an Employer of Record (EOR).
EOR is ideal if you:
Want to hire quickly
Are testing the Nepal market
Do not need local invoicing yet
Many companies later transition from EOR to a full FDI entity.
To start a business in Nepal successfully, foreign companies must balance opportunity with compliance. The country offers genuine advantages, but only when the legal process is followed correctly.
With the right structure, clear documentation, and compliant capital flow, Nepal can become a cost-effective and scalable base for South Asia operations.
If you are planning to start a business in Nepal, speak with specialists who handle FDI, company registration, compliance, and payroll under one roof.
👉 Book a confidential consultation to assess the right entry model for your business.
Yes. Most sectors allow 100% foreign ownership under FITTA 2019, except restricted industries.
The current minimum foreign investment threshold is NPR 20 million.
Yes. Profits, dividends, and capital can be repatriated through NRB-approved banking channels.
With proper documents, the process usually takes 4–6 weeks.
Yes. Foreign nationals can be directors, subject to visa and work permit rules.