If you’re planning to start a business in Nepal, you’re entering one of South Asia’s most under-explored but high-potential markets. Nepal offers competitive labour costs, improving digital infrastructure, and preferential access to India and China. Yet, for foreign companies, the process is highly regulated and often misunderstood.
This guide explains how foreign companies can start a business in Nepal legally, covering approved structures, costs, timelines, compliance, and common pitfalls. It’s written for founders, CFOs, and expansion leaders who want clarity, not guesswork.
Nepal is no longer just a tourism or aid-driven economy. It is emerging as a services, outsourcing, and tech-enabled destination.
Key reasons foreign companies start a business in Nepal include:
Access to skilled, English-speaking professionals
Labour costs 50–70 percent lower than developed markets
Strategic proximity to India and China
Government-backed Foreign Direct Investment incentives
Growing IT, BPO, accounting, engineering, and fintech ecosystems
From Australian mortgage firms to European SaaS startups, Nepal is becoming a cost-efficient regional base.
Yes. Foreign nationals and companies can legally start a business in Nepal, but only through approved investment routes.
Foreigners cannot register a local sole proprietorship or partnership. Every foreign-owned venture must comply with Nepal’s FDI framework.
The governing laws include:
Foreign Investment and Technology Transfer Act (FITTA 2019)
Company Act Nepal
Industrial Enterprises Act
Nepal Rastra Bank (foreign exchange approvals)
Foreign companies can enter Nepal through four legal pathways.
This is the most common route.
A foreign investor incorporates a Private Limited Company in Nepal with foreign shareholding.
Best for:
Long-term market entry
Hiring local staff
Revenue generation inside Nepal
Minimum investment threshold:
NPR 20 million (approx. USD 150,000)
A Branch Office is an extension of the foreign parent company.
Key features:
No separate legal personality
Allowed to earn revenue
Parent company bears liability
Often used by:
Engineering firms
Infrastructure contractors
Consulting companies
A Liaison Office is non-revenue-generating.
Permitted activities:
Market research
Relationship building
Coordination with headquarters
Not allowed:
Sales
Invoicing
Commercial contracts
An EOR allows you to hire staff in Nepal without setting up a legal entity.
Ideal for:
Testing the market
Small teams
Remote operations
This is often the fastest way to start operating in Nepal.
Below is a simplified, realistic roadmap for foreign companies.
Choose between:
FDI company
Branch office
Liaison office
Employer of Record
This decision affects cost, compliance, and timelines.
Applications are submitted to the Department of Industry or Investment Board Nepal.
Required documents include:
Parent company incorporation documents
Board resolution
Business plan
Shareholder details
Approval timeline:
15–30 working days
Once FDI approval is granted:
Company is incorporated at the Office of Company Registrar
PAN and VAT registration follows
Foreign capital must be:
Remitted through a Nepalese bank
Approved by Nepal Rastra Bank
Properly documented for repatriation later
This includes:
Labour registration
Social Security Fund enrollment
Tax registration
Sector-specific licenses
| Structure | Typical Timeline | Complexity |
|---|---|---|
| Employer of Record | 1–2 weeks | Low |
| Liaison Office | 4–6 weeks | Medium |
| Branch Office | 6–8 weeks | Medium |
| FDI Company | 8–12 weeks | High |
Insight: Many foreign companies start with EOR and later convert to FDI once scale is proven.
Typical cost components include:
Government fees
Legal and compliance advisory
Capital requirements
Ongoing accounting and tax compliance
Estimated ranges:
EOR setup: Low initial cost
Liaison office: USD 5,000–8,000
Branch office: USD 8,000–12,000
FDI company: USD 10,000–20,000 (excluding capital)
Foreign companies must comply with:
Monthly payroll tax filings
Social Security Fund contributions
Annual audit by a licensed Nepali auditor
Annual returns with regulators
Non-compliance can lead to:
Penalties
Visa issues
Capital repatriation delays
Avoid these costly errors:
Choosing the wrong entry structure
Underestimating compliance complexity
Using nominee shareholders illegally
Injecting capital without NRB approval
Ignoring exit and repatriation planning
Key tax points:
Corporate tax: Typically 25 percent
Withholding taxes apply to salaries and services
Dividends are repatriable after tax clearance
Nepal has Double Tax Avoidance Agreements with several countries.
Foreign-owned businesses can hire:
Nepali nationals freely
Foreign nationals with work visas
Mandatory contributions include:
Social Security Fund
Leave and labour compliance under Nepal’s Labour Act
Yes, if you:
Choose the right structure
Have local compliance support
Take a long-term view
Nepal rewards patient, compliant investors.
To successfully start a business in Nepal, foreign companies must balance opportunity with compliance. The market is welcoming, but the rules matter. With the right structure and guidance, Nepal can become a profitable and strategic base for your regional operations.
If you’re planning to start a business in Nepal, book a free market-entry consultation with our Nepal FDI and expansion specialists. We’ll help you choose the right structure and avoid costly mistakes.
Yes. Foreigners can own up to 100 percent equity in approved sectors through FDI under FITTA 2019.
The standard minimum FDI threshold is NPR 20 million, though EOR models require no capital injection.
Yes. An Employer of Record allows legal hiring without entity setup.
Profits can be repatriated after tax clearance and approval from Nepal Rastra Bank.
Yes. Nepal is ideal for service-based startups, outsourcing, and back-office operations.