Company registration in Nepal can be a powerful gateway to South Asia. Nepal offers competitive labor costs, a growing digital economy, and favorable foreign investment laws. Yet, many foreign companies face delays, penalties, or failed registrations due to avoidable mistakes.
This guide breaks down the top five mistakes foreign companies make when registering a company in Nepal, why they happen, and how to avoid them. It is written from the perspective of advisors who regularly handle FDI, EOR, branch offices, and private limited company registrations for international clients.
If you want a smooth, compliant, and future-proof market entry, this article is your roadmap.
Nepal’s company laws are clear, but they are procedural and documentation-heavy. Foreign companies must navigate multiple authorities, including:
Office of the Company Registrar (OCR)
Department of Industry (DOI)
Nepal Rastra Bank (NRB)
Inland Revenue Department (IRD)
Ministry of Industry, Commerce and Supplies
Key laws governing company registration in Nepal include:
Companies Act, 2006
Foreign Investment and Technology Transfer Act (FITTA), 2019
Industrial Enterprises Act, 2020
Income Tax Act, 2002
Labour Act, 2017
Missing one step or misunderstanding the structure can cost months.
One of the most common company registration mistakes in Nepal is selecting an incorrect entity type.
Foreign companies usually choose from:
Private Limited Company
Branch Office
Liaison Office
Employer of Record (EOR) model
Each structure has different legal, tax, and compliance implications.
Many foreign founders assume that a branch office or liaison office is faster and cheaper. In reality, these structures come with restrictions on revenue generation and local hiring.
Before company registration in Nepal, clearly define:
Will the entity generate local revenue?
Will it hire Nepali staff?
Is long-term market presence planned?
Is profit repatriation required?
For most foreign companies, a foreign-owned private limited company under FITTA offers the best balance of control and flexibility.
Nepal enforces minimum foreign investment thresholds. Ignoring them can derail the entire registration process.
As per FITTA 2019:
Minimum FDI amount is NPR 20 million (approx. USD 150,000)
Capital must be brought through formal banking channels
Funds must be approved by the Department of Industry
Foreign companies often assume they can start small and inject capital later. Nepal does not allow this for FDI-registered entities.
Plan capital structure before initiating company registration in Nepal:
Align share capital with business scale
Prepare source-of-funds documentation
Coordinate with an NRB-approved commercial bank
Company name reservation in Nepal seems simple, but it causes frequent rejections.
Common issues include:
Names conflicting with existing companies
Restricted or regulated words without approval
Overly broad or vague business objectives
Foreign companies often reuse global brand names without checking local availability or regulatory sensitivity.
When registering a company in Nepal:
Prepare three alternative names
Ensure the object clause matches FITTA-approved activities
Avoid regulated terms like “bank,” “insurance,” or “investment” unless licensed
Many companies think company registration in Nepal ends with the certificate of incorporation. This is a costly assumption.
Post-registration obligations include:
PAN and VAT registration
Monthly tax filings
Social Security Fund (SSF) enrollment
Withholding tax compliance
Annual returns to OCR and IRD
Foreign founders focus on incorporation but overlook operational compliance.
Set up compliance systems immediately after registration:
Register employees under SSF (31% contribution split)
Maintain monthly accounting records
File tax returns even if revenue is zero
Nepal allows online filing, but foreign company registration is not DIY-friendly.
Issues include:
Notarization and apostille requirements
Embassy attestation delays
Language and procedural nuances
Back-and-forth with regulators
Foreign companies assume online portals equal automation. In Nepal, human verification still dominates.
Work with local professionals who understand:
OCR workflows
DOI approval processes
NRB capital repatriation rules
Practical timelines
| Area | Common Mistake | Best Practice |
|---|---|---|
| Entity Type | Choosing branch by default | Private limited under FITTA |
| Capital | Underestimating FDI threshold | Plan NPR 20M+ upfront |
| Name Reservation | One name only | Three compliant alternatives |
| Compliance | Ignoring post-registration | Monthly tax and SSF setup |
| Process | DIY approach | Local legal and tax advisors |
Foreign companies should prepare the following:
Passport copies of shareholders and directors
Board resolution approving Nepal investment
Apostilled incorporation documents
Proposed Memorandum and Articles of Association
Bank reference letter
FDI application to DOI
Having these ready can reduce timelines by weeks.
For foreign companies, realistic timelines are:
Name reservation: 2–3 working days
DOI approval: 2–4 weeks
Company incorporation at OCR: 3–5 working days
PAN and local registrations: 1 week
Total timeline: 4–6 weeks, assuming no rejections.
Align entity structure with exit strategy
Design compliance for audit readiness
Plan profit repatriation from day one
Budget for professional fees and taxes
Use EOR if testing the market first
These steps reduce risk and improve long-term returns.
Yes. Foreigners can own up to 100% equity in many sectors under FITTA 2019, subject to approval.
Foreign investors must bring at least NPR 20 million as foreign direct investment.
Partially. While filings are online, foreign investors still require physical approvals and attestations.
Yes. Profit, dividends, and capital can be repatriated with NRB approval and tax clearance.
Yes. Nepal is popular for IT, accounting, mortgage processing, and back-office outsourcing.
Company registration in Nepal is not difficult, but it is procedural. Most failures happen due to poor planning, incorrect structures, or lack of local expertise.
Avoiding these five mistakes can save months of delays, regulatory stress, and unexpected costs. With the right guidance, Nepal can become a stable and scalable base for your regional operations.
If you are planning company registration in Nepal and want a compliant, fast, and investor-ready setup, speak with our specialists.
We help foreign companies with:
FDI-approved company registration
Branch and liaison office setup
Employer of Record (EOR) services
Tax, payroll, and compliance management
Book a free consultation and enter Nepal with confidence.