Top FAQs About Incorporating a Company in Nepal (2026 Edition)

If you are planning to incorporate a company in Nepal, you are not alone. Nepal has become a strategic destination for foreign investors seeking South Asian growth. Competitive labour costs. A young workforce. Liberalised foreign direct investment policies.

This 2026 edition answers the most common questions foreign companies ask before entering Nepal. It combines legal accuracy with practical execution insights. The goal is clarity. Not complexity.

Whether you are a startup, SME, or multinational, this guide gives you a decisive head start.

Why Foreign Companies Are Choosing Nepal in 2026

Nepal is no longer just a frontier market. It is an emerging services and outsourcing hub.

Key drivers include:

• Stable FDI framework under FITTA 2019

• Access to India and China trade corridors

• English-speaking, skilled workforce

• Competitive operating costs

• Full profit and capital repatriation rights

Foreign ownership is permitted in most sectors. Incorporation is transparent when done correctly.

Incorporate a Company in Nepal – What Foreign Investors Must Know

To incorporate a company in Nepal, foreign investors must follow both company law and investment law. This dual framework is critical.

The two governing pillars are:

• Companies Act 2006

• Foreign Investment and Technology Transfer Act (FITTA) 2019

Ignoring either leads to delays or rejection.

Types of Business Entities Available to Foreign Companies

Foreign companies can choose from several structures. The right choice depends on control, tax, and long-term plans.

1. Private Limited Company (FDI Company)

This is the most common structure.

• 100 percent foreign ownership allowed

• Separate legal entity in Nepal

• Eligible for profit repatriation

• Subject to corporate tax

2. Branch Office

Best for execution-based operations.

• No separate legal personality

• Parent company bears liability

• Restricted commercial scope

• Requires annual renewals

3. Liaison Office

Suitable for market research only.

• No revenue generation allowed

• Limited operational scope

• Temporary presence

Comparison Table: Entity Types for Foreign Investors

Minimum Investment Requirement in Nepal

As of 2026, the minimum foreign investment threshold is:

• NPR 20 million per investor

This applies to equity-based FDI companies. Technology transfer agreements follow different thresholds.

The investment must be brought through formal banking channels and approved by:

• Department of Industry (DoI) or

• Investment Board Nepal (IBN) for large projects

Step-by-Step Process to Incorporate a Company in Nepal

Here is a simplified and practical overview.

Numbered incorporation flow

1. Name reservation at the Company Registrar

2. FDI approval from DoI or IBN

3. Company registration under Companies Act

4. Capital injection via NRB-approved bank

5. PAN and VAT registration

6. Industry-specific licenses if required

7. Post-incorporation compliance setup

When documents are prepared correctly, timelines are predictable.

Typical Timeline for Incorporation

• Name approval: 1 to 2 working days

• FDI approval: 15 to 30 working days

• Company registration: 1 to 3 days

• Tax registration: 1 to 2 days

Average total timeline: 3 to 5 weeks

Delays usually come from incomplete filings or unclear shareholding structures.

Documents Required From Foreign Shareholders

Foreign investors must prepare both corporate and personal documentation.

Core documents include

• Passport or incorporation certificate

• Board resolution approving Nepal investment

• Shareholding structure chart

• Power of attorney

• Source of funds declaration

All foreign documents must be notarised and, where applicable, apostilled.

Taxation Overview for Foreign-Owned Companies

Understanding tax exposure is critical before you incorporate a company in Nepal.

Key taxes applicable

• Corporate income tax: 25 percent

• VAT: 13 percent

• Withholding tax on dividends: 5 percent

• Payroll taxes under Labour and SSF laws

Nepal follows the Income Tax Act 2002. Double taxation treaties apply with several countries.

Profit and Capital Repatriation Explained

One of the most asked questions by foreign companies is about exits and returns.

Nepal allows:

• Repatriation of dividends

• Repatriation of capital on exit

• Repatriation of royalties and fees

Approvals are granted through Nepal Rastra Bank under FITTA 2019.

Clean accounting records are mandatory.

Compliance Obligations After Incorporation

Incorporation is only the beginning.

Foreign companies must maintain:

• Annual financial audits

• Tax filings and advance tax

• SSF and labour compliance

• Industry renewals

• NRB reporting for foreign transactions

Non-compliance can block profit repatriation.

Common Mistakes Foreign Companies Make

Avoid these costly errors.

• Choosing the wrong entity structure

• Underestimating compliance workload

• Poor capital injection planning

• Ignoring labour law obligations

• Working without local compliance partners

These mistakes are preventable with the right advisory support.

Why Work With a Local FDI and Compliance Partner

Local execution matters.

A strong partner helps you:

• Secure faster approvals

• Structure investment efficiently

• Stay compliant across laws

• Protect repatriation rights

• Scale operations confidently

This is where most foreign companies win or lose time.

Call to Action

If you are ready to incorporate a company in Nepal, speak with specialists who manage FDI, legal, tax, and compliance end to end.

Book a consultation or request a tailored incorporation roadmap today.

Conclusion

To incorporate a company in Nepal in 2026 is a strategic move. The framework is investor-friendly. The opportunities are real. The compliance expectations are strict.

With the right structure and guidance, Nepal can become a profitable and scalable base for your regional expansion.

FAQ: People Also Ask

Is Nepal open to 100 percent foreign ownership?

Yes. Most sectors allow full foreign ownership under FITTA 2019, subject to sectoral approvals.

How long does it take to incorporate a company in Nepal?

On average, 3 to 5 weeks, depending on FDI approval timelines and document readiness.

What is the minimum investment to start a company in Nepal?

The minimum foreign investment is NPR 20 million per investor for equity-based FDI companies.

Can foreign investors repatriate profits from Nepal?

Yes. Dividends, capital, and royalties are fully repatriable with NRB approval.

Do foreign companies need a local director?

No. However, a local authorised representative is required for regulatory coordination.