What the 2025 Reforms Mean for Foreign Company Incorporation in Nepal

In 2025, Nepal introduced a wave of legal and economic reforms aimed at making the country more competitive for foreign investors. These changes directly affect company incorporation in Nepal, with improvements across investment approval, taxation, business licensing, and digital processing.

For foreign businesses evaluating South Asia, these reforms could be the tipping point that makes Nepal not only attractive but also easier and faster to enter. This guide explains what the 2025 reforms mean for foreign company incorporation in Nepal, with practical insights into what’s changed and how it impacts your business planning.

Background: Why 2025 Was a Pivotal Year

In response to increasing regional competition and investor concerns over red tape, Nepal's government undertook a reform strategy centered around:

• Improving its Ease of Doing Business metrics

• Aligning more closely with international investment standards

• Unlocking new sectors for Foreign Direct Investment (FDI)

• Digitalizing business incorporation and tax administration

• Accelerating approvals under the Foreign Investment and Technology Transfer Act (FITTA)

These changes were developed through collaboration between the Ministry of Industry, Commerce and Supplies, Nepal Rastra Bank, and the Private Sector Federation of Nepal.

Key 2025 Reforms Affecting Company Incorporation in Nepal

1. Digital Incorporation Portal Launched

Nepal’s Office of the Company Registrar (OCR) rolled out a fully online portal for:

• Name reservation

• MOA & AOA submission

• Business registration

• Digital payment of fees

Impact: Speeds up company incorporation by 30–40% and removes the need for multiple in-person visits.

2. FITTA Approval Timeline Reduced to 15 Working Days

Under the revised FITTA regulations, the Department of Industry must now process and respond to foreign investment applications within 15 working days.

Impact: Reduces waiting time significantly, especially for small and mid-size foreign investors.

3. New Foreign Investment Threshold Adjusted

The minimum foreign investment threshold was revised from NPR 20 million (~USD 150,000) to NPR 10 million (~USD 75,000) for select industries like:

• IT & BPO services

• Renewable energy tech

• Agritech

• Education platforms

Impact: Opens the door to small and medium international firms that previously couldn’t meet the high capital requirement.

4. Pre-Approval Not Required for Non-Restricted Sectors

The 2025 reform eliminates mandatory pre-approval for non-restricted sectors, provided the investment is under NPR 50 million and doesn’t involve land purchase or technology transfer.

Impact: Allows faster entry for sectors like software development, consulting, training, and remote services.

5. Foreign Exchange and Repatriation Clarity

Nepal Rastra Bank now provides clear guidelines and timelines for:

• Capital inflow reporting

• Profit repatriation procedures

• Foreign currency account opening

Impact: Increases transparency and predictability for foreign firms managing cross-border cash flow.

6. Special Economic Zones (SEZs) Expanded with 10-Year Tax Holiday

New zones were opened in Simara, Nepalgunj, and Itahari, with benefits including:

• 10-year corporate tax exemption

• Duty-free import of machinery and raw materials

• Single-window clearance for all business operations

Impact: Enhances competitiveness for foreign manufacturers and export-based businesses.

What It Means for Foreign Companies

✅ Faster Incorporation Process

With online registration and faster FITTA processing, companies can now be incorporated in as little as 2–3 weeks, compared to 6–8 weeks in 2024.

✅ Lower Entry Barriers

The revised investment threshold opens up Nepal to startups, SMEs, and tech firms that previously could not meet capital requirements.

✅ More Industry Access

Liberalization of entry conditions in digital services, green tech, and vocational education gives more freedom to foreign entrepreneurs.

✅ Stronger Legal Protection

Clearer policies on foreign exchange, capital repatriation, and business operations reduce compliance uncertainty.

Industries Best Positioned to Benefit from the Reforms

Remaining Challenges

Despite major reforms, some structural issues remain:

• Land ownership restrictions for foreigners still apply

• Local government offices may lag behind in adopting digital systems

• Labor compliance and VAT refunds still require close management

However, these issues are increasingly navigable with the right local partners or accounting advisors.

Conclusion

The 2025 reforms mark a turning point for company incorporation in Nepal, making it more appealing, efficient, and accessible for global businesses. For companies in IT, education, services, and light manufacturing, Nepal now offers a significantly lower-risk and cost-effective platform for entering South Asia.

With simplified approvals, reduced capital thresholds, and digitalized registration, there’s never been a better time for foreign investors to formally establish a presence in Nepal.