Introduction
Foreign companies intending to operate in Nepal must register under the laws that govern foreign investment and company incorporation. Registration provides the legal framework required for operation, including tax compliance, capital repatriation, and business conduct. As per the Companies Act, 2063 (2006) and the Foreign Investment and Technology Transfer Act, 2075 (2019), foreign companies must undergo a multi-step registration process to carry out business in Nepal.
Legal Definition and Purpose
A foreign company, under Section 154 of the Companies Act, 2063, is a company incorporated outside Nepal that establishes a place of business or provides services within Nepal. The purpose of registering such a company is to ensure it operates within the legal and tax framework, contributes to the economy, and fulfills investor responsibilities. This includes both profit-oriented business and liaison/representative offices.
Key Requirements for Registration
To register, a foreign company must satisfy conditions such as:
- Legal incorporation in its home country.
- Business activity not restricted by Nepalese law.
- Intention to conduct business within Nepal or provide services.
- Minimum capital requirement if applicable (e.g., NPR 20 million for most sectors).
- Investment approval from the Department of Industry (DOI).
- Nepal Rastra Bank (NRB) approval for foreign currency transactions.
Eligibility Criteria for Companies/Investors
Foreign investors must meet the following eligibility conditions:
- The company must be lawfully registered in its home jurisdiction.
- Business activities must align with Nepal’s Foreign Investment Policy.
- The proposed business must not fall under the restricted list published by the Government of Nepal.
- The investor should possess the financial and operational capacity to conduct business in Nepal.
- Non-resident entities must remit investment through formal banking channels.
Step-by-Step Registration Procedure
Prepare Required Documents
Apply to Department of Industry (DOI)
Submit investment proposal
Await approval
Seek Approval from Nepal Rastra Bank (NRB)
Register with Office of Company Registrar (OCR)
File application and supporting documents
Register for PAN/VAT at Inland Revenue Department
Municipality Registration
Commence Business
Each step must be sequential and requires accuracy in documentation.
Documents Required for Registration
- Certificate of Incorporation
- Memorandum and Articles of Association
- Latest financial statement or annual report
- Power of Attorney to local representative
- Board resolution for investment in Nepal
- Details of promoters and directors
- Notarized translations in Nepali (where applicable)
- Approval letters from DOI and NRB
- Lease agreement for office space in Nepal
Timeline for Registration Completion
Registration generally takes 4 to 6 weeks, depending on processing times:
- DOI: 7–10 working days
- NRB: 5–7 working days
- OCR: 5–10 working days
- Tax and Municipal Registration: 3–5 working days
Any delay in document verification may extend this period.
Cost and Government Fees Breakdown
- DOI Registration Fee: NPR 10,000–50,000
- OCR Registration Fee: Based on authorized capital (approx. NPR 15,000–50,000)
- Legal Service Fees: NPR 100,000 and above (varies)
- PAN/VAT: Free (service charges may apply)
Foreign companies should also consider additional costs such as translation, notarization, and office lease.
Compliance and Document Checklist
- Certificate of Registration
- PAN and VAT Certificates
- DOI and NRB approvals
- Appointment of Local Representative
- Municipal registration
- Record of inward remittance
- Annual tax filings
- Audited financial statements
- Labor and environmental clearances (if applicable)
- Renewal of registration as per OCR requirement
Laws Governing the Process
The process is governed by several laws:
- Companies Act, 2063 (2006)
- Foreign Investment and Technology Transfer Act, 2075 (2019)
- Industrial Enterprises Act, 2076 (2020)
- Income Tax Act, 2058 (2002)
- Nepal Rastra Bank Act, 2058 (2002)
- Related sectoral regulations depending on the nature of business
Authorities Involved in Registration
- Department of Industry (DOI): Foreign investment approval
- Nepal Rastra Bank (NRB): Currency exchange and investment clearance
- Office of Company Registrar (OCR): Company registration
- Inland Revenue Department (IRD): Tax registration and compliance
- Municipal Authority: Local business operation permit
Annual Filing and Tax Compliance
- Annual tax return submission to IRD
- Financial audit by registered auditors
- Renewal of local licenses and municipal clearance
- Submission of updated shareholder and director details
- TDS deductions and deposits
- VAT filings (if applicable)
- Documentation of inward remittances for compliance
Post-Registration Formalities
- Open a business bank account
- Transfer investment funds through NRB
- Hire staff and comply with labor laws
- Setup office and display registration details
- Maintain updated company records in English and Nepali
- Begin business within 6 months from registration date
Legal Services Offered for Registration
- Pre-registration consultation
- Drafting and notarization of documents
- Liaison with DOI, NRB, OCR
- Application preparation and submission
- Office setup support
- Post-registration compliance
- Legal representation
- Tax advisory and audit coordination
Benefits and Limitations of Registration
Benefits
- Legally recognized business presence
- Access to local market and resources
- 100% ownership in allowed sectors
- Tax and legal certainty
- Repatriation of profit permitted under NRB rules
Limitations
- Regulatory oversight from multiple authorities
- Sectoral restrictions on investment
- Requirement for periodic filings and renewals
- Additional compliance costs
- Cannot deviate from approved business activities
FAQs
Who can register a foreign company?
Any lawfully registered foreign company from a permitted country can register in Nepal if its intended activities comply with local laws.
What documents do I need?
You need incorporation documents, financial statements, board resolutions, a power of attorney, and office lease documents.
How long does registration take?
The entire process takes around 4 to 6 weeks under normal conditions, assuming all documents are correctly submitted.
Are there any hidden costs?
There are no hidden government fees, but costs such as legal services, translations, and notary charges must be considered.
What are the compliance rules?
Foreign companies must file annual returns, pay taxes, maintain books of accounts, and submit inward remittance records.
Can I own 100% of the company?
Yes, 100% foreign ownership is allowed in most sectors not listed as restricted by the Government of Nepal.
Is local office space required?
Yes, a physical office with a legal address is mandatory for registration and ongoing compliance.
What taxes apply to foreign firms?
Standard corporate income tax applies, generally at 25%, along with VAT and TDS where applicable.
Do I need a local partner?
No, unless the sector specifically mandates joint ventures or local participation as per policy.
Is a visa required for registration?
No visa is required to register, but work or business visas are needed to reside or work in Nepal post-registration.