100% Foreign Ownership: Permitted in most sectors without local partners
Tax Incentives: 5-10 year tax holidays for priority sectors
Low Operational Costs: Competitive labor and real estate costs
Young Workforce: 40% population under 20, English-speaking talent pool
Legal Framework for Foreign Business Ownership
Primary Governing Laws:
Legislation
Purpose
Key Provisions
Foreign Investment and Technology Transfer Act (FITTA), 2019
FDI regulation
Approval processes, repatriation rights, technology transfer
Companies Act, 2063 (2006)
Company formation
Registration, governance, compliance requirements
Industrial Enterprises Act, 2020
Industrial incentives
Tax holidays, subsidies, sectoral promotion
Public Private Partnership and Investment Act, 2019
Infrastructure projects
PPP framework, large project facilitation
Approving Authorities:
Investment Amount
Approving Authority
Timeline
Up to NPR 500 million (~USD 3.75M)
Department of Industry (DOI) - Automatic Route
7-15 days
Above NPR 500 million
Investment Board Nepal (IBN)
30-60 days
Investment Routes for Foreigners
Route 1: Company Registration (FDI Route)
The most common approach for foreign entrepreneurs:
Step-by-Step Process:
Phase
Steps
Timeline
Cost (NPR)
1. Pre-Investment
Sector verification, business plan, document preparation
2-4 weeks
Variable
2. FDI Approval
Submit application to DOI/IBN with documents
7-60 days
20,000 deposit
3. Name Reservation
Reserve company name at OCR (online)
1-2 days
100
4. Company Registration
Submit MoA, AoA, FDI approval, documents
15-30 days
16,000+ (based on capital)
5. Tax Registration
PAN and VAT registration at IRD
3-7 days
Nominal
6. Operational Setup
Bank account, capital injection, licenses
2-4 weeks
Variable
Total Timeline: 6-12 weeks from start to operations
Required Documents for FDI Approval:
Document
Specification
Investor's incorporation certificate
Notarized and legalized
Audited financial statements
Last 3 years
Board resolution
Authorizing Nepal investment
Project proposal/feasibility study
Detailed business plan
Bank reference letter
Financial credibility
Passport copies
All directors/promoters
Power of Attorney
For local representative
Route 2: Branch Office Registration
For foreign companies wanting Nepal presence without separate legal entity:
Key Characteristics:
Feature
Specification
Legal Status
Extension of parent company, no separate legal personality
Revenue Generation
Allowed - can conduct income-earning activities
Minimum Investment
No minimum required
FDI Approval
Not required (different from subsidiary)
Parent Company Liability
Full liability for branch operations
Registration Process:
Step
Action
Timeline
1
Obtain government authority approval/recommendation
2-4 weeks
2
Submit application to OCR with documents
1 day
3
OCR evaluation and registration
2-3 weeks
4
PAN/VAT registration at IRD
1 week
5
Local ward office registration
2-3 days
Total Timeline: 3-5 weeks after government approval
Required Documents:
Document
Requirement
Parent company incorporation certificate
Notarized + Nepali translation
MoA and AoA
Notarized translation
Board resolution
Authorizing branch establishment
Company profile
Signed copy
Directors' passport copies
All directors
Nepal representative citizenship/passport
Local appointee
Power of Attorney
For representative
Proposed operational plan
Business activities in Nepal
Government approval/contract
If applicable
Government Fees:
Proposed Investment
Registration Fee (NPR)
Up to 10 million
15,000
10M - 100M
40,000
100M - 200M
70,000
200M - 300M
100,000
300M - 400M
130,000
400M - 500M
160,000
Above 500M
3,000 + 3,000 per additional 10M
Route 3: Liaison Office (Non-Revenue)
For market research and coordination only:
Feature
Specification
Activities
Market research, liaison, coordination
Revenue Generation
Prohibited
Cost Structure
Parent company funding only
Timeline
Similar to branch office
100% Foreign Ownership Sectors
Fully Open Sectors (No Local Partner Required):
Sector
Minimum Investment
Special Benefits
Manufacturing
NPR 10-50 million
Tax holidays, export incentives
Information Technology
No minimum
Automatic approval, 141% 5-year growth
Tourism & Hospitality
NPR 20-50 million
7-year tax holiday, land lease
Energy/Hydropower
NPR 100 million+
10-year tax holiday, accelerated depreciation
Export-Oriented Agriculture
NPR 10 million
Duty drawbacks, cash incentives
Infrastructure
Project-based
PPP opportunities, government contracts
E-commerce & Digital Services
No minimum
Fast-growing market access
Restricted Sectors (Ownership Caps):
Sector
Foreign Ownership Cap
Conditions
Banking & Financial Institutions
Up to 75%
NRB approval required
Telecommunications
Up to 80%
20% local participation required
Insurance
Up to 80%
20% local participation required
Domestic Airlines
Up to 49%
Strategic sector limitation
Consultancy Services
Up to 51%
Foreign majority allowed
Prohibited Sectors:
Sector
Reason
Cottage industries
Protection of traditional artisans
Real estate trading (not construction)
Speculation control
Retail trading (small scale)
Local business protection
Multilevel marketing
Consumer protection
Arms and ammunition
National security
Mass communication media
Cultural sovereignty
Minimum Investment Requirements (2025)
Sector/Business Type
Minimum FDI
Approximate USD
General Services
NPR 20 million
USD 150,000
Manufacturing
NPR 20-50 million
USD 150,000-375,000
Tourism
NPR 50 million
USD 375,000
Technology Transfer Projects
NPR 30 million
USD 225,000
Export-Oriented Industries
NPR 20 million
USD 150,000
Information Technology
NPR 5 million
USD 37,500
IT (Automatic Route)
No minimum
No minimum
Hydropower Projects
NPR 500 million+
USD 3.75 million+
Taxation for Foreign-Owned Businesses
Corporate Tax Rates:
Business Type
Tax Rate
Notes
General Business
25%
Standard rate
Manufacturing/Export
20%
Export incentive
Priority Sectors (IT, Tourism, Energy)
20% or tax holiday
5-10 year exemption
Special Economic Zone
20%
Additional benefits
Tax Incentives Available:
Incentive
Duration
Eligibility
Tax Holiday
5-10 years
Priority sectors, remote areas
Accelerated Depreciation
Immediate
Capital-intensive industries
Duty-Free Import
Project period
Capital goods, raw materials
Export Subsidies
Ongoing
Export-oriented manufacturing
Land Lease Concessions
Long-term
Tourism, industrial projects
Withholding Taxes:
Payment Type
Rate
Applicability
Dividends
5%
Profit distribution to foreign parent
Interest
15%
On loans from foreign parent
Royalties
15%
Technology transfer payments
Technical Fees
15%
Professional services
Repatriation of Profits
0% (after tax)
Full repatriation allowed
Visa and Immigration for Foreign Entrepreneurs
Business Visa Options:
Visa Type
Eligibility
Duration
Renewal
Business Visa
Foreign investors, entrepreneurs
1-5 years
Annual/bi-annual
Non-Tourist Visa
Employees of registered companies
Employment period
With employment
Residential Visa
Investment USD 1 million
Until investment maintained
Automatic
Study/Research Visa
Pre-investment feasibility
6 months
Extendable
Visa Application Process:
Step
Action
Authority
1
Obtain FDI approval/company registration
DOI/IBN/OCR
2
Apply for visa at Department of Immigration
Immigration Department
3
Submit supporting documents (investment proof, company docs)
-
4
Receive visa and register at local police
-
Capital Injection Schedule (FITTA Requirements)
Foreign investment must be injected in three stages :
Stage
Timeline
Investment Required
Cumulative
Stage 1
Within 1 year of approval
25% (if 20M), 15% (if 20M-250M), 10% (if 250M)
10-25%
Stage 2
When operations commence
Up to 70% of total
70%
Stage 3
After 2 years of production
Remaining 30%
100%
Compliance Requirements After Registration
Ongoing Obligations:
Compliance
Frequency
Authority
Annual financial statements
Annual
OCR (within 6 months of FY-end)
Income tax return
Annual
IRD
VAT return
Monthly/Quarterly
IRD
TDS returns
Monthly/Quarterly
IRD
Foreign investment reporting
Annual
DOI/IBN
Social Security Fund contributions
Monthly
SSF
Local business tax
Annual
Ward Office
Audit report submission
Annual
OCR (for companies)
Branch Office Specific:
Requirement
Timeline
Initial compliance report
Within 3 months of registration
Parent company financials
Within 3 months of preparation
Branch financial audit
Annual
Quarterly compliance reports
Every 3 months
Practical Tips for Foreign Entrepreneurs
Before Starting:
Tip
Explanation
Verify sector eligibility
Check current negative list with DOI
Conduct market research
Understand local demand and competition
Engage local legal counsel
Navigate regulatory complexities
Plan capital structure
Meet minimum investment and injection schedule
Understand tax implications
Model total tax burden and incentives
During Setup:
Tip
Explanation
Use automatic route when eligible
Faster approval for NPR 500M investments
Prepare complete documentation
Avoid delays and rejections
Maintain original document chain
Notarization, legalization, translation
Establish local banking early
Essential for capital injection
Register all applicable taxes
PAN, VAT, excise as applicable
After Operations:
Tip
Explanation
Maintain compliance calendar
Track all filing deadlines
Preserve documentation
6+ years retention for tax purposes
Monitor regulatory changes
FITTA and tax laws evolve frequently
Plan repatriation strategy
Ensure NRB compliance for profit remittance
Consider local partnerships
Even where not mandatory, can help operations
Frequently Asked Questions (FAQs)
Can foreigners own 100% of a business in Nepal?
Yes, in most sectors. FITTA 2019 permits 100% foreign ownership in manufacturing, IT, tourism, energy, and most services. Specific caps apply in banking (75%), telecom (80%), insurance (80%), and airlines (49%) .
What is the minimum investment to start a business in Nepal?
The standard minimum is NPR 20 million (USD 150,000) for most sectors. However, IT and software companies have no minimum investment requirement under the automatic route .
How long does it take to register a company in Nepal?
The complete process takes 6-12 weeks: 7-60 days for FDI approval, 15-30 days for company registration, and 2-4 weeks for operational setup. Automatic route investments are faster .
Can I start a business in Nepal without visiting?
Partially. Initial FDI approval can be obtained online for automatic route investments , but physical presence is typically required for bank account opening, final registrations, and operational launch.
What is the difference between branch office and subsidiary?
A subsidiary is a separate legal entity requiring FDI approval, with limited liability and 100% foreign ownership possible. A branch office is an extension of the parent company, requires no FDI approval, has no minimum investment, but parent company retains full liability .
Can I repatriate profits from Nepal?
Yes, FITTA 2019 guarantees full repatriation of profits, dividends, and capital after tax compliance. NRB approval required, processed within 7 days .
What taxes will my business pay in Nepal?
Corporate income tax: 25% standard, 20% for manufacturing/priority sectors. VAT: 13%. Withholding taxes on dividends (5%), interest/royalties (15%). Various incentives available .
Do I need a local partner or director?
No for most sectors. Foreigners can own 100% and appoint foreign directors. However, at least one director must be physically present in Nepal for compliance, or appoint a local representative .
Can I buy property for my business?
Yes, registered companies can lease or buy property for business purposes. Foreign individuals cannot own land. Agricultural land ownership is restricted even for companies .
What sectors offer the best opportunities?
Information technology (fastest growing, no minimum investment), manufacturing (tax incentives, export potential), tourism (7-year tax holiday), and renewable energy (10-year tax holiday, high demand) .
Why Choose Corporate Np for Foreign Business Setup
Navigating Nepal's business registration process as a foreigner requires expertise in FITTA 2019, company law, tax regulations, and sector-specific requirements. Corporate Np provides comprehensive services including:
Sector eligibility verification and business structure advice
FDI approval applications (DOI/IBN) and automatic route facilitation
Company registration and documentation preparation
Branch office registration and compliance
Tax registration (PAN/VAT) and planning
Visa and work permit assistance
Bank account opening and capital injection support
Ongoing compliance and regulatory advisory
Our team ensures your Nepal business establishment complies with all statutory requirements while maximizing available incentives and minimizing setup timelines. Contact Corporate Np today for seamless foreign business registration in Nepal.
Important Disclaimer
This content is prepared for informational and educational purposes only. It does not constitute legal advice. Foreign investment laws, company registration procedures, and tax regulations are subject to frequent amendments by the Government of Nepal, Department of Industry, Investment Board of Nepal, and other authorities. Always verify current requirements with official sources or qualified legal counsel before making investment decisions. The information presented reflects regulations as of March 2026 and may not capture recent policy changes.
