Nepal welcomes foreign investment, skills and technology, but only through a clear legal door. That door is opened by two main laws: the Foreign Investment and Technology Transfer Act, 2075 (2019) — commonly called FITTA 2019 — and the Companies Act, 2063 (2006). Together with the Industrial Enterprises Act, 2076 (2020), they decide who may invest, in which sector, how much, and through which government office.
This guide answers the questions foreign investors ask us most. Every answer is drawn from the Acts themselves and from official government sources such as the Department of Industry (DOI) at doind.gov.np, the Office of the Company Registrar (OCR) at ocr.gov.np, and the Inland Revenue Department (IRD) at ird.gov.np.
Who Can Register a Business in Nepal as a Foreigner, and Under Which Laws?
Which laws control foreign business registration in Nepal?
Four laws matter most:
- FITTA 2019 – defines foreign investment, requires prior approval, and protects the investor’s rights.
- Companies Act, 2063 (2006) – governs incorporation of private and public companies and branch offices of foreign companies.
- Foreign Investment and Technology Transfer Rules, 2077 (2021) – the procedural details.
- Industrial Enterprises Act, 2076 (2020) – classification and registration of industries.
Nepal Rastra Bank (NRB) rules also apply when money enters or leaves the country. Full official texts are published by the Nepal Law Commission at lawcommission.gov.np.
Who counts as a “foreign investor”?
Under Section 2 of FITTA 2019, a foreign investor is a foreign individual, foreign company or firm, a foreign government or international agency, or a Non-Resident Nepali (NRN) investing in Nepal. A Nepali company that itself has foreign shareholding is also treated as a foreign investor when it invests further.
Importantly, foreign investment must always be approved before it comes in. Section 3 of FITTA states plainly that no foreign investment may be made without approval from the competent body.
Which sectors are closed to foreign investment?
FITTA 2019 contains a Schedule — widely known as the negative list. Foreign direct investment (FDI) is not permitted in, among others:
- Primary agriculture and animal production: poultry, fishery, bee-keeping, fruits, vegetables, oil seeds, pulses, dairy;
- Cottage and small industries;
- Personal service businesses (hairdressing, beauty parlour, tailoring, driving training);
- Arms, ammunition, gunpowder, explosives, nuclear/biological/chemical weapons, atomic energy and radioactive material;
- Real estate business (construction industry is allowed), retail trade (except international chains operating in at least two other countries), internal courier service, local catering, money changer and remittance services;
- Travel agencies, trekking agencies, tour and mountaineering guides, homestay and rural tourism;
- Mass media — newspapers, radio, television, online news — and motion pictures in the national language;
- Management, accounting, engineering and legal consultancy, plus language, music and computer training;
- Any consultancy service where foreign shareholding would exceed 51%.
Everything not on this list — manufacturing, hydropower, IT and software, hospitality and hotels, hospitals, education (subject to sector rules), logistics, trading/wholesale, agro-processing, construction — is generally open. CompanyNP screens your proposed activity against this Schedule before any money is spent. See our FDI approval service page for sector-by-sector screening.
Is there a minimum foreign investment amount?
Yes. Under Section 9 of FITTA 2019, the Government of Nepal fixes a minimum foreign investment threshold by notice in the Nepal Gazette. The threshold currently applied by the Department of Industry is NPR 20 million (2 crore) per foreign investor in equity. Nepal has also issued a Gazette notice exempting the information technology sector from this minimum, to attract small IT and software investors.
Because this figure is set by Gazette notice and can change, always confirm the current threshold on doind.gov.np or with CompanyNP before planning your capital structure.
Which authority approves foreign investment?
- Department of Industry (DOI) — approves most projects, and runs the Single Point Service Centre created under Section 17 of FITTA.
- Investment Board Nepal (IBN) — approves large projects, generally those with fixed capital of NPR 6 billion and above, and hydropower projects above 200 MW, under the Investment Board Act, 2068 (2011).
FITTA also allows an automatic route (Section 15), and Nepal has issued procedures permitting automatic approval for qualifying investments up to NPR 500 million in specified sectors.
What Types of Business Entities Can Foreigners Register in Nepal?
What is a private limited company, and why do most foreigners choose it?
A private limited company under the Companies Act, 2063 is the standard vehicle for FDI in Nepal. Key legal points:
- It may have 1 to 101 shareholders (Section 9).
- 100% foreign shareholding is allowed in open sectors.
- Liability of shareholders is limited to their unpaid share amount.
- No statutory minimum paid-up capital is fixed by the Act for private companies — but the FITTA minimum investment threshold applies to the foreign investor’s equity.
- It must add “Private Limited” to its name (Section 6).
Can a foreigner register a public limited company?
Yes. A public company needs at least seven promoters and, under Section 11 of the Companies Act, a minimum paid-up capital of NPR 10 million unless a different amount is prescribed for a particular sector. Public companies face heavier disclosure, board and audit duties, so they are usually chosen for banking, insurance, large hydropower or listing plans.
Can a foreign company open a branch or liaison office instead?
Yes. Section 154 of the Companies Act, 2063 requires a foreign company that establishes a place of business in Nepal to register with the Office of the Company Registrar within one month. Two options exist:
- Branch office – permitted where the foreign company has won a contract or licence in Nepal; it may earn income and is taxed in Nepal.
- Liaison (contact) office – may not carry out income-generating business; it only coordinates, markets and communicates.
Branch registration requires the parent company’s charter documents, board resolution, audited accounts and the underlying Nepali contract or licence. CompanyNP handles branch and liaison office registration end to end.
Can a foreigner register a sole proprietorship or partnership firm?
In practice, no. Sole proprietorships and partnerships are registered under the Private Firm Registration Act, 2014 and the Partnership Act, 2020, which are administered for Nepali citizens, and FITTA approval is structured around equity in a company or industry. Foreign investors therefore incorporate a company or register a branch.
What Is the Step-by-Step Process of Business Registration for Foreigners in Nepal?
Step 1 – Name reservation at the Office of the Company Registrar
The proposed company name is reserved online through the OCR system at ocr.gov.np. Names that are identical to an existing company, misleading, or contrary to public decency are refused under Section 6 of the Companies Act.
Step 2 – Foreign investment approval from DOI or IBN
An application is filed with the DOI (online through its foreign investment system) with:
- Application in the prescribed form;
- Project report / business plan with capital structure and employment plan;
- Passport copies (individual investor) or incorporation certificate, charter documents and board resolution (corporate investor);
- Financial credibility certificate from the investor’s bank;
- Bio-data of the investor;
- Draft Memorandum of Association (MOA) and Articles of Association (AOA);
- Joint venture agreement if there is a Nepali partner;
- Power of attorney to the local representative or consultant.
Under FITTA 2019 and its Rules, the approving body is required to decide promptly — generally within seven days of receiving a complete application — and to notify the applicant of the decision. Documents in a foreign language must be officially translated and notarised.
Step 3 – Company incorporation at OCR
With the DOI approval letter, the MOA, AOA, and (for private companies with more than one shareholder) the consensus agreement are filed under Sections 4 and 5 of the Companies Act. OCR then issues the Certificate of Incorporation and the company legally exists.
Step 4 – Tax registration at the Inland Revenue Department
Every company must obtain a Permanent Account Number (PAN) from the IRD (ird.gov.np) under the Income Tax Act, 2058 (2002). VAT registration follows where the Value Added Tax Act, 2052 and its Rules require it — either because turnover crosses the prescribed threshold or because the business falls in a category needing compulsory registration.
Step 5 – Industry registration and local-level registration
If the business is an “industry” under the Industrial Enterprises Act, 2076, it is registered with the DOI (or the relevant provincial office) after incorporation. The company must also register with the local municipality or rural municipality ward office and, where the sector needs it, obtain a licence from the concerned ministry or regulator (for example, tourism, health, education, telecom, banking).
Step 6 – Bringing the investment in through the banking channel
Under Section 12 of FITTA, foreign investment must enter Nepal in convertible foreign currency through the banking channel (unless otherwise permitted). The commercial bank issues a certificate of receipt, and the inflow is recorded with Nepal Rastra Bank in line with NRB’s foreign investment and foreign loan management rules (nrb.org.np). This record is what later allows legal repatriation. Investment must be brought within the timeline stated in the DOI approval letter; extensions require an application.
How long does the whole process take?
Where documents are complete and properly notarised, DOI approval plus incorporation and PAN typically takes a few weeks. Delays almost always come from missing notarisation, unclear project reports, or sectors needing a separate licence. CompanyNP’s company registration in Nepal service exists to remove exactly those delays.
What Are the Costs, Compliance, Tax, Visa and Repatriation Rules?
What government fees apply?
OCR charges an incorporation fee based on authorised capital, published in the Companies Regulations and on ocr.gov.np. DOI charges prescribed application and registration fees under the FITTA Rules and Industrial Enterprises Rules. Local ward registration and annual business fees are set by each municipality. Professional fees for translation, notarisation, audit and consulting are separate.
What ongoing compliance must a foreign-invested company follow?
- Annual General Meeting and statutory audit by a licensed auditor;
- Annual returns and financial statements filed with OCR (Sections 78 and 80 of the Companies Act);
- Income tax return to IRD within three months of the fiscal year end, with monthly/periodic VAT and TDS filings;
- Reporting to DOI on investment inflow and project progress;
- Prior approval for share transfer, capital increase, sector change or capitalisation of profits involving foreign investment;
- Compliance with the Labour Act, 2074 (2017) on contracts, social security and minimum wage.
Failure to file returns attracts fines under the Companies Act and can block later approvals.
What taxes will the company pay?
Under the Income Tax Act, 2058, the normal corporate income tax rate is 25%. A 20% rate applies to special (manufacturing) industries and certain other listed businesses, while 30% applies to banks, financial institutions, insurance, telecom, and tobacco or liquor businesses. VAT is 13%. Dividends paid to shareholders attract withholding tax. Rates and concessions change with each Finance Act, so annual verification is essential.
Can profits and capital be taken out of Nepal?
Yes. Section 20 of FITTA 2019 guarantees repatriation, in the currency of investment, of:
- dividends and profits;
- proceeds from sale of shares or the whole investment;
- amounts received from liquidation after paying liabilities;
- principal and interest of an approved foreign loan;
- royalty and fees under an approved technology transfer agreement;
- amounts received under a court award or arbitration settlement.
Repatriation requires DOI recommendation and NRB facilitation, plus proof that Nepali taxes are paid.
What visas are available to foreign investors?
Section 32 of FITTA 2019 provides:
- a non-tourist visa of up to six months to study or research an investment opportunity;
- a business visa for the foreign investor or one authorised representative, and dependent family members, valid so long as the investment is retained;
- a residential visa for an investor who invests US$ 1 million or more at one time, and for dependent family.
Is foreign investment protected against nationalisation?
Yes. Section 21 of FITTA 2019 states that foreign investment shall not be nationalised or expropriated. FITTA also guarantees national treatment in most respects, allows dispute settlement by agreed mechanism or arbitration, and protects investors from adverse retroactive changes to facilities already granted.
How does CompanyNP support foreign investors?
CompanyNP works only on Nepal-focused corporate and FDI matters: negative-list screening, DOI/IBN applications, OCR incorporation, PAN and VAT, industry and local registration, NRB inflow recording, visa recommendations, and annual compliance. Our filings follow the exact formats published by DOI and OCR. Contact us through companynp.com for a documented, law-based assessment of your project.
Frequently Asked Questions (FAQs)
Can a foreigner own 100% of a Nepali company?
Yes. FITTA 2019 permits 100% foreign ownership in sectors outside the negative list. Consultancy services are capped at 51% foreign shareholding, and some sectors carry separate regulatory limits under their own governing laws.
Do I need to visit Nepal to register my company?
Not necessarily. Most filings can be completed through a notarised power of attorney given to a local representative. However, bank account opening, KYC verification and some sector licences may still require the investor’s physical presence.
What is the minimum foreign investment in Nepal?
The Gazette-notified minimum is NPR 20 million per foreign investor in equity, administered by the Department of Industry. The information technology sector has been exempted from this threshold. Always confirm the current figure at doind.gov.np.
Can I buy shares in an existing Nepali company?
Yes. Purchasing shares of an existing company is recognised foreign investment under FITTA 2019, but it needs prior approval from the Department of Industry or Investment Board Nepal, plus share transfer recording at the Office of the Company Registrar.
Is a branch office better than a subsidiary company?
A branch suits a foreign company already holding a Nepali contract or licence. A private limited subsidiary suits long-term operations, limited liability and easier local banking. Both need registration under the Companies Act, 2063.
How do I legally send profits abroad?
Repatriation is allowed under Section 20 of FITTA 2019. You need the recorded investment inflow, audited accounts, tax clearance, Department of Industry recommendation and Nepal Rastra Bank processing through your commercial bank.