Hotel Registration in Nepal

Hotel registration in Nepal is a multi-stage legal process. A hotel is treated as a “tourism industry” under Schedule 4 of the Industrial Enterprises Act, 2076 (2020), as a “company” under the Companies Act, 2063 (2006), and as a licensed tourism service provider under the Tourism Act, 2035 (1978) and the Hotel, Lodge, Restaurant, Bar and Tourist Guide Rules, 2038 (1981). A foreign investor must additionally comply with the Foreign Investment and Technology Transfer Act, 2075 (2019) (FITTA) and the Foreign Exchange (Regulation) Act, 2019 (1962).

In practice, this means that a single hotel project requires approval or registration from the Department of Industry, the Office of the Company Registrar, the Inland Revenue Department, Nepal Rastra Bank, the Department of Tourism, and the concerned local level. The sections below set out the requirements, procedure, documents, timeline and cost, followed by the governing laws and authorities.

What Are the Basic Requirements for Hotel Registration in Nepal?

Before an application is filed, the promoters must be in a position to satisfy the following requirements:

A proposed company name, reserved through the Office of the Company Registrar.
A registered office address in Nepal with supporting land ownership certificate or lease agreement.
Identified fixed capital and working capital, supported by a project report.
For foreign direct investment, compliance with the minimum foreign investment threshold prescribed under Section 9 of FITTA and the relevant Nepal Gazette notification.
Confirmation that the proposed activity does not fall within Schedule 2 of FITTA (the negative list), which bars foreign investment in travel agencies, trekking agencies, rural tourism including homestay, and tourist guide services.
Land or building suitable for hotel operation, with municipal building permit and structural approval.
Environmental clearance where the size of the project triggers a Brief Environmental Study, Initial Environmental Examination or Environmental Impact Assessment under the Environment Protection Act, 2076 and the Environment Protection Rules, 2077.

What Business Activities Can a Registered Hotel Carry Out?

The objectives clause of the Memorandum of Association determines the permitted activities. A registered hotel in Nepal may typically undertake:

Accommodation services, including rooms, suites, villas and cottages.
Restaurant, bar, banquet and catering services, subject to separate liquor licensing under the local level and the Liquor Act, 2031.
Conference, meeting and event facilities.
Health club, spa, swimming pool and recreational facilities.
Tour desk services, provided the company does not itself operate a travel or trekking agency where foreign investment is involved.
Currency exchange, only after obtaining a licence from Nepal Rastra Bank under the Foreign Exchange (Regulation) Act, 2019.

Activities not stated in the objectives clause cannot lawfully be carried out. Any addition later requires an amendment of the Memorandum of Association under Section 21 of the Companies Act, 2063, and a corresponding amendment of the industry registration certificate.

Who Can Register a Hotel in Nepal?

The following persons are eligible:

Nepali citizens who have attained the age of sixteen years and are not disqualified under Section 4 of the Companies Act, 2063.
Nepali companies, cooperatives and other bodies corporate.
Non-Resident Nepalis, subject to the Non-Resident Nepali Act, 2064.
Foreign natural persons, foreign companies and foreign institutional investors, provided they obtain foreign investment approval under FITTA.

Under Section 3 of FITTA, no foreign investment may be made without prior approval of the competent authority. A person disqualified by insolvency proceedings, or a citizen of a country with which Nepal has restricted investment relations, cannot be a promoter.

What Ownership Structures Are Permitted?

A hotel is generally registered as a private limited company because of limited liability, ease of share transfer and clarity of governance. A public limited company is used where the promoters intend to raise capital from the public. Sole proprietorship and partnership structures are available to Nepali citizens only and are not suitable for foreign direct investment.

Can a Foreign Investor Own 100% of a Hotel?

Yes. FITTA does not impose a general foreign equity ceiling on tourism industries, and hotels and resorts are not listed in Schedule 2 of the Act. A foreign investor may therefore hold up to one hundred percent of the shares, subject to approval and the minimum investment threshold. A private limited company must have at least one shareholder and may have up to one hundred and one shareholders under Section 9 of the Companies Act.

How Is a Joint Venture Structured?

In a joint venture, the Nepali and foreign shareholders execute a joint venture agreement, which is submitted with the foreign investment application. The agreement should address share ratio, board composition, capital call obligations, deadlock resolution, dividend policy and exit. The agreement must be consistent with the Articles of Association, since the Articles prevail in matters of company governance.

What Is the Minimum Investment for a Hotel in Nepal?

Section 9 of FITTA empowers the Government of Nepal to prescribe a minimum amount of foreign investment. By Nepal Gazette notification, that threshold currently stands at NPR 20,000,000 per foreign investor in equity terms. This is a floor, not a project cost; the actual capital required for a hotel is determined by land, construction, furnishing and working capital needs.

Additional financial thresholds relevant to hotel projects include:

Projects with total investment of NPR 6,000,000,000 or more fall within the jurisdiction of the Investment Board Nepal under the Investment Board Act, 2068.
Projects below that limit are approved by the Department of Industry.
Tourism industries with fixed capital exceeding NPR 2,000,000,000 may claim income tax exemption under Section 11 of the Income Tax Act, 2058, on the terms specified therein.

Is There a Separate Threshold for Automatic Route Approval?

Yes. Under the Foreign Investment (Automatic Route) Regulations, 2078, foreign investment up to NPR 500,000,000 in eligible industries may be approved through an automatic system operated by the Department of Industry, provided the investment is in equity and no technology transfer condition applies.

What Types of Hotels Can Be Registered?

The Hotel, Lodge, Restaurant, Bar and Tourist Guide Rules, 2038 recognise the following categories:

Star hotels, classified from one star to five star and five star deluxe.
Tourist standard hotels, which meet basic tourist facility norms without star grading.
Resorts and lodges, classified according to facilities and location.
Restaurants and bars, which may be registered separately.

Classification is granted by the Hotel Classification Committee under the Department of Tourism, following physical inspection of rooms, kitchen, safety systems, staff qualification and service standards.

What Is the Difference Between Star and Tourist Standard Hotels?

Star classification requires a minimum number of rooms, prescribed room dimensions, attached bathrooms, twenty-four hour reception, fire safety systems and trained personnel. Tourist standard hotels operate under lighter facility requirements but remain subject to inspection, renewal and service quality obligations.

What Is the Step-by-Step Procedure for Hotel Registration in Nepal?

The procedure for a foreign-invested hotel follows this sequence:

Reserve the company name through the online system of the Office of the Company Registrar.
Prepare the project report, joint venture or share subscription agreement, and board resolutions.
File the foreign investment approval application with the Department of Industry, or with the Investment Board Nepal for large projects.
Register the company at the Office of the Company Registrar and obtain the certificate of incorporation, Memorandum and Articles.
Register the industry at the Department of Industry and obtain the industry registration certificate.
Obtain the Permanent Account Number and complete Value Added Tax registration at the concerned Inland Revenue Office.
Obtain approval from Nepal Rastra Bank for inward remittance of the investment amount, and record the capital after it arrives.
Register at the concerned Rural Municipality or Municipality and obtain the business operation licence.
Complete environmental study approval, building permit and fire safety compliance.
Apply to the Department of Tourism for the hotel operation licence and classification.

How Does Foreign Investment Approval Work?

The Department of Industry examines the applicant’s financial credibility, source of funds, project viability and compliance with the negative list. Approval is issued in writing with conditions, including the timeframe for bringing in capital. Failure to bring the investment within the stated period may lead to cancellation of approval.

What Happens After Company Registration?

Within the timelines set by the Companies Act, 2063, the company must maintain a shareholder register, appoint an auditor, hold the first annual general meeting and file returns. A hotel cannot open to guests until the Department of Tourism licence is issued.

Which Documents Are Required for Hotel Registration in Nepal?

Applicants should prepare:

Application in the prescribed form, with the proposed name approval letter.
Memorandum of Association and Articles of Association.
Citizenship certificates of Nepali promoters, or passport copies of foreign promoters.
Company registration certificate, board resolution and authorised representative letter for corporate investors.
Bio-data and financial credibility certificate issued by a bank of the foreign investor.
Project report with capital structure, employment plan and financial projections.
Joint venture agreement, where applicable.
Land ownership certificate, lease deed, blueprint and building completion certificate.
Environmental study report approval letter.
Photographs, tax clearance and power of attorney.

How Long Does Hotel Registration in Nepal Take?

Indicative timelines, assuming complete documentation, are as follows:

Name reservation: one to three working days.
Foreign investment approval: two to five weeks.
Company incorporation: three to seven working days.
Industry registration: five to ten working days.
Permanent Account Number and Value Added Tax registration: one to three working days.
Nepal Rastra Bank approval and capital recording: two to four weeks.
Department of Tourism licence and classification: dependent on construction completion and inspection.

How Much Does Hotel Registration in Nepal Cost?

Government charges are statutory and vary with capital:

Company registration fee at the Office of the Company Registrar is graduated by authorised capital, beginning at NPR 1,000 for capital up to NPR 100,000 and rising for higher capital slabs.
Industry registration fees at the Department of Industry are prescribed in the Industrial Enterprises Regulations, 2078, on the basis of fixed capital.
Department of Tourism licence and annual renewal fees vary according to star category and number of rooms.
Local level business registration and renewal charges are fixed by the annual finance ordinance of each municipality.

Professional fees, translation, notarisation, environmental study and architectural costs are additional. Guidance on comparative costs is available through CompanyNP.

What Tax Obligations Apply to a Registered Hotel?

Under the Income Tax Act, 2058, a hotel company is taxed at the corporate rate applicable to entities, with concessions available to special industries and to tourism industries meeting the capital thresholds in Section 11. Value Added Tax registration is compulsory for hotels and bar-attached restaurants irrespective of turnover, in accordance with the Value Added Tax Act, 2052 and its Rules. Monthly VAT returns, annual income tax returns, advance tax instalments and withholding tax on salaries, rent and service payments must be filed on time. Service charge collected from guests must be distributed as required by the Labour Act, 2074 and the Labour Rules, 2075.

What Environmental and Local Approvals Are Needed?

Depending on bed capacity, land area and location, a hotel may require a Brief Environmental Study, Initial Environmental Examination or Environmental Impact Assessment under the Environment Protection Act, 2076. Projects inside national parks, conservation areas or buffer zones additionally require approval under the National Parks and Wildlife Conservation Act, 2029. Building permits, sanitation approval and fire safety clearance are issued by the concerned local level under the Local Government Operation Act, 2074.

Can Profits and Capital Be Repatriated?

Yes. Section 20 of FITTA permits repatriation of dividends, sale proceeds of shares, proceeds of liquidation, royalties and approved technology transfer fees, in the currency in which the investment was made. Repatriation requires evidence that the investment was recorded with Nepal Rastra Bank and that all tax liabilities have been cleared, with approval processed under the Foreign Exchange (Regulation) Act, 2019.

What Visa Facilities Are Available to Foreign Investors?

Under Section 26 of FITTA and the Immigration Rules, 2051, a foreign investor may obtain a non-tourist visa for study and inspection, a business visa for the period of investment, and a residential visa where the investment is one million United States dollars or more at one time. Foreign experts and technicians may be employed with prior approval of the Department of Industry and a work permit from the Department of Labour.

What Are the Ongoing Compliance Obligations?

Annual renewal of the tourism licence with the Department of Tourism.
Annual return and audited financial statements to the Office of the Company Registrar.
Annual progress reporting to the Department of Industry.
Social Security Fund contribution under the Contribution Based Social Security Act, 2074.
Renewal of local level business licence.

Support with these filings is offered by CompanyNP.

Which Laws Govern Hotel Registration in Nepal?

Companies Act, 2063 (2006)
Foreign Investment and Technology Transfer Act, 2075 (2019)
Industrial Enterprises Act, 2076 (2020) and Regulations, 2078
Tourism Act, 2035 (1978)
Hotel, Lodge, Restaurant, Bar and Tourist Guide Rules, 2038 (1981)
Income Tax Act, 2058 (2002) and Value Added Tax Act, 2052 (1996)
Foreign Exchange (Regulation) Act, 2019 (1962)
Environment Protection Act, 2076 (2019) and Rules, 2077
Labour Act, 2074 (2017) and Contribution Based Social Security Act, 2074
Local Government Operation Act, 2074 (2017)

Authentic texts are available at the Nepal Law Commission portal, lawcommission.gov.np.

Which Authorities Are Involved?

Department of Industry, doind.gov.np – foreign investment approval and industry registration.
Office of the Company Registrar – incorporation and corporate filings.
Department of Tourism, Ministry of Culture, Tourism and Civil Aviation – hotel licensing and star classification.
Inland Revenue Department, ird.gov.np – Permanent Account Number, Value Added Tax and income tax.
Nepal Rastra Bank – foreign exchange approval, capital recording and repatriation.
Investment Board Nepal – projects of NPR 6,000,000,000 and above.
Concerned Municipality or Rural Municipality – business licence, building permit and local taxes.

Frequently Asked Questions

Is prior approval required before bringing foreign investment into a hotel project?

Yes. Section 3 of FITTA prohibits foreign investment without prior approval. Approval is granted by the Department of Industry, or the Investment Board Nepal for larger projects, before any capital is remitted into Nepal through banking channels.

Can a foreign investor purchase land for a hotel in Nepal?

A foreign individual cannot purchase land personally. The Nepal-registered company holding foreign investment may acquire land in its own name for industrial purposes, subject to the land ceiling provisions of the Land Act, 2021 and applicable exemptions.

Is star classification compulsory for every hotel?

No. A hotel may operate as a tourist standard establishment without star grading. However, star classification is granted only after inspection by the Department of Tourism and is generally required for larger hotels seeking international recognition and tourism benefits.

What happens if the approved investment is not brought within time?

The approval letter specifies a deadline for remitting capital. If the investor fails to comply, the Department of Industry may cancel the approval under FITTA, requiring a fresh application, revised project report and payment of applicable fees again.

Are hotels required to register for Value Added Tax immediately?

Yes. Hotels and bar-attached restaurants fall within the compulsory registration categories under the Value Added Tax Act, 2052 and its Rules. Registration is required before commencing transactions, regardless of projected annual turnover thresholds.

Can shares in a registered hotel company be transferred to another foreign investor?

Yes, with prior approval of the Department of Industry and compliance with Nepal Rastra Bank procedures. Capital gains tax must be settled, and the share transfer must be recorded with the Office of the Company Registrar.