Registering a company is only the starting point. Once the certificate of incorporation is issued, Nepali law places a continuing set of duties on the company, its directors and its shareholders. These duties repeat every business year, and missing them creates fines, interest, blocked tax clearance certificates and, for foreign investors, delays in repatriation of profit.
This guide from CompanyNP sets out, in plain language, the annual compliance obligations of a company in Nepal under the Companies Act 2063, the Income Tax Act 2058, the Value Added Tax Act 2052, the Foreign Investment and Technology Transfer Act 2075 (FITTA), the Industrial Enterprises Act 2076, the Labour Act 2074 and the Contribution Based Social Security Act 2074.
What Does Annual Compliance Mean Under Nepali Law?
Annual compliance is the group of filings, payments, meetings and renewals that a registered entity must complete inside one fiscal year to remain in good legal standing. It is not one single form filed with one single office. Duties are spread across several regulators.
Which authorities does a company report to?
- Office of the Company Registrar (OCR) for corporate filings, annual returns and audited accounts.
- Inland Revenue Department (IRD) and the concerned Inland Revenue Office or Large Taxpayers Office for PAN, VAT, excise, TDS and income tax returns.
- Department of Industry (DOI) or the Investment Board Nepal for foreign investment approval and annual industry reporting.
- Nepal Rastra Bank (NRB) for recording of inward foreign investment, foreign loans and outward remittance.
- Labour Office and the Social Security Fund for employment-related compliance.
- The local level (municipality or rural municipality) for business renewal and local taxes under the Local Government Operation Act 2074.
When does the Nepali business year start and end?
Nepal follows a fiscal year that runs from 1 Shrawan to the last day of Ashad, which falls roughly from mid-July to mid-July of the following English year. Section 2 of the Income Tax Act 2058 defines the income year on this basis. Almost every deadline in this article is counted from the end of Ashad.
Why the Bikram Sambat calendar matters for deadlines
Tax and corporate deadlines in Nepal are fixed in Nepali months, not English months. A company that plans its accounting calendar only in English months will file late. The three dates every business should memorise are Poush end, Chaitra end and Ashad end for advance tax, and Ashoj end for the annual income tax return.
What Must a Company File With the Office of the Company Registrar Each Year?
Corporate compliance under the Companies Act 2063 is administered by the OCR through its online system at ocr.gov.np. These duties apply to private limited companies, public companies and, in modified form, to foreign company branch and liaison offices registered in Nepal.
Is an annual general meeting compulsory?
Yes. Under Section 76 of the Companies Act 2063, a public company must hold its first annual general meeting within one year of receiving permission to commence business, and every subsequent annual general meeting within six months from the date of expiry of the fiscal year. Notice of the AGM must be given as prescribed by the Act, generally at least twenty-one days in advance for public companies.
Private companies must hold their general meetings as provided in their articles of association and consensus agreement, but they still cannot escape the annual financial reporting duty.
Which documents must reach the OCR after the annual general meeting?
The standard annual package includes:
- Audited balance sheet, profit and loss account and cash flow statement, audited by an auditor holding a valid certificate of practice from the Institute of Chartered Accountants of Nepal.
- The board of directors’ report prepared under Section 109 of the Companies Act 2063.
- The auditor’s report.
- Minutes and resolutions of the annual general meeting, including appointment or reappointment of the auditor and fixing of audit fees under Section 111.
- Updated details of directors, shareholders, registered office and share register (share lagat) maintained under Section 46.
Under Section 80, a public company must file particulars of its annual general meeting with the OCR within thirty days of the meeting. Under Section 81, a private company must submit its annual financial details, certified by the auditor, to the OCR within six months of the expiry of the fiscal year. A company that has not held a general meeting still has to submit the reason and the required details.
What happens if OCR filings are late?
The Companies Act 2063 provides penalties under Section 81 and Section 184, and the OCR applies a late fee schedule that increases with the authorised capital of the company and the length of delay. Practical consequences are often worse than the fee itself: the OCR may refuse to register share transfers, capital increases, director changes or branch amendments until back filings are cleared. Long-inactive companies can also face striking off or dissolution proceedings under Chapter 12 of the Act.
Which changes must be reported during the year, not just at year end?
- Change of registered office, under Section 184 read with Section 21.
- Appointment, resignation or removal of directors and company secretary.
- Increase in authorised or paid-up capital and allotment of shares.
- Transfer of shares, including transfer to or from a foreign shareholder.
- Amendment of the memorandum or articles of association, supported by a special resolution.
- Change of company name or objectives.
These are event-based filings with short statutory windows, commonly fifteen to thirty days. Our team explains the documentation for each event on companynp.com.
What Are the Yearly and Monthly Tax Duties Under the Income Tax Act 2058?
Tax compliance is administered by the Inland Revenue Department through its taxpayer portal at ird.gov.np. Every company must hold a Permanent Account Number (PAN), and must register for VAT where the law requires it.
When is the annual income tax return due?
Section 96 of the Income Tax Act 2058 requires every person with a taxable presence to file an income return within three months of the end of the income year. In practice this means the return is due by the end of Ashoj, that is roughly mid-October. The return is filed as D-03 or the applicable schedule together with audited financial statements, tax computation and supporting annexes.
Section 98 allows the Inland Revenue Department to extend the filing date, generally by up to three months, on a written application filed before the original deadline. An extension of the filing date does not extend the date for paying tax, so interest can still run.
How does advance tax work in Nepal?
Section 94 requires payment of tax in instalments during the income year itself, based on estimated taxable income:
- By the end of Poush: 40 percent of the estimated annual tax.
- By the end of Chaitra: 70 percent of the estimated annual tax.
- By the end of Ashad: 100 percent of the estimated annual tax.
Failure to deposit these instalments attracts interest under Section 118 of the Income Tax Act 2058, calculated at fifteen percent per annum on the shortfall.
The estimated tax return
Section 95 requires the taxpayer to submit an estimate of assessable income and tax payable for the year, normally by the end of Poush, and to revise that estimate if circumstances change materially. Many companies overlook this filing and only discover the problem during assessment.
What are the monthly withholding tax duties?
Under Sections 87 to 90 of the Income Tax Act 2058, a company acting as a withholding agent must deduct tax at source on payments such as salary, rent, service fees, interest, dividends, commission and contract payments. The deducted amount must be deposited and the withholding return submitted within twenty-five days of the end of the Nepali month in which the deduction was made.
Correct TDS practice matters twice: the expense may be disallowed if tax was not withheld, and the recipient cannot claim credit without a valid withholding certificate.
How do you get a tax clearance certificate?
A tax clearance certificate is issued by the concerned Inland Revenue Office after the annual return, audited accounts and all outstanding tax, interest and fees are settled. Foreign investors need it for dividend repatriation, and companies need it for bidding, bank facilities, licence renewals and closure or liquidation.
What Extra Compliance Applies to Foreign-Invested Companies?
A company with any foreign shareholding carries an additional layer of duties under FITTA 2075, the Foreign Investment and Technology Transfer Rules 2077 and NRB directives. Official procedures and forms are published by the Department of Industry at doind.gov.np.
Approval, banking channel and NRB recording
- Foreign investment requires prior approval under Section 3 of FITTA 2075 from the Department of Industry, or from the Investment Board Nepal where the project size falls within its threshold.
- The Government has fixed a minimum foreign investment amount per foreign investor by order under FITTA, currently NPR 20 million, with relaxations notified for certain sectors such as information technology. The applicable figure should always be confirmed against the current notice.
- Investment must be brought into Nepal only through formal banking channels in convertible foreign currency, and the inward remittance must be recorded with Nepal Rastra Bank under the Foreign Exchange (Regulation) Act 2019 and the relevant NRB bylaws.
- Shares can be issued to the foreign investor only after the funds are received and recorded, and the share register and OCR records must be updated accordingly.
Annual reporting to the Department of Industry
Industries registered under the Industrial Enterprises Act 2076 must submit annual details of production, capital, transactions and employment to the Department of Industry or the concerned Provincial industry office in the prescribed format. Failure to submit these annual details can obstruct later applications for capital increase, visa recommendation, technology transfer agreements or repatriation.
Repatriation of dividends, royalty and sale proceeds
Section 20 of FITTA 2075 allows a foreign investor to repatriate dividends, sale proceeds of shares, royalty under a technology transfer agreement and other approved amounts. The standard requirements are:
- Approved and recorded foreign investment.
- Audited financial statements and a general meeting resolution declaring the dividend.
- Payment of applicable dividend tax and withholding tax.
- Tax clearance certificate from the Inland Revenue Office.
- Approval from the Department of Industry followed by foreign exchange facility from Nepal Rastra Bank.
Visas and work permits for foreign staff
Foreign investors and their dependents may obtain business or residential visas as provided in FITTA 2075 and the Immigration Rules, on recommendation of the Department of Industry. Foreign employees require a work permit from the Department of Labour before employment, and companies must comply with the local-hiring conditions of the Labour Act 2074.
What Other Yearly Obligations Do Businesses Often Forget?
VAT, excise and other indirect taxes
- Registration under the Value Added Tax Act 2052 is compulsory on crossing the prescribed turnover threshold, and is compulsory from the start for the businesses and locations listed in the VAT Rules 2053 regardless of turnover.
- VAT returns are generally filed monthly within twenty-five days of the end of the Nepali month, with four-monthly filing allowed for the categories prescribed by law.
- Purchase and sales books must be maintained, and invoices must follow the prescribed format, including electronic billing where required.
- Excise licence holders under the Excise Duty Act 2058 must renew the licence within the prescribed period each fiscal year and maintain the statutory records.
Labour, Social Security Fund and bonus
- Written appointment letters and employment contracts are required under the Labour Act 2074, along with a workplace safety policy and internal work procedure where applicable.
- Employers listed under the Contribution Based Social Security Act 2074 must register the enterprise and employees with the Social Security Fund and deposit contributions monthly, generally by the fifteenth of the following month.
- An annual labour audit must be carried out and submitted to the Labour Office in the format prescribed by the Labour Rules 2075.
- Under the Bonus Act 2030, an enterprise in profit must set aside bonus and distribute it within the statutory period after the accounts are finalised.
Local level renewal and intellectual property
- Business renewal and payment of enterprise tax, signboard tax and property-related charges to the municipality or rural municipality under the Local Government Operation Act 2074.
- Renewal of sector licences, for example from the Department of Tourism, the Nepal Telecommunications Authority or the Department of Drug Administration.
- Renewal of a registered trademark with the Department of Industry within the term fixed by the Patent, Design and Trademark Act 2022.
A simple fiscal-year compliance calendar
- Every month: TDS deposit and return, VAT return, SSF contribution, by the twenty-fifth day for tax filings.
- Poush end: estimated tax return and first advance tax instalment of 40 percent.
- Chaitra end: second advance tax instalment to 70 percent.
- Ashad end: third advance tax instalment to 100 percent; excise and other licence renewals.
- Shrawan to Ashoj: statutory audit, finalisation of accounts.
- Ashoj end: annual income tax return with audited financials.
- Within six months of Ashad end: annual general meeting and OCR annual filings.
- After the AGM: OCR particulars within thirty days, dividend declaration, then DOI and NRB steps for repatriation.
Frequently Asked Questions
Is a dormant company with no transactions still required to file?
Yes. A company with no income must still submit a nil income tax return under Section 96 of the Income Tax Act 2058, hold its general meeting and file audited accounts with the Office of the Company Registrar within the statutory period.
Can a foreign investor repatriate profit without a tax clearance certificate?
No. Repatriation under Section 20 of FITTA 2075 requires proof that all Nepali taxes are settled. The Department of Industry and Nepal Rastra Bank both examine audited accounts, dividend tax payment and the tax clearance certificate before approving outward remittance.
What is the penalty for filing the income tax return late?
Section 117 of the Income Tax Act 2058 imposes a fee for non-filing, calculated on turnover or on a monthly basis as prescribed, whichever is higher. Interest under Section 119 also applies on tax paid after the due date.
Does a branch office of a foreign company have annual obligations?
Yes. A registered foreign company must file its annual accounts and prescribed particulars with the Office of the Company Registrar under Chapter 15 of the Companies Act 2063, and must comply separately with PAN, VAT, TDS and labour requirements in Nepal.
Who can audit a company registered in Nepal?
Only an auditor holding a valid certificate of practice issued by the Institute of Chartered Accountants of Nepal may audit a company. The auditor is appointed by the general meeting under Section 111 of the Companies Act 2063 and must be independent of the company.
Can compliance deadlines be extended in Nepal?
Some can. The Inland Revenue Department may extend the income return date under Section 98 on timely application, and the government occasionally notifies general extensions. Corporate filing delays with the Office of the Company Registrar are usually regularised through late fees instead.