Nepal’s tourism sector is governed by a combination of company law, foreign investment law, and sector-specific tourism law. Any person or entity wishing to operate a hotel, resort, tour operation, adventure tourism, or allied tourism service must first incorporate a legal entity and then obtain the applicable licence from the Department of Tourism under the Ministry of Culture, Tourism and Civil Aviation. This article, prepared by CompanyNP, explains the requirements, permitted activities, ownership rules, minimum investment thresholds, procedure, documents, timeline, and costs of tourism company registration in Nepal, strictly on the basis of the Companies Act 2063, the Foreign Investment and Technology Transfer Act 2075 (FITTA), the Industrial Enterprises Act 2076, the Tourism Act 2035, and the Income Tax Act 2058.
Who Can Register a Tourism Company in Nepal?
Both Nepali citizens and foreign nationals may establish a tourism business in Nepal, but the legal pathway differs.
- Nepali citizens and Nepali-owned entities may register directly at the Office of the Company Registrar (OCR) under the Companies Act 2063 and thereafter apply for the tourism licence.
- Foreign nationals, foreign companies, and non-resident Nepalis must first obtain foreign investment approval under FITTA 2075 from the Department of Industry (DOI) or, for large projects, the Investment Board Nepal, before the company can be incorporated.
- A private limited company under Section 3 of the Companies Act 2063 may be formed by one to one hundred and one shareholders. A public limited company requires at least seven promoters and a minimum paid-up capital of NPR 10,000,000.
What Are the Basic Requirements for Tourism Company Registration?
The following requirements apply to virtually every tourism entity:
- A distinct company name approved and reserved by the Office of the Company Registrar.
- A registered office address within Nepal, supported by a lease agreement or ownership evidence and the landlord’s tax clearance.
- Memorandum of Association and Articles of Association drafted in accordance with Sections 18 and 19 of the Companies Act 2063.
- At least one shareholder and one director; foreign directors require passport copies and, where applicable, board resolutions of the parent company.
- Permanent Account Number (PAN) registration with the Inland Revenue Department under the Income Tax Act 2058, and Value Added Tax registration under the Value Added Tax Act 2052 where turnover or the nature of service so requires.
- Industry registration with the Department of Industry, since tourism is classified as an industry under Schedule 4 of the Industrial Enterprises Act 2076.
- Sector licence from the Department of Tourism under the Tourism Act 2035 and the rules framed thereunder.
- Registration with the local municipality or rural municipality ward office and with the Social Security Fund once employees are hired.
Which Tourism Activities Are Recognised Under Nepali Law?
The Industrial Enterprises Act 2076 recognises “tourism industry” as a separate class of industry. Activities commonly registered include:
- Tourist standard hotels, resorts, motels, and star hotels
- Restaurants, bars, and tourist standard catering establishments
- Travel agency and tour operator services
- Trekking agency and mountaineering expedition operation
- Rafting, canyoning, bungee jumping, paragliding, and other adventure tourism
- Cable car operation, amusement parks, and recreation centres
- Golf courses, polo grounds, ski resorts, and sports tourism facilities
- Convention centres and MICE (meetings, incentives, conferences, exhibitions) services
- Casino operation, subject to the Casino Regulation 2070
- Homestay and rural tourism, subject to the Homestay Working Procedure
What Ownership Structure Is Permitted for Foreign Investors?
FITTA 2075 permits up to one hundred percent foreign ownership in most tourism industries, including hotels, resorts, cable cars, amusement parks, and adventure tourism ventures. However, Section 3(1) of FITTA read with its Schedule prohibits foreign investment in certain tourism-related activities. The restricted list expressly includes:
- Travel agency services
- Tourist guide services
- Trekking and mountaineering guide services
- Rural tourism, including homestay
Accordingly, a wholly foreign-owned company cannot obtain a travel agency or trekking guide licence. Foreign investors who wish to participate in these areas generally structure their presence through hotel, resort, transport, or destination-management activities that fall outside the negative list, or invest in permitted allied services. CompanyNP advises confirming the classification of the intended activity with the Department of Industry before committing capital.
Can a Foreign Company Open a Branch Instead?
Yes. Under Section 154 of the Companies Act 2063, a foreign company that has obtained permission to carry out business in Nepal may register a branch office with the Office of the Company Registrar within thirty days of receiving such permission. A branch is generally used for contract-based operations rather than for holding a tourism licence, and it does not enjoy the same treatment as a locally incorporated subsidiary under FITTA.
What Is the Minimum Investment for a Foreign-Invested Tourism Company?
The Ministry of Industry, Commerce and Supplies, by notice published in the Nepal Gazette, has fixed the minimum foreign investment threshold at NPR 20,000,000 per foreign investor. This threshold applies to equity investment in a tourism company as it does to other sectors, subject to exemptions granted for information technology services.
Additional financial thresholds to note:
- Foreign investment proposals up to NPR 6,000,000,000 are approved by the Department of Industry.
- Proposals exceeding NPR 6,000,000,000, and certain large tourism infrastructure projects, fall under the Investment Board Nepal pursuant to the Investment Board Act 2068.
- The automatic approval route, introduced through subordinate regulation, is available for qualifying investments up to NPR 500,000,000 in prescribed sectors.
- Under Section 11 of the Income Tax Act 2058, tourism industries with capital investment exceeding NPR 2,000,000,000 may claim income tax exemption for a defined period, subject to conditions.
What Types of Tourism Licences Does the Department of Tourism Issue?
The Department of Tourism issues activity-specific licences, each with its own capital, deposit, and infrastructure conditions prescribed under the Tourism Act 2035 and rules such as the Trekking and Rafting Rules 2042, the Hotel Management and Tourist Service Rules 2038, and the Mountaineering Expedition Regulation 2059.
Hotel and Resort Registration
Tourist standard hotels and star-rated hotels are classified by the Department of Tourism on the basis of room numbers, facilities, and service standards. Classification is a continuing obligation, and hotels must renew and maintain their grading.
Travel Agency and Tour Operator Licence
A travel agency licence is issued to a Nepali-owned company that meets the prescribed paid-up capital and security deposit requirement and maintains an office with qualified staff. Foreign investment is not permitted in this activity under FITTA.
Trekking and Adventure Tourism Licence
Trekking agencies, rafting operators, and expedition organisers must satisfy safety, insurance, and guide-qualification standards, and must deposit the prescribed bank guarantee with the Department of Tourism.
What Is the Step-by-Step Registration Procedure?
The sequence below reflects the practice followed by the Department of Industry and the Office of the Company Registrar.
- Determine the activity classification and confirm that it is not on the FITTA negative list.
- For foreign investors, submit the foreign investment approval application through the online system of the Department of Industry, together with the project report, joint venture agreement (if applicable), and financial credibility certificate.
- Obtain the foreign investment approval letter from the Department of Industry or Investment Board Nepal.
- Reserve the company name with the Office of the Company Registrar.
- File the Memorandum and Articles of Association and incorporate the private limited company under the Companies Act 2063.
- Register the industry with the Department of Industry under the Industrial Enterprises Act 2076.
- Obtain PAN, and VAT registration where applicable, from the Inland Revenue Department.
- Obtain approval from Nepal Rastra Bank for the inward remittance of foreign investment and record the capital injection through the banking channel.
- Apply to the Department of Tourism for the sector licence, submitting the incorporation certificate, PAN, office evidence, staff details, and prescribed deposit.
- Complete ward-level business registration and Social Security Fund enrolment.
Which Documents Must Be Submitted?
For company incorporation and foreign investment approval, the following are ordinarily required:
- Passport copies of individual foreign investors, or registration certificate, charter documents, and board resolution of a corporate investor
- Financial credibility certificate issued by a bank of the investor’s country
- Project report containing capital structure, employment plan, and market analysis
- Joint venture agreement, where there is more than one shareholder
- Bio-data of the investor and authority letter or power of attorney
- Memorandum and Articles of Association signed by all promoters
- Proof of registered office and citizenship documents of Nepali shareholders
- Application forms prescribed by the Department of Industry and the Office of the Company Registrar
For the tourism licence, additional documents include the tax clearance certificate, office photographs, employee qualification certificates, insurance policies, and the bank guarantee or deposit voucher.
How Long Does Tourism Company Registration Take?
Indicative timelines, assuming complete documentation:
- Name reservation: one to three working days
- Foreign investment approval at the Department of Industry: approximately two to four weeks
- Company incorporation at the Office of the Company Registrar: three to seven working days
- PAN and VAT registration: one to three working days
- Nepal Rastra Bank recording of investment: one to three weeks
- Department of Tourism licence: two to six weeks, depending on the activity and inspection requirements
A fully foreign-invested tourism company should therefore anticipate a total period of approximately eight to fourteen weeks.
What Are the Government Costs Involved?
Company registration fees at the Office of the Company Registrar are calculated on authorised capital. For a private limited company the fee ranges from NPR 1,000 for authorised capital up to NPR 100,000, to NPR 43,000 for authorised capital of NPR 100,000,000, with an incremental charge thereafter. Additional statutory costs include:
- Industry registration fees at the Department of Industry, based on fixed capital
- Department of Tourism licence fees and refundable security deposits or bank guarantees
- Annual renewal fees and municipal business tax
- Corporate income tax at the applicable rate under the Income Tax Act 2058, with VAT at thirteen percent where registered
What Are the Post-Registration Compliance Obligations?
- Annual return and audited financial statements to the Office of the Company Registrar under Section 78 and Section 80 of the Companies Act 2063
- Annual income tax return to the Inland Revenue Department within three months of the end of the fiscal year
- Monthly VAT returns, where VAT registered
- Annual progress reporting to the Department of Industry
- Renewal of the tourism licence and maintenance of the star classification
- Social Security Fund contributions and compliance with the Labour Act 2074
- Repatriation of dividends, sale proceeds, and royalties only with approval, in accordance with Section 20 of FITTA 2075 and Nepal Rastra Bank directives
Foreign investors meeting the prescribed investment threshold may apply for a business visa, and investors of one million United States dollars or more may apply for a residential visa under Section 30 of FITTA 2075.
Governing Laws and Competent Authorities
Applicable laws include the Companies Act 2063, the Foreign Investment and Technology Transfer Act 2075, the Industrial Enterprises Act 2076, the Tourism Act 2035, the Hotel Management and Tourist Service Rules 2038, the Trekking and Rafting Rules 2042, the Income Tax Act 2058, the Value Added Tax Act 2052, the Foreign Exchange (Regulation) Act 2019, and the Labour Act 2074.
The competent authorities are the Office of the Company Registrar, the Department of Industry, the Inland Revenue Department, the Department of Tourism under the Ministry of Culture, Tourism and Civil Aviation, Nepal Rastra Bank, and the Investment Board Nepal.
For assistance with company registration in Nepal, foreign investment approval, and tourism licensing, refer to the advisory services available at companynp.com.
Frequently Asked Questions
Can a foreigner own one hundred percent of a hotel company in Nepal?
Yes. Hotels and resorts are not listed in the FITTA 2075 negative list, so a foreign investor may hold full equity, provided the investment meets the minimum threshold of NPR 20,000,000 and receives approval from the Department of Industry.
Why is foreign investment prohibited in travel and trekking agencies?
The Schedule to FITTA 2075 expressly restricts foreign investment in travel agencies, tourist guides, trekking and mountaineering guides, and rural tourism including homestay. These activities are reserved for Nepali citizens and wholly Nepali-owned companies under prevailing law.
Is a separate licence needed after company incorporation?
Yes. Incorporation at the Office of the Company Registrar creates the legal entity only. Operating a hotel, trekking agency, rafting service, or expedition business additionally requires the activity-specific licence issued by the Department of Tourism under the Tourism Act 2035.
What tax incentives apply to tourism industries in Nepal?
The Income Tax Act 2058 provides exemptions and concessions for tourism industries meeting prescribed capital thresholds, including those investing more than NPR 2,000,000,000. Concessions also exist for industries established in specified underdeveloped areas, subject to statutory conditions.
How is foreign capital brought into the tourism company?
Foreign investment must enter Nepal through formal banking channels in convertible foreign currency, supported by the Department of Industry approval and recorded with Nepal Rastra Bank. Proper recording is essential for later repatriation of dividends and sale proceeds.
Can a tourism company employ foreign nationals?
Yes, subject to the Labour Act 2074 and its rules. Foreign nationals may be employed where skilled Nepali manpower is unavailable, after obtaining a work permit from the Department of Labour and completing the prescribed visa formalities.