Doing Business in Nepal 2026/27 — Complete Guide for Investors and Businesses

Investment / Sector Review

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Foreign Investment Approval

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Company Incorporation

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Tax Registration

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Industry Registration

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Banking & Foreign Capital Inflow

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Sector / Environmental Approvals

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Labour, SSF and Visa Compliance

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Commercial Operation

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Annual Tax & Corporate Compliance

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Dividend / Investment Repatriation

The Department of Industry's current foreign-investment guidance itself structures a new FDI project around FDI approval → company incorporation → tax registration → industry registration, while the One Stop Service Centre coordinates wider investment-related services.

Choose the Legal Structure

Common structures include:

Private Limited Company

The most common form for closely held businesses.

Public Limited Company

Required for certain regulated businesses and appropriate where wider capital raising is contemplated.

Foreign-invested Nepalese Company

A Nepal-incorporated company whose shareholder(s) include approved foreign investors.

Branch / Other Foreign Establishment

Available in specified circumstances depending on the proposed activity and applicable law.

Partnership / Proprietorship

Generally relevant to domestic investors and subject to separate foreign-investment restrictions.

The choice of legal form should be made after examining:

• ownership;

• activity;

• foreign investment;

• tax;

• regulatory licensing;

• exit strategy.

Can a Foreigner Own 100%?

FITTA does not generally impose a universal maximum foreign ownership percentage.

Section 13 provides that no general maximum ceiling is prescribed for foreign investment, but:

• industries in the statutory negative list are restricted; and

• sector-specific laws can impose separate foreign-ownership limits.

Therefore:

100% foreign ownership may be possible in many sectors, but not every sector.

Before incorporation, check: FITTA negative list

sector-specific ownership limit

licensing law.

Foreign investment approval

Under amended FITTA section 17, the Department of Industry approves foreign investment. Prepare the proposed activity, investment plan, inflow timetable and required documents; use the automatic route only for an eligible listed activity. FITTA’s complete-application procedure does not remove industry registration or sector permissions.

Department of Industry

Confirm industry eligibility and the appropriate DoI process before incorporating or transferring shares. Record the approved activity, investor and capital structure consistently in the company, tax, industry and banking files. Where the project also falls under separate investment legislation, coordinate that project-level approval as a distinct requirement.

Investment Board Nepal

The Public-Private Partnership and Investment Act separately places project investment approval with Investment Board Nepal where estimated project cost is NPR 6 billion or more. Project implementation has its own categories: non-energy projects above NPR 6 billion and hydropower or other energy projects above 200 MW fall under the Board, subject to the Act’s special arrangements. Use project cost and capacity for these tests; the foreign investor’s share contribution alone does not determine them.

One Stop Service Centre

The Department of Industry operates a:

One Stop Service Centre (OSSC)

at Tripureshwor, Kathmandu.

The current OSSC framework coordinates services including:

• industry registration;

• foreign-investment approval;

• visas/recommendations;

• foreign-exchange facilitation;

• environmental approval;

• infrastructure coordination;

• exit-related services.

Use the current official OSSC and IMIS services for the relevant application, retaining the application, acknowledgement and decision in the project file.

Automatic Route for FDI

Nepal has materially expanded the Automatic Route for foreign investment.

Under the automatic route, qualifying investments in designated industry areas can obtain FDI approval electronically through DOI's IMIS system without the ordinary prior manual approval process.

The current automatic-route Gazette is dated 2082/11/04 and lists 102 industry areas. Its final notes remove the upper automatic-route investment limit, waive the minimum investment for the listed IT-based category and repeal the earlier notification. Check the exact activity against that list before using the electronic route.

The specific proposed activity must still be within a category currently allowed under the automatic route.

General Minimum Foreign Investment

The general FDI framework has used a minimum foreign-investment threshold of: NPR 20 million per foreign investor under the relevant Gazette notification.

A specific exception applies to qualifying information-technology industries approved through the automatic route, where the minimum threshold has been waived. This framework is also reflected in official/regulatory investor materials.

Because the Government can modify the threshold by Gazette notification, the current threshold and applicable exception should be reverified when an investment application is filed.

Company Incorporation

After/alongside the applicable foreign-investment approval process, the Nepal company is incorporated through the:

Office of Company Registrar / CAMIS

The company will need:

• approved name;

• Memorandum of Association;

• Articles of Association;

• founder/shareholder documents;

• foreign-investment approval;

• foreign corporate documents where applicable;

• other statutory documents.

The company-registration process is covered separately in CMA's Company Registration Guide.

Tax Registration

The company requires tax registration with the Inland Revenue Department.

Depending on activity, registrations/compliance may include:

• PAN;

• VAT;

• excise;

• TDS;

• Income Tax.

Company registration does not itself settle VAT or sector-specific tax status.

Industry Registration

Foreign investment under FITTA is tied to investment in an industry within the Industrial Enterprises framework.

DOI's current process includes industry registration after foreign-investment approval, company incorporation and tax registration.

The project should therefore determine:

• industry category;

• fixed capital;

• working capital;

• employment;

• capacity;

• location;

• environmental requirement.

Foreign Capital Must Come Through Banking Channels

FITTA requires approved foreign investment to be brought into Nepal through the banking system in convertible foreign currency following the procedure prescribed by Nepal Rastra Bank.

Indian investors may bring approved investment through the banking system in Indian currency under the statutory provision.

The company should maintain a complete capital-inflow trail: FDI approval

1. → investor
2. sending bank
3. Nepal bank
4. foreign-exchange evidence
5. share subscription
6. share allotment
7. FDI recording.

NRB Foreign Investment Recording

Nepal Rastra Bank regulates foreign-exchange aspects of:

• foreign investment;

• foreign borrowing;

• recording of investment;

• repatriation.

NRB's Foreign Exchange Management Department expressly lists approval, recording and management of foreign direct investment and foreign debt among its functions.

The current NRB investment and loan bylaw includes the Fifth Amendment dated 2082/09/14. Ordinary approved FDI inflow has the conditional route in regulation 4; FDI recording under regulation 5 is required within six months of inflow. Foreign borrowing has the separate prior approval and recording route under regulations 7 and 8.

Bank Account

A foreign-invested company can operate Nepalese-rupee bank accounts according to normal banking law.

Foreign-currency accounts/facilities are subject to NRB foreign-exchange rules.

FITTA separately provides for foreign-currency account facilities with NRB approval where required.

Corporate Income Tax

The ordinary general entity tax rate is generally: 25% but some industries/entities are taxed at different rates and Section 11 incentives can reduce tax for qualifying industries.

Foreign investors should therefore analyse: business activity

1. → base corporate rate
2. Section 11 incentive
3. withholding tax
4. VAT
5. repatriation tax.

VAT

The standard Nepal VAT rate is: 13%

Taxable businesses must assess:

• VAT registration;

• invoice requirements;

• Input VAT;

• VAT returns;

• imports/exports;

• zero-rated exports.

VAT applies to transactions, not accounting profit.

TDS / Withholding

Businesses making specified payments must deduct tax where required.

Common areas include:

• salary;

• rent;

• service;

• contract;

• royalty;

• interest;

• dividend;

• payments to non-residents.

Foreign-invested businesses should pay particular attention to cross-border:

• management fees;

• royalty;

• technical services;

• interest.

Treaty and transfer-pricing rules can also apply.

Transfer Pricing

Cross-border transactions with associated persons must be reviewed under Nepal's transfer-pricing framework.

Examples:

• parent-company management fee;

• intercompany loan;

• royalty;

• software licence;

• cost recharge;

• export services.

Nepal's transfer-pricing framework now includes specific documentation and Finance Act 2083 developments concerning safe harbour and Advance Pricing Agreements.

Labour and Social Security

Once workers are hired, employers must consider:

• employment contracts;

• minimum remuneration;

• working hours;

• overtime;

• leave;

• SSF;

• Labour Audit;

• occupational safety.

Foreign-invested companies do not receive a general exemption from Nepal's Labour Act.

Foreign Employees

Foreign experts, technical or managerial workers may require:

• labour approval/work permit;

• immigration visa;

• employment agreement;

• PAN;

• salary tax.

FITTA permits foreign technical/managerial employees where the necessary expertise cannot be adequately filled by Nepali citizens, subject to labour law.

Business Visa

A foreign investor or qualifying businessperson may obtain a Business Visa subject to Immigration and DOI/line-agency recommendation.

The Department of Immigration currently requires documents including:

• DOI/line-agency recommendation;

• FDI acceptance letter;

• company registration;

• PAN/VAT;

• industry registration;

• passport;

• current tax clearance for renewal;

• other investment/company documents.

Business Visa is a separate immigration procedure from:

• foreign-investment approval;

• labour permit;

• company registration.

Accounting and Audit

Companies must maintain proper accounting records and prepare financial statements under the applicable Nepal accounting framework.

Depending on size/type this can involve:

• NFRS;

• NFRS for SMEs / applicable framework;

• NAS for MEs;

• other applicable standards.

Annual statutory audit is required according to company and sector law.

Annual Corporate Compliance

Typical annual compliance can include:

• audited financial statements;

• AGM;

• OCR annual filing;

• Income Tax return;

• VAT returns;

• TDS;

• tax clearance;

• Labour Audit;

• SSF;

• industry progress reports;

• sector-regulator reports.

The compliance calendar should begin immediately after incorporation.

Repatriation of Dividend / Investment

FITTA permits foreign investors, after satisfaction of Nepal tax and legal requirements, to repatriate qualifying amounts including:

• proceeds from sale of investment;

• profit/dividend;

• liquidation proceeds;

• royalty/technology-transfer amounts;

• other permitted returns.

Foreign exchange approval/processing is governed through the NRB framework. NRB's Foreign Exchange Management Department expressly administers repatriation of FDI and foreign debt.

Exit

Foreign investors should plan exit at entry.

Possible exit mechanisms include:

• share sale;

• transfer to another investor;

• buyout;

• liquidation;

• repatriation.

Share-transfer tax, DOI recording, OCR records and NRB repatriation should be considered together.

Doing Business Checklist

• Identify business activity

• Check foreign-investment negative list

• Check foreign ownership ceiling

• Determine DOI / IBN jurisdiction

• Check automatic-route eligibility

• Check current minimum-investment rule

• Prepare project report/JVA

• Obtain FDI approval

• Incorporate company

• Register PAN/VAT

• Register industry

• Obtain environmental/sector approvals

• Open bank account

• Bring foreign capital through banking system

• Complete FDI/NRB recording

• Complete share allotment

• Hire/register employees

• Obtain foreign-worker permits/visas

• Establish accounting/tax systems

• Complete annual compliance

• Obtain tax clearance

• Plan dividend/repatriation

• Maintain exit documentation

Further reading

The related guides cover these stages in more detail:

• Foreign Investment Approval

• Automatic Route FDI

• Foreign Investment Negative List

• Company Registration

• Industry Registration

• PAN/VAT

• Corporate Tax

• VAT

• TDS

• Transfer Pricing

• Foreign Employees

• Business Visa

• Labour & SSF

• Foreign Loans

• Technology Transfer

• Dividend Repatriation

• Share Sale / Exit

• Company Liquidation

Further guidance and practical checks

“Doing business in Nepal” is not one registration procedure. It is a coordinated legal, investment, corporate, tax, foreign-exchange, labour and regulatory process. The investment structure should be designed before capital is committed.