Nepal is a fast-growing hub for tourism, hydropower, information technology, and manufacturing, making it an attractive destination for foreign investors. Starting a business in Nepal as a foreigner requires following specific laws and regulations under the Foreign Investment and Technology Transfer Act (FITTA) 2019 and other related acts. This guide provides a step-by-step process, eligibility, documents, fees, and compliance requirements for foreigners who want to establish a business in Nepal.
Legal Framework for Foreign Investment in Nepal
- Foreign Investment and Technology Transfer Act (FITTA) 2019
- Companies Act 2006
- Industrial Enterprises Act 2020
- Foreign Exchange Regulation Act
These laws regulate foreign direct investment (FDI), company registration, industry licensing, and profit repatriation in Nepal.
Sectors Open and Restricted for Foreign Investment
Open Sectors:
- Hydropower projects
- Tourism and hospitality (hotels, resorts, travel agencies)
- Information Technology (software development, outsourcing)
- Agriculture and agro-processing industries
- Education and vocational training institutions
- Manufacturing and industrial enterprises
Restricted Sectors:
- Real estate business
- Retail and wholesale trading
- Tobacco and liquor production (without special approvals)
- Security services
- Cottage industries
Minimum Investment Requirement
- A foreign investor must invest at least NPR 20 million (approx. USD 150,000) in Nepal.
- Investment may be in the form of equity, technology transfer, or reinvestment of profits.
Step-by-Step Process to Start a Business in Nepal as a Foreigner
1. Industry Approval from DOI
- Submit a Foreign Investment Approval Application to the Department of Industry (DoI).
- The DoI reviews the business proposal, capital investment plan, and sector eligibility.
2. Company Registration at OCR
- Register the company at the Office of the Company Registrar (OCR).
- Types of companies available:
- Private Limited Company
- Public Limited Company (for larger investments)
- Branch Office / Liaison Office (for foreign companies operating in Nepal)
3. Tax Registration
- Obtain a Permanent Account Number (PAN) from the Inland Revenue Department (IRD).
- Apply for VAT registration if annual turnover exceeds NPR 5 million.
4. Bank Account and Capital Injection
- Open a foreign currency account in a commercial bank in Nepal.
- Transfer the investment amount legally through the banking channel.
- Bank issues an inward remittance certificate, which is required for company setup.
5. Business-Specific Licenses
- Obtain additional approvals depending on the sector, such as:
- Tourism license from the Ministry of Culture, Tourism and Civil Aviation.
- Industry registration for manufacturing.
- Hydropower license from the Department of Electricity Development.
6. Visa for Investors
- Apply for a Business Visa or Investor Visa from the Department of Immigration.
- The visa is usually granted for up to 1 year initially, renewable upon continued investment.
7. Commence Operations
- Once the company is registered, licenses are obtained, and capital is deposited, the business can legally operate in Nepal.
Documents Required for Foreign Business Registration in Nepal
- Application form for foreign investment approval.
- Detailed business plan and feasibility study.
- Copy of passport of investor(s).
- Company incorporation certificate of the foreign parent company (if applicable).
- Board resolution for investment in Nepal.
- Lease agreement or proof of business premises in Nepal.
- Inward remittance certificate from the bank.
Timeline for Business Registration in Nepal for Foreigners
- Industry approval from DoI: 10–15 working days
- Company registration at OCR: 5–7 working days
- PAN/VAT registration: 1–2 working days
- Bank account and inward remittance process: 2–5 working days
- Sector-specific licenses: 10–30 working days
Total time: 30–45 working days, depending on business type and approvals.
Fees for Foreign Business Registration in Nepal
- Industry registration fee: NPR 15,000 – 50,000 (based on investment amount).
- Company registration fee: NPR 10,000 – 100,000 (depending on authorized capital).
- PAN registration: Free.
- Sector-specific licenses: Varies by industry.
- Investor visa processing fee: USD 100 – 200.
Profit Repatriation and Taxation
- Foreign investors are allowed to repatriate:
- Dividends
- Sale proceeds of shares
- Loan repayments
- Royalties and fees under technology transfer agreements
- Taxes applicable:
- Corporate Income Tax: 25% (standard rate)
- VAT: 13%
- Withholding Tax: 5–15% depending on transaction
Workflow Diagram of Business Registration for Foreigners
flowchart TD
A[Submit Foreign Investment Application at DoI] --> B[Obtain Approval from DoI]
B --> C[Register Company at OCR]
C --> D[Open Foreign Currency Bank Account]
D --> E[Transfer Investment and Obtain Remittance Certificate]
E --> F[Register for PAN and VAT]
F --> G[Apply for Business-Specific Licenses]
G --> H[Apply for Investor/Business Visa]
H --> I[Commence Operations in Nepal]
Conclusion
Starting a business in Nepal as a foreigner is a structured process governed by Nepalese investment laws. By securing DoI approval, company registration, PAN/VAT, banking compliance, and sector-specific licenses, foreign investors can establish a legitimate business presence in Nepal. With minimum investment requirements, profit repatriation rights, and supportive visa policies, Nepal offers attractive opportunities for international entrepreneurs seeking to enter a growing South Asian market.
