Nepal's economy is at an inflection point. With GDP growth stabilizing above 5%, a young and increasingly skilled workforce, and a regulatory framework that is actively liberalizing to attract foreign capital, the country presents a compelling — if complex — investment destination.
This guide summarizes what international investors and businesses need to know before entering the Nepali market.
The Investment Climate
Nepal's strategic position between India and China, combined with preferential trade access to both markets, creates unique opportunities in manufacturing, transit trade, and services. The government has signaled strong intent to attract FDI through the amended FITTA 2081 and the introduction of the Automatic Route for qualifying investments.
Key indicators:
GDP: approximately USD 40 billion (2024/25)
Population: 30 million, with 55% under the age of 30
Primary growth sectors: hydropower, tourism, IT/ITES, agriculture, financial services
FDI inflows have grown at 15% CAGR over the past five years
Types of Business Entities
Foreign investors may establish one of the following structures:
Private Limited Company — most common for foreign-invested enterprises; minimum two shareholders, one director
Public Limited Company — required for enterprises planning a public offering; minimum seven shareholders
Branch Office — permitted for specific activities (banking, insurance, airlines); does not constitute a separate legal entity
Liaison Office — limited to market research and feasibility activities; cannot engage in commercial operations
Company Registration Process
Registration is administered by the Office of the Company Registrar (OCR):
Name reservation and approval (2-3 working days)
Submission of MoA, AoA, and incorporation documents
Company registration certificate issuance (7-10 working days)
PAN registration with the Inland Revenue Department
Industry registration with the Department of Industry (for manufacturing/processing)
FDI approval from DoI or Investment Board Nepal (for foreign-invested companies)
NRB approval for capital import and banking arrangements
Tax Framework
Nepal operates a self-assessment tax system administered by the Inland Revenue Department (IRD):
Corporate Income Tax: 25% standard rate; 30% for banks/FIs and tobacco/liquor; 20% for manufacturing industries and special industries
VAT: 13% standard rate on goods and services
TDS: rates vary from 1.5% to 15% depending on the nature of payment
Dividend Tax: 5% for residents, 5-15% for non-residents (subject to DTAA)
Capital Gains Tax: 10% on gains from disposal of shares and assets
Nepal has Double Taxation Avoidance Agreements (DTAAs) with 11 countries including India, China, South Korea, Thailand, and several European nations.
Foreign Investment Regulations
Under the amended FITTA 2081:
Minimum FDI threshold: USD 20,000 for technology enterprises, USD 50,000 for others
Automatic Route now available for investments in specified sectors up to defined thresholds
Profit repatriation permitted after payment of applicable taxes and submission of audited financials
100% foreign ownership permitted in most sectors (retail, media, and a few others retain restrictions)
Technology transfer agreements must be registered with the DoI
Labour & Employment
Nepal's labour framework is governed by the Labour Act 2074 and the Social Security Act 2074:
Working hours: 8 hours/day, 48 hours/week
Minimum wage: set annually by the government (currently NPR 17,300/month for unskilled workers)
Social Security Fund: mandatory contributions from both employer (20%) and employee (11%)
Foreign workers require work permits from the Department of Labour
How Veritas Helps
We have guided over 80 foreign-invested companies through the Nepal market entry process — from initial feasibility through incorporation, FDI approval, banking setup, and first-year compliance. Our team knows every regulator, every form, and every unofficial timeline.
Whether you are exploring Nepal for the first time or expanding an existing operation, we can provide a structured market entry roadmap tailored to your sector, investment size, and timeline. Contact us for a confidential consultation.
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Our team can provide a confidential briefing on how this development affects your specific situation.
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