FDI in Nepal: A Practical Guide for Foreign Investors

gates in order

4

approval comes first

DOI

remittance certificate is key evidence

Bank

entry structures

3

Foreign direct investment in Nepal is fully permitted, actively courted by government policy, and, at the same time, procedurally sequential in a way that surprises investors used to jurisdictions where capital and incorporation can move in almost any order. In Nepal, the order matters: skipping ahead, remitting funds before approval, or incorporating before the investment is properly structured, creates problems that are far more time-consuming to fix than to avoid in the first place.

The four gates, in the order they must be crossed

1. Department of Industry (DOI) approval. No foreign investment can be lawfully brought into a Nepalese company without prior approval from the Department of Industry, or through the relevant one-window mechanism for larger or specifically incentivised projects. This approval confirms the investment amount, the sector, and the foreign investor's shareholding, and it is the single foundational document every later step depends on.

2. Remittance through the approved banking channel. Once approval is granted, the investment must be brought into Nepal through the formal banking channel, not through informal transfer, cash, or an offshore adjustment to an existing arrangement. The bank's own certification of this inward remittance becomes a critical piece of evidence later, both for company registration and, eventually, for repatriation of profit or capital.

3. Company registration (or capital increase in an existing company). With DOI approval and evidence of the remitted investment in hand, the company is registered at the Office of the Company Registrar, or, where the foreign investor is joining an existing Nepalese company, the share capital increase and new shareholding are formally registered.

4. PAN registration and ongoing compliance. The company then registers for a Permanent Account Number and, depending on its activities, VAT, and enters the same ongoing compliance cycle, tax filing, annual returns, audit, as any other Nepalese company, with the added dimension of foreign-investment-specific reporting.

Where investors most often lose time

The most common and most costly sequencing error is remitting funds, or beginning to operate, before DOI approval is actually granted. This creates a position where money has entered the country, or business activity has started, without the underlying legal authorisation the entire structure depends on, and unwinding or regularising that position after the fact is materially harder, and slower, than simply waiting for approval before acting. The second most common delay is incomplete documentation at the DOI stage itself: an investment structure, a source-of-funds explanation, or a business plan that does not match what is actually intended, forcing a resubmission cycle that a properly prepared application would have avoided entirely.

Visa and physical presence

FDI approval and a business visa are related but separate processes, and the visa itself depends on the investment already being properly approved and remitted. Our companion piece on business visa for foreign investors in Nepal sets out the specific visa categories, thresholds and documentation the Department of Immigration requires once the underlying investment approval is in place.

Repatriation: the part investors ask about earliest and understand latest

Every serious investor asks about repatriation before committing capital, and it is worth understanding precisely how it works rather than assuming it mirrors the investment process in reverse. Profit and dividend repatriation, and eventual repatriation of the capital itself on exit or divestment, is permitted, but it flows back through the same formal banking channel, and requires evidence that Nepalese tax on the relevant profit has been settled and that the underlying investment was itself properly approved and recorded from the start. This is precisely why the documentation discipline at every earlier stage, the DOI approval, the bank remittance certificate, the registered shareholding, matters well beyond the initial registration: it is the paper trail that repatriation depends on years later.

Structural choices that affect the whole process

Foreign investors can enter Nepal through a private limited company, a branch office, or a liaison office, each with materially different implications for taxable presence, repatriation, and the scope of activity permitted, and the right choice depends on the specific business model, not a default preference. A liaison office, for example, cannot generally undertake revenue-generating activity in Nepal at all, while a branch office and a locally incorporated private limited company are treated very differently for tax and repatriation purposes. This choice should be made deliberately at the outset, since converting from one structure to another after operations have begun is a considerably more complex undertaking than choosing correctly the first time.

Tax and compliance considerations specific to foreign-invested companies

A foreign-invested company faces the same core tax obligations as any Nepalese company, income tax, VAT where applicable, TDS on payments made, but with additional considerations: withholding tax treatment on any payments to the foreign parent or investor, transfer pricing scrutiny on related-party transactions with the foreign shareholder or its group, and careful attention to how any technology transfer, licensing, or management fee arrangement with the foreign parent is structured and priced, since these are common areas of review.

How Veritas supports foreign investors through this

We manage the sequence end to end, DOI application, bank remittance coordination, company registration, and the ongoing tax and compliance position, so that each stage is properly evidenced for the one that follows, including eventual repatriation. See our FDI services in Nepal for how a full engagement is structured from the first approval application through to steady-state compliance.

For the full sequence of approvals and timelines, see the FDI approval process in Nepal: step-by-step guide.

Frequently asked

Related: if you only need a presence in Nepal without a separate company, see branch and liaison office registration.

Related: Trademark registration in Nepal Securing the brand name does not require local incorporation or FDI approval, so it can and should happen before the rest of the sequence.