Options for registering companies in Nepal
Nepal is a federal democratic republic located in South Asia with a legal framework that permits local and foreign investors to conduct business through several recognised structures. Foreign investment activities are regulated under the Foreign Investment and Technology Transfer Act and related legislation.
Companies are registered through the Office of the Company Registrar, while foreign investment approvals are administered by the Department of Industry or Investment Board Nepal depending on the size and nature of the investment. Nepal permits foreign ownership in a wide range of sectors subject to statutory restrictions.
The available entity types vary in legal status, tax treatment, capital thresholds and governance structure, shaping how foreign businesses operate and manage risk locally.
Nepal offers international investors the following legal structures for establishing a local presence:
Limited liability company (Private Limited Company – Pvt. Ltd.)
A private limited company is a separate legal entity whose shareholders' liability is limited to their capital contributions.
- A Pvt. Ltd. company is a separate legal person registered with the Office of the Company Registrar. Unlike a branch or representative office, it exists independently from its shareholders.
- A Pvt. Ltd. company is commonly used for trading, services, manufacturing and foreign-invested business operations. Nepal permits foreign investors to establish wholly owned subsidiaries in approved sectors.
- The company operates through directors and authorised officers appointed under its constitutional documents. Official government confirmation of a resident-management requirement was not located.
- Corporate income is generally taxed at 25%. The company must comply with income tax registration, filing and corporate reporting obligations.
- Registration and ongoing filings are maintained through the Office of the Company Registrar and Inland Revenue Department. Commercial banks generally require authorised signatories when opening corporate accounts.
- Unlike a branch office, a Pvt. Ltd. company creates a separate liability framework around local operations. Certain regulated sectors require additional approvals from sector regulators.
Free zone company
A free zone company operates inside a Special Economic Zone established under Nepal's Special Economic Zone framework.
- A free zone company is generally incorporated as a Nepali company and operates under SEZ legislation. Unlike a representative office, it is permitted to conduct commercial activities and generate revenue.
- A free zone company is commonly used for export-oriented manufacturing and industrial activities. SEZ legislation provides a dedicated framework for qualifying enterprises.
- Corporate governance requirements depend on the legal vehicle established within the SEZ.
- The supplied tax treatment is 0% for years 1 to 5 and 12.5% thereafter.
- SEZ enterprises remain subject to registration, tax and reporting obligations prescribed by Nepalese law. Additional compliance requirements apply under the SEZ regulatory framework.
- In contrast to a representative office, a free zone company conducts revenue-generating activities. Operations must comply with the specific conditions applicable to SEZ enterprises.
Representative office
A representative office is a non-commercial presence established by a foreign company for liaison, coordination and promotional functions.
- A representative office is not a separate legal entity and operates on behalf of the foreign parent company. Unlike a private limited company, it does not maintain an independent commercial identity.
- A representative office is commonly used for market research, communication, project coordination and relationship management. It serves as a local contact point for the foreign company.
- The office operates through authorised representatives appointed by the foreign company.
- A representative office cannot conduct trading activities or generate profits in Nepal. Corporate income tax on business profits therefore does not apply where no commercial activity is undertaken.
- The office remains subject to registration and reporting obligations imposed by the relevant authorities. Activity reports and expenditure records may be required by regulators.
- This structure does not allow revenue generation or commercial contracting, whereas a private limited company and free zone company may conduct operational business activities. Regulatory approval remains required for establishment and operation.
Comparison of the common types of companies in Nepal
Information verified against Office of the Company Registrar, Department of Industry and Investment Board Nepal.
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