Before starting a business in Nepal, it is important to determine the nature of the business i.e.,commerce (trade, goods and services distribution) or industry (production or manufacturing). Once the nature of the business has been determined, the prevailing laws of Nepal provide multiple alternatives for the operation of the business.

Business Vehicle

1.  Private /sole proprietorship firms: Private firms are owned and operated by a single person to operate their business or engage in trade and industry. Therefore, it is registered in the name of a single individual. 

According to Private Firm Registration Act, 2014 B.S. (1957), there are three routes to register one’s business under sole proprietorship:

i) Department of Commerce, Supplies & Consumer Protection (trading and commercial business)

 (ii) Department of Small and Cottage Industry (in case of the cottage and small-scale industrial businesses)

 (iii) Department of Industry (in case of industries).

What are the documents required for registering a private company in Nepal?

 -Name of the Private Firm;

- Address of the Firm;

-Objectives, functions and the particulars of goods or commodities to be transacted by the private firm.

-Name and address of the owner, and the name of his/her father, mother, grandfather, and grandmother.

2. Partnership firms: A partnership firm must be registered in the concerned department within six months from the conclusion of the partnership agreement. To register a partnership firm, the partners shall submit an application in the prescribed legal format to the concerned department along with the prescribed official fee and a copy of the partnership agreement (if any)

What are the documents required for the registration of partnership firms in Nepal?

-Full Name of the firm;

-The principal place of business of the firm;

-The objectives of the firm include a short description of the nature of the goods or services, as the case may be, which the firm intends to run the business;

-The full name, surname, and permanent address of the partners;

-The matter of restrictions imposed on the power of a partner, if any;

-The types of partnership and the capital subscribed by each partner;

-The name of a partner or partners, who represent the firm;

-The mode to share the profit and loss between /among partners;

-The mode to calculate the profit of a firm;

-Any other matters prescribed by the concerned Department stating which should be set out in the application.

3. Companies:

What are the documents required for the registration of a company in Nepal?

- Submit an application to the Company Registrar’s Office in the prescribed legal format along with the registration fee (calculated on the basis of the authorized capital of the company) 

-Proposed Memorandum of Association

-Proposed Articles of Association 

-In case of the public company: copy of the agreement, if any, entered into between the promoters prior to incorporation

-In the case of a private company: a copy of the consensus agreement

-Approval or license from a competent authority, if required (for carrying on any particular type of business or transaction under the prevailing laws)

-Where the promoter is a Nepalese citizen: a certified copy of the citizenship certificate

-Where the promoter is a body corporate: registration certificate of such body, the decision of the Board of Directors, and major documents relating to the incorporation of such body. 

4. Local Business: Need to register at the local level(municipality) at the ward level. For example Tea shops, small grocery stores, etc. These need not be registered as firms or companies.  Local businesses can operate only within the specific ward where it is registered. These businesses are governed by local municipality law.

Documents required for local business:

- Rental agreement

-Citizenship certificate of the owners:

- Two passport-size pictures of the business owners(s)

Tax registration

 Permanent Account Number (PAN) Registration

All business entities in Nepal must obtain a Permanent Account Number (PAN) registration certificate from the Inland Revenue Department before commencing their business. PAN is a distinct identification number provided to all taxpayers in Nepal. This includes private firms, partnership firms, companies, and all forms of local businesses.  

 Value Added Tax (VAT) Registration 

VAT is the tax that covers value-added to each commodity at all stages of production and distribution. VAT registration is incorporated within the PAN certificate. It is provided by the Inland Revenue Office. Businesses with transactions exceeding 20 lakh (Two Hundred Thousand) Nepali Rupee for services and 50 lakh (Five Hundred Thousand) Nepali Rupee for goods should be registered in VAT.

VAT registration is compulsory for businesses associated with hardware, sanitary, furniture, fixtures, furnishings, automobiles, electronics, marbles, education consultancy, audit services, catering services, party palaces, parking services, restaurants with bars, color lab, ice cream factory, boutique, dry cleaners with machinery and other businesses specified in the VAT Act irrespective of their turnovers.

An individual or entity involved in taxable transactions under Value Added Tax Act, 2052 (1996) must submit an application in the prescribed format before the Inland Revenue Office

Additional FAQ:

How long will the company registration process in Nepal take?

• If the application was filed correctly with all information and the application is backed by other necessary documents, your company will be registered within 15 minutes. However, the Company registration office usually takes up to 15 days to approve the name and proceed with your registration process further. One can apply for company registration in Nepal online.

What are the types of business companies that can be opened in Nepal?

- According to the Companies Act 2006 (2063B.S.), the following companies can be established in Nepal:

a. Private limited company: It requires only one shareholder or promoter

b. Public limited company: At least seven shareholders and promoters are required

c. Non-profit company: At least five members are required. It has no shareholders

- Cost to incorporate a private company in Nepal.

• Up to NPR 100,000 (authorized capital): NRS 1,000.

• NRS 100,001 to NRS 500,000: NRS 4,500.

• NRS 500,001 to NRS 2,500,000: NRS 9,500.

• NRS 2,500,001 to NRS 10,000,000: NRS 16,000.

• NRS 10,000,001 to NRS 20,000,000: NRS 19,000.

• NRS 20,000,001 to NRS 30,000,000: NRS 22,000.

• NRS 30,000,001 to NRS 40,000,000: NRS 25,000.

• NRS 40,000,001 to NRS 50,000,000: NRS 28,000.

• NRS 50,000,001 to NRS 60,000,000: NRS 31,000.

• NRS 60,000,001 to NRS 70,000,000: NRS 34,000.

• NRS 70,000,001 to NRS 80,000,000: NRS 37,000.

• NRS 80,000,001 to NRS 90,000,000: NRS 40,000.

• NRS 90,000,001 to NRS 100,000,000: NRS 43,000.

• Additional than NRS 100,000,000: NRS 43,000 plus NRS 30 for all added NRS 100,000

-Cost to incorporate a proprietorship