Business

Foreign investment in Nepal runs through an approval process before a company exists, not after. You obtain investment approval, then incorporate, then apply for the business visa - and three things decide whether the plan is viable at all: whether your sector is open to foreign investment, whether you meet the minimum investment threshold, and whether you can document the money's origin well enough to take profits out later.

For company structures, registration mechanics, tax and the July fiscal year, business covers the ground. This page covers the foreign investor's path.

Three questions before anything else

1. Is the sector open? Nepal maintains a list of activities closed to foreign investment. Several retail, small-scale and personal-service categories are restricted. Confirm yours before spending anything.
2. Does your investment meet the minimum? A threshold applies to foreign investment, is revised periodically, and should be checked against the current figure rather than any article.
3. Can you evidence the source of funds? Repatriating profit and capital later depends on having documented how the money arrived. This is the one people neglect and the one that bites hardest.

The route

Step	With whom
Investment approval	Department of Industry, or the investment board for large projects
Company incorporation	Office of the Company Registrar
PAN, and VAT where applicable	Inland Revenue Department
Central bank recording of the investment	Nepal Rastra Bank
Business visa	Department of Immigration, on the approval
Local registration	Ward or municipality

The central bank step is the one that determines whether you can take money out. Investment that is properly recorded on the way in can be repatriated through a defined process; investment that was not recorded becomes extremely difficult to move. Do it at the time, not later.

Structures

Most foreign investors use a private limited company, either wholly owned where the sector permits or as a joint venture with Nepali shareholders. A branch or liaison office suits a foreign company wanting a presence without a separate Nepali entity, with its own limits on what it may do - a liaison office generally cannot trade.

If you take a local partner, paper the relationship properly. A shareholder agreement covering decision-making, deadlock, exit and what happens if one side stops contributing is worth far more than it costs. Legal and government covers finding representation.

The business visa

Issued on the strength of the investment approval and renewed annually, with renewal depending on the investment remaining in good standing and the company meeting its filing obligations.

This is the quiet risk in an investor visa: your immigration status depends on corporate compliance. A company that misses its annual return or audit creates a visa problem months later. Residence covers the renewal cycle.

Repatriating profits

Permitted, through a defined approval process, and dependent on the documentation chain: the recorded investment, the audited accounts showing the profit, evidence that tax was paid, and the board approval for the distribution.

Build the discipline from the first transaction. Reconstructing three years of records to support a repatriation request is a miserable and sometimes unsuccessful exercise.

Hiring

A foreign-invested company hires Nepali staff under the ordinary labour framework - appointment letters, Social Security Fund enrolment, tax at source. Bringing in foreign staff requires the work permit route described in jobs, applied for by the company, and the "could not be filled locally" test applies to your own company too.

What it actually costs to set up

Beyond the investment itself, budget for the process:

Registration fees	Scale with authorised capital
Legal and advisory	The largest line for most foreign investors
Accountant, ongoing	Monthly or annual retainer
Audit, annual	Required, scales with size
Office and local registration	Varies by municipality

Professional fees are the item people underestimate. Nepali corporate and foreign-investment practice is specialised, and the cost of doing it properly is trivial beside the cost of unwinding it later.

The small-business reality

A frequent plan among foreign residents is a café, a guesthouse, a small tour operation or a shop. Be aware that several small-scale and retail activities sit on the restricted list precisely to reserve them for Nepali citizens, and that the minimum investment threshold is set well above what such a business would need.

The common workaround - the business is registered to a Nepali friend or spouse while the foreign partner runs it and funds it - creates an arrangement with no legal protection for the person holding the money at risk. It works until a relationship changes, and then it does not. If you are considering it, get advice on what can actually be documented.

Realistic timelines

Allow months rather than weeks. Approval, incorporation, central bank recording, banking and the visa each depend on the one before, and each involves a third party working to its own pace.

The common failure is committing to a lease, staff or equipment on an assumed start date. Do not spend on the operation until the approvals are in hand.

Where this goes wrong

• Incorporating before checking the sector list. Some activities are simply closed.
• Skipping the central bank recording. The money comes in easily and will not go out.
• Treating the minimum threshold as negotiable. It is not.
• Letting company filings lapse. It becomes an immigration problem, not just a corporate one.
• A handshake with a local partner. Put it in writing while everyone is friendly.

Where to go next

Business covers the mechanics every company here deals with - fiscal year, tax, annual compliance. Banking and finance covers the account and the currency rules underneath all of this.