Business in Nepal

Nepal has no single national business registration office equivalent to a general trade-registration authority. A business may need several registrations and approvals because company registration, industry registration, local business registration, tax registration and sector licensing are handled by different bodies. The Office of Company Registrar, or OCR, handles companies. The Department of Industry, or DOI, handles industries, foreign investment, technology transfer and related services. Provinces and local levels handle many micro, cottage and small industries under provincial law, while municipalities, rural municipalities and wards handle local business registration, renewals, business tax and market oversight. The Inland Revenue Department, or IRD, issues the Permanent Account Number, commonly called PAN, and administers income tax, VAT and excise. A sector regulator may require an additional permit. Common legal forms include a private limited company, public limited company, non-distributing-profit company, proprietorship, partnership and, in some cases, a cooperative-owned industry. A private limited company may have one to 101 shareholders and is a separate legal person; liability is generally limited to the company. A public limited company requires at least seven founders and paid-up capital of at least NPR 10,000,000. A non-distributing-profit company requires at least five founders. A proprietorship or partnership keeps the business more closely tied to its owner or partners, including its liability and tax structure. A typical setup begins with the business model, sector, location and ownership. The founder then chooses the legal form, completes company registration through OCR and CAMIS where a company is used, or follows the firm or industry registration process for another structure. Industry registration may be required through DOI, a provincial authority or a local authority. The business then completes local registration, local tax or renewal requirements, obtains a PAN through the IRD Taxpayer Portal and registers for VAT when the law requires or permits it. Excise registration applies to affected goods. Environmental approval, an IEE or an EIA may also be required, depending on the activity and its effects. A private limited company may generally begin after receiving its Certificate of Incorporation unless a special sector licence is required. A public limited company needs the relevant transaction approval before it conducts transactions. Running an unregistered or unlicensed activity can expose the business to sanctions, tax and liability problems and restricted market access. Industry categories use fixed-capital, employment, turnover, technology and activity criteria. A micro-industry has fixed capital of no more than NPR 2,000,000 excluding land and buildings, no more than nine workers including the entrepreneur, annual turnover below NPR 10,000,000 and energy use of no more than 20 kilowatts. The entrepreneur must operate and manage it. A cottage industry is linked to traditional skills or technology, labour, local resources or culture and may use no more than 50 kilowatts or fall within the relevant schedule. A small industry has fixed capital up to NPR 150,000,000, excluding the micro and cottage categories. A medium industry exceeds NPR 150,000,000 and reaches NPR 500,000,000, while a large industry exceeds NPR 500,000,000. Categories include energy, manufacturing, agriculture and forestry, mining, infrastructure, tourism, ICT and information dissemination and services. Documents depend on the chosen form and activity. OCR commonly requires an application, the memorandum and articles of association and citizenship copies. A foreign founder may need an approval or permit, passport and company documents, together with DOI approval or joint-venture papers. DOI industry registration commonly requires the prescribed Form A, a project report, the incorporation certificate, the memorandum and articles of association, citizenship or passport documents and any sector permit. An IEE or EIA may be required. Foreign direct investment, or FDI, normally requires DOI or FITTA approval before the investment, registration in IMIS, a project proposal, a joint-venture agreement where applicable, a passport or company profile and a bank credibility certificate. After FDI approval, industry registration must generally be completed within 35 days; a late application needs an extension. Registration fees vary by form and authorized or fixed capital. OCR private-company fees range from NPR 1,000 for authorized capital up to NPR 100,000 to NPR 16,000 for capital from NPR 2,500,001 to NPR 10,000,000, with higher capital charged under a graduated schedule. A public company with capital up to NPR 10,000,000 pays NPR 40,000. DOI proprietorship registration commonly ranges from NPR 1,000 to NPR 50,000, with renewal fees of NPR 600 to NPR 15,000. Partnership registration commonly ranges from NPR 600 to NPR 15,000, with renewal fees of NPR 100 to NPR 300. Micro-industry registration has a fee exemption under the Industrial Enterprises Act. Local business tax, permits and renewals depend on the municipality, activity and location, so there is no single national amount. Tax rates and reliefs follow the applicable Finance Act and IRD rules and should be checked for the relevant year. A company must keep accounts in Nepali or English using double-entry accounting, show its true financial position and follow applicable accounting standards. It must have an annual audit by a registered auditor. A private company generally files annual audited financial statements with OCR within six months after the end of the financial year. A public company generally files its annual documents within 30 days after its annual general meeting. Shareholder and debenture records, annual returns, director and auditor reports and statutory changes must be maintained and submitted through CAMIS within the applicable deadlines. An income-tax return under PAN is generally due within three months after the end of the income year. VAT and excise returns and payments follow the applicable IRD regime. An industry must submit an annual progress report to DOI or the relevant industry registrar, and local renewals follow local rules. Growth measures may include tax or customs incentives, concessions, research and development deductions and productivity or industrial-property expenses, but eligibility depends on current law and the activity. A female-owned sole industry or firm may receive additional facilities under the Industrial Enterprises Act. The Startup Enterprise Loan is available only to qualifying partnerships or companies under the applicable DOI call and is not available merely because a business has a PAN or ward registration; a one-shareholder company is excluded under the cited DOI FAQ. The loan is project-backed, may carry interest of up to 3% for up to seven years and remains subject to the budget and current call. Banking and loan-product terms are separate from business registration. Changes such as share transfers, beneficial-owner or shareholder updates, capital increases or reductions, changes of name or business object, company-type changes, mergers and de-registration are handled through OCR and CAMIS. A merger application must generally be filed within 30 days after the resolution. Share transfers may also require approval from DOI, Nepal Rastra Bank or a sector regulator. An FDI share purchase requires the applicable DOI process and may require the current shareholder list, audited accounts and tax-clearance documents. DOI guidance commonly uses an FDI minimum of NPR 20,000,000, but sector exclusions and exceptions require a current check. Closing a business requires more than stopping activity. An industry suspension or closure must generally be reported to the registrar within 30 days, followed by cancellation and settlement of tax and other government liabilities. Company de-registration proceeds through CAMIS and OCR, including the special de-registration directive 2082 where applicable. The business should also settle its position with IRD, the local level, DOI and any sector regulator. Assets, employees, creditors, tax clearance and permits need separate treatment. Insolvency follows the insolvency-law and liquidator process. Local authority, provincial rules, fees, renewal dates and practical access can differ between urban and rural areas, so the responsible office must be confirmed for the activity and location.