Foreign Direct Investment (FDI) in Nepal requires compliance with multiple regulatory bodies and payment of various fees. The total cost of establishing an FDI company comprises government fees and professional service charges. This article provides a detailed breakdown of all costs associated with FDI company registration in Nepal.
Government Fees for FDI Company Registration
The government fees for FDI company registration in Nepal are divided into several categories. Each regulatory body charges specific fees based on the nature and capital of the business.
Office of Company Registrar (OCR) Fees
The Office of Company Registrar charges registration fees based on the authorized capital of the company. The fee structure differs significantly between IT companies and other industries.
OCR Fees for IT Companies
The Companies Act, 2063 (2006) and related regulations provide concessional rates for IT companies to promote the technology sector in Nepal. The fee structure for IT companies is as follows:
| Authorized Capital Range | Registration Fee (NPR) |
|---|---|
| NPR 1–5 Lakhs | 4,500 |
| NPR 5–25 Lakhs | 9,500 |
| NPR 25 Lakhs – 1 Crore | 16,000 |
| Every Additional 1 Crore | 3,000 per Crore |
IT companies benefit from substantially reduced registration fees compared to other industries. For example, an IT company with authorized capital of NPR 50 lakhs pays only NPR 9,500, while a non-IT company with the same capital pays NPR 19,000 or more. Companies with capital exceeding 1 crore pay an additional NPR 3,000 for each crore above the base amount. This progressive fee structure encourages larger investments in the IT sector.
OCR Fees for Other Industries
For industries other than IT, the Office of Company Registrar charges a minimum fee of NPR 19,000 regardless of the authorized capital. This flat minimum fee applies to manufacturing, trading, service, and other business sectors. Companies with higher authorized capital may be subject to additional fees based on the capital structure. The Foreign Investment and Technology Transfer Act, 2075 (2019) governs these fee structures for foreign investment companies.
Ward Registration Fees
Ward registration is mandatory for all companies operating in Nepal. The local ward office where the company’s registered office is located collects this fee. The ward registration fee starts from NPR 10,000 and varies based on the annual rent amount specified in the rent agreement.
According to the Local Government Operation Act, 2074 (2017), companies must pay 10% of their annual rent as ward tax. For example, if a company’s annual rent is NPR 100,000, the ward tax amounts to NPR 10,000. If the annual rent is NPR 200,000, the ward tax becomes NPR 20,000. This tax must be paid annually and is calculated based on the rent agreement submitted during registration. The ward office issues a registration certificate after payment of this fee.
Department of Industry (DOI) Deposit
The Department of Industry requires a refundable deposit of NPR 25,000 for industry registration. This deposit is collected under the Industrial Enterprises Act, 2076 (2020). The deposit serves as a security amount and is refundable when the company ceases operations or surrenders its industry registration certificate. The DOI deposit is separate from the industry registration fee and must be paid at the time of submitting the industry registration application. This deposit applies to all industries regardless of their capital size or sector.
Service Charges for FDI Company Registration
Professional service providers charge fees for handling the complete FDI company registration process. These charges cover legal, documentation, and liaison services with various government departments.
Service Charges for IT Companies
For establishing an IT company in Nepal through FDI, professional service charges amount to NPR 1,95,000 excluding government fees. This fee covers all services from initial FDI approval to final registration and compliance. The service charge for IT companies is lower than other industries due to the streamlined approval process and reduced documentation requirements. IT companies benefit from single-window clearance at the Department of Industry, which simplifies the registration process. The service charge includes preparation of all legal documents, coordination with government offices, and follow-up until completion of registration.
Service Charges for Standard FDI Companies
For establishing a standard FDI company with 2 crore capital, the service charge is NPR 2,95,000 excluding government fees. This higher fee reflects the additional complexity and documentation required for larger capital investments. Companies in manufacturing, trading, or service sectors require more extensive documentation and approvals compared to IT companies. The service charge covers consultation on business structure, preparation of feasibility studies, drafting of memorandum and articles of association, and coordination with multiple regulatory bodies.
Service Charges for Special Industries
Industries requiring additional approvals or those with capital above the base amount require customized quotations. Special industries include banking, insurance, telecommunications, hydropower, and other regulated sectors. These industries require sector-specific approvals from regulatory bodies such as Nepal Rastra Bank, Insurance Board, Nepal Telecommunications Authority, or Department of Electricity Development. Service providers prepare updated quotations based on the specific requirements and complexity of each case. Clients can request quotations via email or WhatsApp after providing details of their proposed business.
Scope of Work in FDI Company Registration
The FDI company registration process involves multiple steps across different government departments. Professional service providers handle all these steps on behalf of foreign investors.
Obtaining FDI Approval from Department of Industry
The first step in establishing an FDI company is obtaining approval from the Department of Industry. The Foreign Investment and Technology Transfer Act, 2075 (2019) requires all foreign investors to obtain prior approval before registering a company. The application must include details of the proposed business, capital structure, technology transfer arrangements, and foreign investor information. The Department of Industry reviews the application to ensure compliance with sectoral policies and foreign investment limits. Approval is typically granted within 7 working days for industries not requiring additional clearances.
Company Registration at OCR
After obtaining FDI approval, the company must be registered at the Office of Company Registrar. The Companies Act, 2063 (2006) governs the registration process. The application includes the memorandum of association, articles of association, details of directors and shareholders, and registered office address. Foreign investors must submit notarized and authenticated documents from their home country. The OCR verifies all documents and issues a company registration certificate within 3-5 working days. The company receives a unique registration number and PAN (Permanent Account Number) upon registration.
Tax Registration at IRD
The Inland Revenue Department (IRD) handles tax registration for all companies. The Income Tax Act, 2058 (2002) and Value Added Tax Act, 2052 (1996) require companies to register for income tax and VAT. The company must submit its registration certificate, PAN, and details of business activities. The IRD issues a tax registration certificate and VAT registration certificate. Companies engaged in manufacturing or trading must also register for excise duty if applicable. Tax registration must be completed before commencing business operations.
Ward Registration at Local Ward Office
Companies must register at the ward office of their registered address. The Local Government Operation Act, 2074 (2017) mandates this registration. The company submits its registration certificate, rent agreement, and citizenship or passport copies of directors. The ward office verifies the documents and collects the registration fee based on annual rent. The ward registration certificate is valid for one year and must be renewed annually. This registration is necessary for obtaining other licenses and permits.
Local Bank Account Opening
Opening a bank account is essential for capital deposit and business transactions. Foreign investors must deposit the committed capital in a Nepalese bank. The Foreign Exchange (Regulation) Act, 2019 (1962) and Nepal Rastra Bank directives govern foreign currency transactions. Banks require the company registration certificate, tax registration, ward registration, and director identification documents. The bank issues an account opening certificate and capital deposit certificate. This certificate is required for industry registration and Nepal Rastra Bank notification.
Obtaining Non-Blacklisted Certificate from CIB
The Credit Information Bureau (CIB) issues non-blacklisted certificates for company directors and shareholders. This certificate confirms that the individuals have no adverse credit history or legal issues. Banks and regulatory bodies require this certificate during various approval processes. The company submits citizenship or passport copies and authorization letters to CIB. The certificate is typically issued within 1-2 working days. This certificate is valid for six months from the date of issue.
Conducting Industry Registration at DOI
Industry registration at the Department of Industry is mandatory for all manufacturing and certain service industries. The Industrial Enterprises Act, 2076 (2020) requires this registration. The company submits its registration certificate, tax registration, environmental clearance (if required), and capital deposit certificate. The DOI verifies compliance with sectoral policies and issues an industry registration certificate. This certificate is necessary for obtaining various operational licenses and tax benefits. The registration fee varies based on the type and scale of industry.
Obtaining Share Registry Certificate from OCR
The Office of Company Registrar maintains a share registry for all companies. After capital deposit, the company must register its shares and obtain a share registry certificate. The Companies Act, 2063 (2006) requires companies to maintain proper share records. The company submits details of share allocation, shareholder information, and capital deposit certificates. The OCR verifies the information and issues a share registry certificate. This certificate serves as proof of share ownership and capital structure.
Notifying Nepal Rastra Bank
Foreign investment companies must notify Nepal Rastra Bank about the capital inflow. The Foreign Exchange (Regulation) Act, 2019 (1962) and Foreign Investment and Technology Transfer Act, 2075 (2019) require this notification. The company submits FDI approval, company registration, capital deposit certificate, and bank account details. Nepal Rastra Bank records the foreign investment in its database and issues an acknowledgment. This notification is necessary for profit repatriation and dividend distribution to foreign shareholders.
Obtaining Share Registry Certificate
The final step involves obtaining the share registry certificate after completing all registrations. This certificate confirms the final share structure and ownership pattern. The Office of Company Registrar issues this certificate after verifying all previous registrations and approvals. The share registry certificate is required for annual compliance and any future changes in share structure. Companies must update the share registry whenever there are changes in shareholding or capital structure.
Total Cost Estimation for FDI Company Registration
The total cost of FDI company registration varies based on the type of industry and capital structure. The following table provides estimated costs for different scenarios:
| Company Type | Authorized Capital | OCR Fee (NPR) | Ward Fee (NPR) | DOI Deposit (NPR) | Service Charge (NPR) | Approximate Total (NPR) |
|---|---|---|---|---|---|---|
| IT Company | 10 Lakhs | 9,500 | 10,000 | 25,000 | 1,95,000 | 2,39,500 |
| IT Company | 50 Lakhs | 16,000 | 15,000 | 25,000 | 1,95,000 | 2,51,000 |
| IT Company | 2 Crores | 19,000 | 20,000 | 25,000 | 1,95,000 | 2,59,000 |
| Other Industry | 2 Crores | 19,000 | 20,000 | 25,000 | 2,95,000 | 3,59,000 |
| Other Industry | 5 Crores | 28,000 | 25,000 | 25,000 | 2,95,000 | 3,73,000 |
These estimates do not include additional costs such as legal documentation, notarization, translation, environmental impact assessment, or sector-specific approvals. Companies should budget for these additional expenses based on their specific requirements.
Additional Costs and Considerations
Beyond the basic registration costs, FDI companies may incur additional expenses during the establishment process.
Legal Documentation Costs
Legal documentation includes drafting and notarization of various agreements and certificates. The memorandum of association, articles of association, shareholder agreements, and technology transfer agreements require legal expertise. Notarization and authentication of foreign documents from the investor’s home country add to the cost. Translation of documents into Nepali language is mandatory for official submissions. These costs typically range from NPR 50,000 to NPR 150,000 depending on the complexity of documents.
Environmental and Sector-Specific Approvals
Certain industries require environmental impact assessments and sector-specific approvals. The Environment Protection Act, 2076 (2019) requires Initial Environmental Examination (IEE) or Environmental Impact Assessment (EIA) for specified industries. Manufacturing industries, hotels, hospitals, and infrastructure projects typically require environmental clearance. Sector-specific approvals from regulatory bodies such as Department of Mines and Geology, Department of Food Technology and Quality Control, or Tourism Board add to the timeline and cost. These approvals can cost between NPR 100,000 to NPR 500,000 depending on the industry.
Ongoing Compliance Costs
After registration, companies must budget for ongoing compliance costs. Annual renewal of ward registration, tax filing, audit fees, and annual returns to the Office of Company Registrar are recurring expenses. Companies must maintain proper books of accounts and conduct annual audits as per the Companies Act, 2063 (2006). The minimum annual compliance cost ranges from NPR 100,000 to NPR 300,000 depending on the size and complexity of operations.
Read More:
- https://lawaxion.com/understanding-nepals-foreign-investment-laws/
- https://lawaxion.com/foreign-currency-law-for-company-registration/
- https://lawaxion.com/visas-and-work-permits-for-foreign-directors-in-nepal/
- https://lawaxion.com/repatriation-of-profits-from-nepal/
- https://lawaxion.com/why-global-companies-are-incorporating-in-nepal/
Payment Methods and Timeline
Understanding the payment methods and timeline helps in financial planning for FDI company registration.
Payment Methods
Government fees must be paid through designated banks or online payment systems. The Office of Company Registrar accepts payments through specific banks authorized to collect government revenue. Ward offices accept cash or cheque payments. The Department of Industry accepts bank drafts or online transfers for deposits. Service charges to professional service providers are typically paid in installments: an advance payment at the start of the process and the balance upon completion of registration.
Registration Timeline
The complete FDI company registration process typically takes 30 to 45 working days. FDI approval from the Department of Industry takes 7 to 15 days. Company registration at OCR takes 3 to 5 days after FDI approval. Tax registration and ward registration can be completed simultaneously within 5 to 7 days. Bank account opening takes 3 to 5 days. Industry registration and Nepal Rastra Bank notification take an additional 10 to 15 days. The timeline may extend for industries requiring environmental clearance or sector-specific approvals.
What is the minimum capital requirement for FDI in Nepal?
The minimum capital requirement varies by sector. For IT companies, the minimum is NPR 5 lakhs. For other industries, the minimum is typically NPR 50 lakhs to NPR 2 crores depending on the sector.
Are government fees refundable if the application is rejected?
No, government fees paid to OCR and other departments are non-refundable. However, the DOI deposit of NPR 25,000 is refundable when the company ceases operations.
Can foreign investors pay fees in foreign currency?
No, all government fees must be paid in Nepali Rupees. Foreign investors must convert their currency through authorized banks before making payments.
Do service charges include government fees?
No, service charges are exclusive of government fees. Clients must pay government fees separately in addition to the service charges.
What happens if the company capital increases after registration?
Companies must file an amendment with OCR and pay additional registration fees based on the increased capital. The fee structure follows the same rates as initial registration.
Is VAT applicable on service charges?
Yes, 13% VAT is applicable on professional service charges as per the Value Added Tax Act, 2052 (1996).
Can the ward registration fee be negotiated?
No, ward registration fees are statutory and calculated as 10% of annual rent. The fee cannot be negotiated or reduced.
How long is the DOI deposit held?
The DOI deposit is held until the company surrenders its industry registration or ceases operations. There is no fixed time limit for holding the deposit.
Are there any hidden costs in FDI registration?
Reputable service providers disclose all costs upfront. However, clients should budget for incidental expenses such as document courier, photocopying, and travel costs for meetings.
Can the registration process be expedited?
While normal processing times apply, some departments offer expedited services for additional fees. However, this is not guaranteed for all steps in the process.
