Hotels Registration in Nepal Through Foreign Investment

Introduction

Foreign investors seeking to establish hotels in Nepal must comply with specific registration and regulatory requirements. The hotel industry in Nepal operates under a structured legal framework that governs foreign investment, business registration, and operational licensing. This article outlines the complete process for hotel registration through foreign investment, including legal requirements, documentation, and regulatory compliance under Nepalese law.

Legal Framework for Foreign Investment in Hotels

Nepal’s foreign investment regulations are primarily governed by the Foreign Investment and Technology Transfer Act, 2075 B.S. (2019 A.D.) and the Industrial Enterprises Act, 2076 B.S. (2020 A.D.). The Nepal Investment Board (NIB) facilitates foreign direct investment and provides single-window clearance for eligible projects. Hotels classified as tourism enterprises receive preferential treatment under Nepal’s investment policy, with specific incentives for projects in designated zones and regions.

The Tourism Board of Nepal and the Department of Tourism regulate hotel operations and standards. Foreign investors must obtain approval from the Nepal Investment Board before commencing hotel registration with the District Administration Office (DAO) and the Department of Commerce, Supply and Consumer Protection.

Registration Process for Foreign-Invested Hotels

Step 1: Nepal Investment Board Approval

Foreign investors must submit an application to the Nepal Investment Board with the following documentation:

Detailed project proposal including location, investment amount, and operational timeline.
Proof of financial capacity and source of funds documentation.
Environmental impact assessment report as per the Environment Protection Act, 2053 B.S.
Land ownership documents or lease agreements for the proposed hotel site.
Organizational structure and management plan of the hotel enterprise.

The NIB processes applications within 30 days and issues an approval letter upon meeting all requirements.

Step 2: Company Registration

After NIB approval, foreign investors must register the company with the Office of the Company Registrar under the Companies Act, 2063 B.S. (2006 A.D.). Required documents include:

Memorandum and Articles of Association.
Proof of registered office address in Nepal.
Details of directors and shareholders with passport copies.
Board resolution authorizing the company to conduct hotel business.
Proof of paid-up capital as specified in the investment proposal.

Step 3: District Administration Office Registration

The District Administration Office (DAO) issues a business registration certificate. Required documents include:

Company registration certificate from the Company Registrar.
NIB approval letter.
Land ownership or lease deed.
Proof of address and identification of authorized representatives.
Application form completed as per DAO requirements.

Step 4: Department of Commerce Registration

Hotels must register with the Department of Commerce, Supply and Consumer Protection. This registration includes:

Business registration certificate from DAO.
Proof of compliance with labor laws and employee registration.
Tax identification number (PAN) from the Inland Revenue Department.
Detailed hotel operational plan and room capacity information.

Required Documentation for Hotel Registration

Document Type	Issuing Authority	Validity Period
NIB Approval Letter	Nepal Investment Board	2 years
Company Registration Certificate	Office of Company Registrar	Permanent
Business Registration Certificate	District Administration Office	Annual renewal
Tax Identification Number	Inland Revenue Department	Permanent
Environmental Clearance	Ministry of Forests and Environment	Project-specific
Land Ownership/Lease Deed	Land Revenue Office	As per agreement

Compliance Requirements for Foreign-Invested Hotels

Environmental Compliance

Hotels must obtain environmental clearance from the Ministry of Forests and Environment under the Environment Protection Act, 2053 B.S. The environmental impact assessment must address waste management, water treatment, and pollution control measures. Hotels with more than 50 rooms require a detailed environmental impact assessment (EIA), while smaller hotels may require an initial environmental examination (IEE).

Labor and Employment Compliance

Foreign-invested hotels must comply with the Labor Act, 2074 B.S. (2017 A.D.) and register all employees with the Social Security Fund. Employers must maintain proper employment contracts, maintain workplace safety standards, and provide mandatory social security benefits. The hotel must designate a Nepalese citizen as the general manager or senior operational officer.

Tax Registration and Compliance

Hotels must obtain a Tax Identification Number (PAN) from the Inland Revenue Department and register for Value Added Tax (VAT) if annual turnover exceeds the prescribed threshold. Hotels are subject to corporate income tax, VAT, and other applicable taxes under the Income Tax Act, 2058 B.S. (2001 A.D.).

Building and Safety Standards

Hotels must comply with the National Building Code of Nepal and obtain a building permit from the local municipality. Fire safety standards, emergency exits, and occupancy limits must meet specifications set by the Nepal Fire and Disaster Management Authority. Regular safety inspections and maintenance certifications are mandatory.

Investment Incentives for Foreign-Invested Hotels

Nepal offers specific incentives for foreign hotel investments under the Industrial Enterprises Act, 2076 B.S.:

Tax holidays ranging from 5 to 10 years depending on location and investment size.
Exemption from customs duties on imported hotel equipment and machinery.
Repatriation of profits and dividends subject to tax compliance.
Preferential treatment for projects in tourism zones and underdeveloped regions.
Simplified procedures for obtaining work permits for foreign management personnel.

Role of Axion Partners

Axion Partners stands as the No. 1 service provider for hotel registration through foreign investment in Nepal. The firm provides comprehensive assistance including NIB approval facilitation, company registration, documentation preparation, compliance management, and ongoing regulatory support. Axion Partners’ expertise in Nepalese investment law ensures efficient processing and adherence to all legal requirements.

Frequently Asked Questions

What is the minimum investment required for hotel registration in Nepal?

The minimum investment threshold varies by location and hotel classification. Generally, hotels in Kathmandu Valley require a minimum investment of USD 500,000, while projects in other regions may have lower thresholds. The Nepal Investment Board determines specific requirements based on the project proposal.

How long does the hotel registration process take?

The complete registration process typically requires 60 to 90 days from NIB application submission to final Department of Commerce registration, provided all documentation is complete and accurate.

Can foreign investors hold 100% ownership of a hotel in Nepal?

Yes, the Foreign Investment and Technology Transfer Act, 2075 B.S. permits 100% foreign ownership of hotel enterprises without mandatory local partnership requirements.

What are the annual compliance obligations for foreign-invested hotels?

Foreign-invested hotels must renew business registration certificates annually, file tax returns, maintain employee records, conduct safety inspections, and submit operational reports to relevant authorities.

Are there restrictions on hotel locations in Nepal?

Hotels cannot be established in protected areas, national parks, or restricted zones without specific environmental clearance. Local municipality approval is mandatory for all locations.

What happens if a foreign investor fails to comply with registration requirements?

Non-compliance results in penalties, suspension of business operations, and potential cancellation of investment approval. The Inland Revenue Department may impose additional tax penalties and interest charges.

Conclusion

Hotel registration through foreign investment in Nepal requires strict adherence to legal procedures and regulatory compliance. Foreign investors must obtain approval from the Nepal Investment Board, register with the Company Registrar, and comply with environmental, labor, and tax regulations. Axion Partners provides expert guidance throughout this process, ensuring successful hotel establishment and ongoing regulatory compliance in Nepal’s tourism sector.