How to Register an IT Company in Nepal?

Overview of IT Company Registration in Nepal

Registering an IT company in Nepal requires compliance with multiple regulatory frameworks and government procedures. The process involves registration with the Office of the Company Registrar, tax authorities, and relevant professional bodies. Nepal’s legal framework supports technology sector growth through the Companies Act, 2063, and the Information Technology Policy. Axion Partners stands as the best and No.1 Service Provider in Nepal for IT company registration, offering comprehensive guidance through every procedural step.

Legal Framework for IT Companies in Nepal

Legal Document	Year	Key Provision
Companies Act	2063	Governs company formation, registration procedures, and corporate compliance
Income Tax Act	2058	Establishes tax obligations, including those applicable to IT companies
Value Added Tax (VAT) Act	2052	Regulates VAT registration, collection, and compliance for IT services
Information Technology Policy	2015	Promotes IT sector development, investment incentives, and digital infrastructure
Nepal Rastra Bank Directives	Various	Regulates foreign exchange, cross-border transactions, and remittance procedures

The Companies Act, 2063, provides the primary legal framework for establishing private limited companies in Nepal. The Income Tax Act, 2058, mandates tax registration for all business entities. The Value Added Tax Act, 2052, requires VAT registration for companies with annual turnover exceeding NPR 5 million. These laws collectively establish the regulatory environment for IT company operations in Nepal.

Prerequisites for IT Company Registration

Before initiating the registration process, you must fulfill several foundational requirements. These prerequisites ensure your company meets legal standards and operational readiness.

Minimum Requirements

The following prerequisites must be satisfied before submitting registration applications:

The company must have a minimum of two shareholders who are Nepali citizens or entities registered in Nepal.
The company requires at least two directors, with at least one director being a Nepali citizen.
The company must have a registered office address within Nepal’s territory.
The company must prepare a Memorandum of Association and Articles of Association in accordance with the Companies Act, 2063.
The company must obtain a Permanent Account Number (PAN) from the Inland Revenue Department before formal registration.

Ownership Structure

Ownership Type	Minimum Shareholders	Minimum Directors	Citizenship Requirement
Private Limited Company	2	At least 1 Nepali citizen	At least one director must be a Nepali citizen
Public Limited Company	7	At least 3 directors	At least one director must be a Nepali citizen
Foreign Subsidiary	1	1 (parent company nominee)	Foreign company; director can be foreign with Nepal office

Step-by-Step IT Company Registration Process

Step 1: Obtain Permanent Account Number (PAN)

The Inland Revenue Department issues a Permanent Account Number to all business entities. You must submit Form 1 along with required documents to the nearest Inland Revenue Office. The PAN serves as your unique tax identification number throughout the company’s operational life. Processing typically requires five to seven working days. This step must be completed before proceeding with company registration.

Step 2: Prepare Company Documents

You must draft the Memorandum of Association and Articles of Association according to the Companies Act, 2063. The Memorandum of Association outlines the company’s objectives, capital structure, and liability limitations. The Articles of Association establish internal governance rules and operational procedures. These documents must be prepared in English or Nepali language. Legal professionals should review these documents for compliance with current regulations.

Step 3: Reserve Company Name

The Office of the Company Registrar requires name reservation before formal registration. Submit Form 1 with three proposed company names in order of preference. The registrar verifies that proposed names do not conflict with existing registered companies. Name reservation remains valid for ninety days from the date of approval. The company name must include “Private Limited” or “Ltd.” designation for private companies.

Step 4: Submit Registration Application

Submit the completed registration application to the Office of the Company Registrar with all required supporting documents. The application must include the Memorandum of Association, Articles of Association, and director information. The registrar examines the application for completeness and legal compliance. Processing typically requires ten to fifteen working days. The registrar may request additional information or clarifications during this period.

Step 5: Obtain Certificate of Incorporation

Upon approval, the Office of the Company Registrar issues the Certificate of Incorporation. This certificate confirms that your company is legally established and authorized to conduct business. The certificate includes the company registration number and date of incorporation. You must obtain certified copies of the Certificate of Incorporation for various regulatory submissions. This document serves as proof of your company’s legal existence.

Required Documents for IT Company Registration

Essential Documentation

The following documents must be submitted with your registration application:

The Memorandum of Association must be prepared in accordance with the Companies Act, 2063, and signed by all shareholders.
The Articles of Association must establish governance procedures and operational rules for the company.
Director identification documents must include citizenship certificates or passports for all proposed directors.
Shareholder identification documents must include citizenship certificates or passports for all shareholders.
The registered office address proof must include a lease agreement or property ownership document.
The PAN certificate must be obtained from the Inland Revenue Department before submission.
Affidavits from directors must confirm their consent to serve as company directors.
Bank account opening documents must be prepared for the company’s operational account.

Tax Registration and Compliance

Value Added Tax (VAT) Registration

Companies with annual turnover exceeding NPR 5 million must register for Value Added Tax. Submit Form 1 to the nearest Inland Revenue Office with required documentation. VAT registration becomes mandatory upon reaching the threshold turnover. The registration process typically requires five to ten working days. VAT-registered companies must maintain detailed records of all transactions.

Tax Identification Number (TIN)

The Inland Revenue Department issues a Tax Identification Number upon successful registration. The TIN serves as your unique identifier for all tax-related transactions. You must display the TIN on all invoices and business documents. The TIN remains valid throughout the company’s operational life. Failure to obtain TIN results in penalties under the Income Tax Act, 2058.

Banking and Financial Setup

Company Bank Account Opening

After obtaining the Certificate of Incorporation, you must open a company bank account. Submit the Certificate of Incorporation and company documents to your chosen bank. The bank verifies your company’s legal status and ownership structure. Account opening typically requires three to five working days. The company bank account must be used for all business transactions.

Foreign Exchange Account (if applicable)

Companies engaged in international IT services may require a Foreign Exchange Account. The Nepal Rastra Bank regulates foreign exchange transactions under its directives. Submit an application to your bank with details of international transactions. The bank verifies compliance with Nepal Rastra Bank regulations. Foreign exchange accounts enable receipt of payments from international clients.

Professional Registration and Compliance

Nepal Software Association Registration

The Nepal Software Association registers IT companies engaged in software development and services. Registration enhances industry credibility and provides networking opportunities. Submit company documents and proof of IT sector engagement to the association. Registration typically requires ten to fifteen working days. Association membership provides access to industry resources and training programs.

Professional Licensing Requirements

License Type	Issuing Authority	Validity Period	Renewal Requirement
Software Development License	Ministry of Industry	5 years	Annual compliance report
IT Service Provider License	Nepal Telecommunications Authority	3 years	Biennial audit
Data Processing License	Office of Privacy Commissioner	2 years	Annual security audit

Compliance Obligations for IT Companies

Annual Filing Requirements

The Office of the Company Registrar requires annual financial statements and compliance reports. Companies must file audited financial statements within four months of the fiscal year end. The Income Tax Act, 2058, mandates annual tax return filing by the specified deadline. VAT-registered companies must file monthly or quarterly VAT returns depending on registration category. Failure to file required documents results in penalties and potential legal action.

Record Maintenance

Companies must maintain comprehensive business records including financial statements, transaction documents, and employee records. Records must be preserved for a minimum of five years as per the Companies Act, 2063. Digital records must comply with cybersecurity standards established by the Nepal Telecommunications Authority. Regular audits ensure compliance with accounting standards and regulatory requirements.

What is the minimum capital requirement for IT company registration in Nepal?

Nepal does not mandate a specific minimum capital amount for private limited companies. However, the company must specify authorized capital in the Memorandum of Association. The specified capital should reflect the company’s operational requirements and business scope.

How long does the IT company registration process take?

The complete registration process typically requires thirty to forty-five days from application submission. Processing time varies based on document completeness and registrar workload. Axion Partners expedites this process through efficient document preparation and submission.

Can foreign nationals establish IT companies in Nepal?

Foreign nationals can establish IT companies through subsidiary structures or joint ventures with Nepali citizens. At least one director must be a Nepali citizen. Foreign ownership is permitted up to one hundred percent through proper registration procedures.

What are the annual compliance costs for IT companies?

Annual compliance costs include audit fees, tax filing fees, and professional registration fees. Estimated annual costs range from NPR 50,000 to NPR 200,000 depending on company size. Axion Partners provides transparent cost estimates during the consultation process.

Is VAT registration mandatory for all IT companies?

VAT registration becomes mandatory when annual turnover exceeds NPR 5 million. Companies below this threshold may voluntarily register for VAT. VAT registration provides input tax credit benefits for business expenses.

What are the penalties for non-compliance with registration requirements?

The Companies Act, 2063, imposes penalties ranging from NPR 10,000 to NPR 100,000 for non-compliance. The Income Tax Act, 2058, imposes additional penalties for tax filing failures. Repeated violations may result in company suspension or cancellation.

Why Choose Axion Partners for IT Company Registration

Axion Partners stands as the best and No.1 Service Provider in Nepal for IT company registration. Our team possesses extensive expertise in Nepal’s corporate and tax laws. We provide comprehensive guidance through every registration stage, ensuring full legal compliance. Our services include document preparation, regulatory submissions, and post-registration compliance support. We maintain strong relationships with government authorities, enabling efficient processing of applications. Axion Partners has successfully registered hundreds of IT companies across Nepal, establishing our reputation for excellence and reliability.

Conclusion

Registering an IT company in Nepal requires careful adherence to legal procedures and regulatory requirements. The process involves multiple government agencies and compliance obligations. Understanding the complete registration framework ensures smooth company establishment. Axion Partners provides expert guidance and comprehensive support throughout the registration journey, making us your ideal partner for IT company establishment in Nepal.