Registration of Tours Company in Nepal

Understanding Travel/Tours Companies in Nepal

A travel or tours company in Nepal is a business entity that specializes in organizing, selling, and facilitating travel-related services for individuals or groups. These companies serve as intermediaries between travelers and service providers such as airlines, hotels, transportation services, and local tour operators. In Nepal, tourism is a vital economic sector, making travel companies significant contributors to the national economy.

The tourism industry in Nepal is regulated primarily by the Tourism Act, 2035 (1978) and its subsequent amendments, along with the Tourism Industry Service Directive. These legal frameworks establish the requirements and procedures for operating a travel or tours company in the country.

Travel companies in Nepal typically offer services such as tour packages, trekking arrangements, adventure tourism activities, cultural tours, hotel bookings, transportation services, and visa assistance. Given Nepal’s rich cultural heritage and natural attractions, including Mount Everest and numerous other Himalayan peaks, travel companies play a crucial role in promoting and facilitating tourism experiences.

Types of Travel/Tours Companies in Nepal

In Nepal, travel and tours companies can be registered in several forms:

1. Private Limited Company: Most common structure for medium to large operations, requiring a minimum paid-up capital of NPR 25 Lakhs.
2. Proprietorship Firm: Suitable for small operations, requiring a minimum capital of NPR 15 Lakhs.
3. Partnership Firm: Involves two or more partners sharing ownership, with similar capital requirements as proprietorships.
4. Public Limited Company: Larger entities that can offer shares to the public, with higher capital requirements.

The Tourism Industry Service Directive categorizes travel agencies based on their services and scope of operations, with different requirements for each category.

Legal Requirements for Travel/Tours Company Registration

The registration of a travel or tours company in Nepal involves compliance with several legal requirements as stipulated by the Tourism Act, 2035 (1978) and the Company Act, 2063 (2006). These requirements ensure that the company meets the necessary standards for operating in the tourism sector.

Capital Requirements

According to the Tourism Industry Service Directive, the capital requirements for travel/tours companies are:

• For a Private Limited Company: Minimum paid-up capital of NPR 25 Lakhs (2.5 million)
• For a Proprietorship Firm: Minimum capital of NPR 15 Lakhs (1.5 million)
• Bank Guarantee: A mandatory deposit of NPR 5 Lakhs (500,000) as a bank guarantee with a licensed Class-B bank

The bank guarantee serves as security and must be maintained throughout the company’s operation. This requirement is specified in Section 3(2) of the Tourism Industry Service Directive.

Office Space Requirements

The Tourism Industry Service Directive also stipulates specific requirements for office space:

• Minimum office area of 200 square feet
• Office location in a commercial area or designated business zone
• Lease agreement for a minimum period of 5 years
• Proper office setup with necessary equipment and facilities

These requirements ensure that the company has an appropriate physical presence for conducting business operations.

Human Resource Requirements

A travel/tours company must have qualified personnel:

• At least one staff member with tourism-related qualifications or experience
• Authorized representative with knowledge of the tourism industry
• Compliance with labor laws regarding employment terms and conditions

Section 4 of the Tourism Industry Service Directive outlines these human resource requirements to ensure professional service delivery.

Step-by-Step Process for Registering a Travel/Tours Company

Step 1: Company Registration with OCR

The first step involves registering your company with the Office of the Company Registrar (OCR):

1. Reserve a unique company name through the OCR online portal
2. Prepare Memorandum of Association (MOA) and Articles of Association (AOA)
3. Submit registration application with required documents
4. Pay the registration fee based on authorized capital
5. Receive the Company Registration Certificate

This process is governed by the Company Act, 2063 (2006), which requires all business entities to be formally registered before commencing operations.

Step 2: Tax Registration and Local Compliance

After company registration, complete the following:

1. Register for Permanent Account Number (PAN) and Value Added Tax (VAT) with the Inland Revenue Department
2. Register with the local ward office of the municipality where the office is located
3. Open a corporate bank account with a commercial bank
4. Deposit the minimum required capital in the company account

Tax registration is mandatory under the Income Tax Act, 2058 (2002) and the Value Added Tax Act, 2052 (1996).

Step 3: Capital Compliance and Documentation

Ensure capital compliance by:

1. Registering the minimum share capital of NPR 25 Lakhs with the OCR
2. Preparing board resolutions approving the registration as a travel company
3. Drafting a power of attorney for the authorized representative
4. Preparing a letter of commitment addressed to the Tourism Office

These documents establish the financial foundation of the company and demonstrate compliance with capital requirements.

Step 4: Provincial Tourism Office Recommendation

Obtain a recommendation from the Provincial Tourism Office:

1. Submit application form for recommendation along with a declaration letter
2. Provide copies of company registration documents, PAN certificate, MOA, and AOA
3. Submit proof of minimum capital compliance
4. Present the NPR 5 Lakhs bank guarantee
5. Provide office lease agreement and related documents
6. Submit biographical information of the authorized representative

The recommendation is a prerequisite for final registration as a tourism industry entity.

Step 5: Tourism Industry Registration

Register the company as a tourism industry entity:

1. Submit application to the Department of Tourism with the Provincial recommendation
2. Provide all required documents including bank guarantee proof
3. Pay the prescribed registration fee
4. Undergo inspection of office premises by tourism officials
5. Receive the Tourism Industry Registration Certificate

This registration is required under Section 3 of the Tourism Act, 2035 (1978).

Step 6: Final Compliance and Licensing

Complete the final registration process:

1. Register with the Tourism Industry Division of the Ministry of Culture, Tourism and Civil Aviation
2. Obtain membership with the Nepal Association of Tour and Travel Agents (NATTA)
3. Apply for any additional permits required for specific tourism activities
4. Ensure compliance with all tourism industry regulations

These final steps establish the company’s legitimacy within the tourism sector and industry associations.

Step 7: Post-Registration Compliance

After registration, ensure ongoing compliance:

1. Maintain the bank guarantee throughout the company’s operation
2. Renew the tourism license annually
3. File regular tax returns and financial statements
4. Comply with tourism industry standards and regulations
5. Maintain proper records of all tourism activities and transactions

Ongoing compliance is essential to maintain the company’s legal status and operating permissions.

Documents Required for Travel/Tours Company Registration

Essential Company Documents

The following documents are required for the registration process:

• Duly filled application form for company registration
• Memorandum of Association (MOA) and Articles of Association (AOA)
• Citizenship certificates of all shareholders and directors
• Recent passport-size photographs of all shareholders and directors
• Biodata of the authorized representative
• Board meeting resolution approving registration as a travel company
• Power of attorney for the authorized representative

These documents establish the company’s legal structure and ownership.

Financial and Guarantee Documents

Financial documentation requirements include:

• Proof of minimum paid-up capital of NPR 25 Lakhs
• Bank guarantee slip of NPR 5 Lakhs from a Class-B bank
• Bank statements showing capital deposits
• Share registry showing capital distribution among shareholders
• Tax clearance certificates (if applicable for existing businesses)

These documents demonstrate the company’s financial capacity and compliance with capital requirements.

Office and Infrastructure Documents

Office-related documentation includes:

• House rent agreement for a minimum of 5 years
• Landlord’s citizenship certificate
• House number and location map
• Recent water/electricity bills as proof of address
• Office layout plan showing the minimum required area
• Photographs of office premises and facilities

These documents verify the company’s physical presence and operational capacity.

Tourism-Specific Documents

Additional tourism-specific documents include:

• Letter of commitment addressed to the Tourism Office
• Declaration letter regarding compliance with tourism regulations
• Application for recommendation from the Provincial Tourism Office
• Membership application for relevant tourism associations
• Detailed business plan for tourism operations

These documents demonstrate the company’s commitment to operating within the tourism industry framework.

Timeline and Cost for Registration

Expected Timeline

The registration process typically takes:

• Company registration with OCR: 3-7 days
• Tax registration (PAN/VAT): 2-3 days
• Bank account opening and capital deposit: 1-3 days
• Provincial Tourism Office recommendation: 7-14 days
• Tourism Industry registration: 7-14 days
• Final compliance and licensing: 3-7 days

The total timeline ranges from 20 to 45 days, depending on document preparation efficiency and processing times at various government offices.

Registration Costs

The costs associated with registration include:

• Company registration fee: NPR 9,500 for capital up to NPR 1 crore
• PAN/VAT registration: NPR 1,000
• Bank guarantee commission: Approximately 1-2% of guarantee amount
• Tourism Industry registration fee: NPR 10,000
• NATTA membership fee: NPR 25,000 (one-time) plus annual fee
• Legal and professional service fees: Varies based on service provider

Government fees may vary based on the company’s capital structure and specific requirements.

Annual Compliance Requirements

Regulatory Compliance

Travel/tours companies must maintain ongoing compliance with:

• Annual renewal of tourism license with the Department of Tourism
• Maintenance of the NPR 5 Lakhs bank guarantee
• Submission of annual activity reports to the Tourism Department
• Compliance with tourism service standards and guidelines
• Adherence to environmental and cultural preservation regulations

These requirements are stipulated in the Tourism Act and related directives.

Financial Compliance

Financial compliance obligations include:

• Filing annual tax returns with the Inland Revenue Department
• Submitting audited financial statements to the OCR
• Renewing PAN/VAT registration annually
• Maintaining proper accounting records of all transactions
• Paying applicable taxes including VAT, TDS, and income tax

These requirements are mandated by the Income Tax Act, 2058 (2002) and the Company Act, 2063 (2006).

Operational Compliance

Operational compliance involves:

• Maintaining proper client records and service agreements
• Ensuring proper insurance coverage for tourism activities
• Complying with labor laws for employee management
• Adhering to ethical business practices and consumer protection standards
• Maintaining proper safety and security measures for tourists

These operational standards ensure the company provides quality services while protecting client interests.

FAQs About Registering a Travel/Tours Company in Nepal

What is the minimum capital requirement for a travel company in Nepal?

The minimum paid-up capital requirement is NPR 25 Lakhs (2.5 million) for a private limited company and NPR 15 Lakhs (1.5 million) for a proprietorship firm. Additionally, a bank guarantee of NPR 5 Lakhs must be maintained with a Class-B bank as per the Tourism Industry Service Directive.

How long does it take to register a travel company in Nepal?

The complete registration process typically takes between 20 to 45 days from the date of company name reservation. This timeline depends on the efficiency of document preparation, processing times at government offices, and the applicant’s promptness in addressing any requirements or queries.

Can foreigners own a travel company in Nepal?

Yes, foreigners can own a travel company in Nepal, but with certain restrictions. Foreign investment in the tourism sector is permitted under the Foreign Investment and Technology Transfer Act, 2075 (2019). However, foreign investors must bring in a minimum investment of USD 200,000 and can own up to 80% of the company, with the remaining 20% required to be held by Nepali nationals.

What are the annual renewal requirements for a travel company?

Travel companies must renew their tourism license annually with the Department of Tourism by submitting an application along with renewal fees, tax clearance certificate, audit report, and proof of maintained bank guarantee. The renewal should be completed within three months of the expiry of the fiscal year as per Section 5 of the Tourism Act, 2035 (1978).

Is membership in tourism associations mandatory?

While not legally mandatory, membership in associations like the Nepal Association of Tour and Travel Agents (NATTA) is highly recommended and often practically necessary. These associations provide industry recognition, networking opportunities, and access to various tourism-related resources and events that can benefit the company’s operations.

What specific permits are needed for adventure tourism activities?

Companies offering adventure tourism activities such as trekking, mountaineering, rafting, or paragliding require additional specific permits from relevant authorities. For example, trekking companies need registration with the Trekking Agencies’ Association of Nepal (TAAN), while mountaineering services require permits from the Nepal Mountaineering Association (NMA) as stipulated in the Mountaineering Expedition Regulation, 2059 (2002).

What are the consequences of operating without proper registration?

Operating a travel or tours company without proper registration is illegal under Section 10 of the Tourism Act, 2035 (1978). Penalties include fines up to NPR 50,000, potential imprisonment, immediate closure of business operations, and blacklisting from future tourism industry participation. Additionally, unregistered companies cannot legally issue trekking permits, climbing permits, or other official tourism documentation.