Opening a restaurant in Nepal is an attractive business option for both local entrepreneurs and foreign investors, given the country’s growing hospitality and tourism sector. However, restaurant registration in Nepal is not a single-step process. It involves compliance with several laws, including the Companies Act 2063, the Industrial Enterprises Act 2076, the Foreign Investment and Technology Transfer Act (FITTA) 2075, the Income Tax Act 2058, and directives issued by Nepal Rastra Bank (NRB). At CompanyNP, we assist foreign nationals and companies in completing company registration, industry registration, and tax registration in a legally compliant manner.
This article explains the restaurant registration process in Nepal in simple terms, based strictly on applicable Nepali law and official government procedures.
What Is the Legal Framework Governing Restaurant Registration in Nepal?
Restaurant registration in Nepal falls under the combined jurisdiction of several government bodies and statutes. Since a restaurant is treated as both a commercial enterprise and, in many cases, a tourism industry under Nepali law, promoters must satisfy requirements under company law, industrial law, tax law, and, where foreign investment is involved, foreign exchange law.
Why Does Nepal Regulate Restaurant Businesses Under Multiple Laws?
A restaurant business touches on several regulatory areas at once. It requires a legal business entity, a registered industry classification, tax identification, local government clearance, and food safety compliance. Because of this, the Government of Nepal has assigned responsibility to different departments rather than a single authority. This structure ensures that commercial, tax, labour, and public health standards are each properly supervised.
What Government Bodies Oversee Restaurant Registration?
The table below summarizes the principal government authorities involved in restaurant registration in Nepal and their respective roles.
| Authority | Role in Restaurant Registration in Nepal |
|---|---|
| Office of Company Registrar (OCR) | Registers the company under the Companies Act 2063 |
| Department of Industry (DOI) | Registers the industry and approves foreign investment under FITTA |
| Inland Revenue Department (IRD) | Issues Permanent Account Number (PAN) and VAT registration |
| Nepal Rastra Bank (NRB) | Approves inward remittance of foreign investment and profit repatriation |
| Local Municipality or Rural Municipality | Issues local business operation permit and sanitation clearance |
| Department of Food Technology and Quality Control (DFTQC) | Certifies food safety and quality compliance |
Official information on company registration is available at the Office of Company Registrar website, ocr.gov.np. Industry registration details are published at doind.gov.np, the official site of the Department of Industry. Tax-related procedures are described at ird.gov.np, the Inland Revenue Department portal.
What Is the Step-by-Step Restaurant Registration Process in Nepal?
The restaurant registration process in Nepal generally follows a sequence of steps. Each step must be completed before proceeding to the next, since later approvals often depend on documents issued in earlier stages.
Step 1: Name Reservation at the Office of Company Registrar
Before incorporating a company, the proposed restaurant name must be reserved online through the Office of Company Registrar system. The name must not be identical or deceptively similar to an existing registered entity, in accordance with the Companies Act 2063.
Step 2: Company Incorporation Under the Companies Act 2063
Once the name is approved, the promoters must submit the memorandum of association, articles of association, and details of shareholders to the OCR. A private limited company is the most common structure chosen for restaurant businesses in Nepal.
Step 3: Industry Registration with the Department of Industry
After incorporation, the business must be registered as an industry with the Department of Industry. Restaurants are generally classified under the tourism industry category as listed in the schedule of the Industrial Enterprises Act 2076, depending on scale and nature of service.
Step 4: Foreign Investment Approval Under FITTA
If the restaurant involves any foreign shareholding, prior approval must be obtained from the Department of Industry under FITTA 2075. This approval confirms that the proposed investment meets the minimum threshold and sectoral conditions prescribed by law.
Step 5: Approval and Reporting to Nepal Rastra Bank
Foreign investors must route their investment funds through the banking channel and report the inward remittance to Nepal Rastra Bank. NRB approval is also required for future repatriation of dividends, profits, and capital, in accordance with the Foreign Exchange (Regulation) Act 2019 and related NRB directives.
Step 6: PAN and VAT Registration with the Inland Revenue Department
Every restaurant business must obtain a Permanent Account Number (PAN) from the Inland Revenue Department under the Income Tax Act 2058. If annual turnover is expected to exceed the threshold prescribed under the Value Added Tax Act 2052, VAT registration is also compulsory.
Step 7: Local Government Business Registration
Under the Local Government Operation Act 2074, every business operating within a municipality or rural municipality must register with the local ward office and obtain a business operation permit. Local authorities may also inspect the premises for sanitation and safety compliance.
Step 8: Food Quality and Sanitation Certification
Since restaurants directly serve food to the public, registration with the Department of Food Technology and Quality Control, or the relevant local food inspection office, is required under the Food Act 2023 (1966) and its regulations. This certification confirms compliance with hygiene and food safety standards.
What Documents Are Required for Restaurant Registration in Nepal?
Documentation requirements differ slightly depending on whether the promoters are Nepali citizens, foreign individuals, or foreign companies investing in Nepal.
Documents for Nepali Promoters
- Citizenship certificate of all shareholders and directors
- Memorandum and articles of association
- Passport-sized photographs of promoters
- Lease agreement or ownership document of the business premises
- Recommendation letter from the local ward office, where applicable
Documents for Foreign Investors
- Valid passport copy of the foreign investor
- Company registration certificate and board resolution, if investing through a foreign company
- Foreign investment approval application submitted to the Department of Industry
- Project report or feasibility study, where required
- Bank statement or proof of source of investment funds
The table below outlines the key documents and their issuing or requiring authority.
| Document | Purpose | Requiring Authority |
|---|---|---|
| Company registration certificate | Proof of legal incorporation | Office of Company Registrar |
| Industry registration certificate | Confirms registered business activity | Department of Industry |
| Foreign investment approval letter | Permits foreign shareholding | Department of Industry |
| PAN registration certificate | Tax identification | Inland Revenue Department |
| VAT registration certificate | Indirect tax compliance | Inland Revenue Department |
| Local business operation permit | Confirms local government clearance | Municipality or Rural Municipality |
| Food business certificate | Confirms food safety compliance | Department of Food Technology and Quality Control |
What Are the Tax and Compliance Obligations for Restaurants in Nepal?
Once registered, a restaurant business must meet ongoing tax and reporting obligations under Nepali law.
Income Tax Obligations Under the Income Tax Act 2058
Every registered restaurant must file annual income tax returns with the Inland Revenue Department. Corporate entities are generally subject to the standard corporate income tax rate, although certain tourism-related enterprises may qualify for concessional rates or incentives under the Industrial Enterprises Act 2076, subject to conditions prescribed by the Government of Nepal.
Value Added Tax and Other Indirect Taxes
Restaurants whose annual transactions exceed the threshold set under the Value Added Tax Act 2052 must register for VAT and issue VAT invoices for taxable sales. Restaurants serving alcohol may also be subject to excise duty requirements under the Excise Duty Act 2058, along with a separate liquor sale licence.
Annual Compliance and Renewal Requirements
- Annual renewal of industry registration with the Department of Industry
- Annual filing of company returns with the Office of Company Registrar
- Annual tax clearance certificate from the Inland Revenue Department
- Periodic renewal of the local business operation permit
- Renewal of food safety certification as required by local authorities
What Rules Apply to Foreign Investment in Nepal’s Restaurant Sector?
Foreign investment in Nepal’s restaurant and hospitality sector is permitted but subject to specific conditions under FITTA 2075 and its amendments.
Minimum Capital Threshold for Foreign Investors
FITTA and its regulations prescribe a minimum threshold amount for foreign investment in Nepal. This threshold is periodically revised by the Government of Nepal, so investors should confirm the prevailing minimum amount directly with the Department of Industry before applying.
Restricted and Negative List Considerations
Nepal maintains a negative list of industries closed to foreign investment under FITTA. While large-scale restaurants linked to hotels or tourism ventures are generally permitted, certain micro, cottage, and small-scale retail or catering activities may fall under restricted categories. Investors should verify the current negative list with the Department of Industry before proceeding.
Repatriation of Profit and Capital
Foreign investors are permitted to repatriate dividends, profits, and the proceeds of share sale in convertible foreign currency, subject to prior approval and reporting to Nepal Rastra Bank, as prescribed under NRB foreign investment-related directives and brochures.
Frequently Asked Questions
Is foreign ownership allowed for restaurants in Nepal?
Yes, foreign ownership is generally permitted under FITTA 2075, provided the investment meets the prescribed minimum threshold and the restaurant does not fall under Nepal’s restricted negative list for foreign investment, as determined by the Department of Industry.
The Office of Company Registrar registers the company under the Companies Act 2063. Afterwards, the Department of Industry handles industry registration, while the Inland Revenue Department manages PAN and VAT registration for tax compliance purposes.
Is VAT registration mandatory for every restaurant?
VAT registration becomes mandatory once annual turnover exceeds the threshold prescribed under the Value Added Tax Act 2052. Restaurants below this threshold may register voluntarily, but compliance with Inland Revenue Department procedures remains compulsory regardless of turnover.
Can foreign restaurant owners repatriate profits abroad?
Yes, profits and dividends can be repatriated in convertible foreign currency, subject to prior approval and reporting requirements set by Nepal Rastra Bank under applicable foreign exchange regulations and investment-related directives issued to authorized banks.
Does a restaurant need food safety certification?
Yes, under the Food Act 2023 and its regulations, restaurants must obtain food safety and sanitation clearance from the Department of Food Technology and Quality Control or the relevant local food inspection office before commencing operations.
Is local government registration necessary besides company registration?
Yes, under the Local Government Operation Act 2074, every restaurant must additionally register with the municipality or rural municipality and obtain a local business operation permit, separate from company and industry registration at the federal level.
