• Foreign Investment and Technology Transfer Act (FITTA), 2075 (2019)

• Industrial Enterprises Act, 2076

• Companies Act, 2063

• Public Private Partnership and Investment Act, 2075

• Bank and Financial Institutions Act (BAFIA)

Tax & Financial Laws

• Income Tax Act, 2058

• Value Added Tax Act

• Foreign Exchange (Regulation) Act, 2019

Investment Authority

• Investment Board Nepal (IBN) – For large projects (above threshold limit)

• Department of Industry (DOI) – For medium-scale FDI

• Office of Company Registrar (OCR) – Company incorporation

• Nepal Rastra Bank (NRB) – Foreign currency approval

3. Key Legal Provisions for US Investors

100% Foreign Ownership

In most sectors, US investors can own 100% of a company in Nepal, except restricted sectors.

Minimum Investment Threshold

• Generally NPR 20 million (approx. USD 150,000+) minimum FDI (subject to revision).

Repatriation Rights

US investors can legally repatriate:

• Dividends

• Profits

• Royalties

• Sale proceeds

• Loan repayments

Repatriation requires approval from Nepal Rastra Bank.

Bilateral Context

Nepal and the USA maintain trade and diplomatic relations. Nepal is also eligible for:

• US GSP (Generalized System of Preferences)

• MCC Compact projects

4. Administrative Authorities Involved

Depending on project size:

5.  Investing in Nepal from USA

What?

Foreign Direct Investment (FDI) in business, industry, infrastructure, IT, tourism, or energy sectors.

Who?

• US citizens

• US-based companies

• NRNs living in USA

• US venture capital funds

Why?

• Low labor cost

• Growing market

• Hydropower potential

• Tourism expansion

• Strategic geographic location

Where?

Across Nepal — Special Economic Zones (SEZ), Kathmandu, Pokhara, Terai industrial corridor.

When?

Any time, subject to regulatory approval.

How?

FDI approval → Company registration → Capital injection → Business operation.

6. Eligibility Criteria for US Investors

To invest legally:

• Must not invest in restricted sectors

• Must meet minimum capital threshold

• Must declare source of funds

• Must comply with anti-money laundering laws

• Must register investment through formal banking channels

7. Sectors Open for Investment

High-Potential Sectors for US Investors

• Hydropower & Renewable Energy

• Tourism & Hotels

• Information Technology & Outsourcing

• Agriculture & Agro-processing

• Education & Healthcare

• Manufacturing

• Infrastructure & Construction

Restricted Sectors (Examples)

• Cottage industries

• Retail business (limited cases)

• Real estate trading (direct speculative land trading restricted)

• Media (partial restriction)

8. Step-by-Step Process to Invest in Nepal from USA

Step 1: Choose Investment Structure

• Private Limited Company

• Public Limited Company

• Joint Venture

• Branch Office

• Liaison Office

Step 2: Obtain FDI Approval

Apply to:

• Department of Industry (DOI) or

• Investment Board Nepal (IBN)

Step 3: Incorporate Company

Register at Office of Company Registrar (OCR).

Step 4: Open Bank Account

Open company bank account in Nepal.

Step 5: Inject Capital

Transfer funds through official banking channel.
Obtain foreign currency confirmation from Nepal Rastra Bank.

Step 6: Tax Registration

• PAN registration

• VAT registration (if applicable)

Step 7: Obtain Industry License

Apply for operational licenses depending on sector.

9. Cost of Investing in Nepal

Government Fees

• Company registration fee (based on capital)

• Industry registration fee

• FDI approval fee

Additional Costs

• Legal & consultancy fees

• Office setup cost

• Compliance & audit cost

• Tax obligations

Corporate Tax Rate:

• Standard corporate tax: 25%

• Special industries: Reduced rates may apply

10. Timeline for FDI Approval

• FDI Approval: 2–6 weeks

• Company Registration: 3–7 days

• Capital Injection Approval: 1–2 weeks

• Total Setup Time: 1–3 months (depending on sector)

Large infrastructure projects may take longer.

11. Other Compliance Requirements

US investors must:

• File annual audit reports

• Submit tax returns

• Comply with labor laws

• Maintain minimum capital requirement

• Obtain environmental clearance (if applicable)

• Follow repatriation approval process

Non-compliance may result in penalties or cancellation of license.

12. FAQs – Investing in Nepal from USA 

1. Can a US citizen invest in Nepal?

Yes. US citizens can invest in Nepal under FITTA 2019 in most open sectors.

2. What is the minimum investment required in Nepal?

Generally NPR 20 million (subject to change by government policy).

3. Can US investors repatriate profits?

Yes, profits and dividends can be repatriated after tax clearance and NRB approval.

4. Is Nepal safe for foreign investment?

Nepal provides legal protection for foreign investors under FITTA and investment laws, but due diligence is essential.

5. Can NRN living in USA invest in Nepal?

Yes, NRNs can invest either as foreign investors or under NRN citizenship provisions.

6. How long does FDI approval take?

Usually 2–6 weeks depending on sector and documentation.

7. Are there tax incentives in Nepal?

Yes, certain sectors like hydropower, IT, and export industries receive tax incentives.

8. Can US company open branch office in Nepal?

Yes, with proper registration and regulatory approval.

13. Conclusion

Investing in Nepal from the USA offers promising opportunities, particularly in energy, tourism, IT, infrastructure, and agriculture. Nepal’s liberal foreign investment regime allows 100% foreign ownership in many sectors and guarantees repatriation of profits. However, regulatory compliance, capital threshold requirements, and proper legal structuring are essential for smooth operation.

Professional legal and tax planning is strongly recommended before initiating FDI.

Disclaimer

This article is for informational purposes only and does not constitute legal or investment advice. Investment laws and policies in Nepal are subject to change. Investors should consult a qualified legal and financial advisor before making investment decisions.