Remote foreign IT company registration in Nepal is the process of incorporating a Nepali company that delivers software development, SaaS, BPO, or digital services to clients abroad while operating from Nepal. The structure is governed by the Companies Act, 2063 (2006) and, for foreign investors, the Foreign Investment and Technology Transfer Act, 2019 (FITTA).
Nepal has quietly become one of Asia's most cost-effective IT outsourcing destinations. Moreover, recent budgets have granted strong tax relief on IT export income. Furthermore, foreign currency earned from software exports can be retained in convertible accounts. As a result, founders from the US, Europe, Australia, and the Gulf are now registering Nepali entities to serve global clients remotely.
This guide explains the legal framework, setup steps, tax benefits, foreign exchange rules, and compliance duties in plain language. Everything has been fact-checked against current Nepali law and recent fiscal policy announcements.
Why Register an IT Company in Nepal for Remote Foreign Work?
Several advantages make Nepal attractive for IT service exporters:
- Deep talent pool – Tens of thousands of IT graduates enter the market each year.
- Low operating cost – Salaries and office costs are far below Western markets.
- Tax incentives – Recent budgets have granted major income tax exemptions on IT export income.
- Zero-rated exports – IT services sold to foreign clients are VAT zero-rated.
- Foreign currency retention – Export earnings can be held in convertible currency accounts.
- Time zone advantage – Nepal (GMT+5:45) overlaps with both European and Asian business hours.
Additionally, Nepal's government has classified IT as a priority sector under the Industrial Enterprises Act, 2076. Consequently, approvals, fee waivers, and fast-track services have been introduced for tech companies.
Legal Framework for Remote IT Company Registration in Nepal
The table below summarizes the laws that apply to a remote IT company serving foreign clients.
| Law / Regulation | Authority | What It Covers |
|---|---|---|
| Companies Act, 2063 (2006) | Office of Company Registrar | Incorporation and governance |
| FITTA, 2019 | Department of Industry / IBN | Foreign investment approval |
| Industrial Enterprises Act, 2076 | Department of Industry | Industry registration and incentives |
| Income Tax Act, 2058 | Inland Revenue Department | Corporate tax and export exemptions |
| VAT Act, 2052 (1996) | Inland Revenue Department | VAT and zero-rating of exports |
| Foreign Exchange Regulation Act, 2059 | Nepal Rastra Bank | Foreign currency receipts and retention |
| Labor Act, 2074 (2017) | Labor Office | Employment and work permits |
| Electronic Transactions Act, 2063 | Ministry of Communication and IT | Digital contracts and cyber law |
Furthermore, a 2025 ordinance introduced ESOP frameworks and allowed Non-Resident Nepalis (NRNs) to act as promoters. Therefore, the legal environment for tech businesses has improved significantly in recent years.
Step-by-Step Remote Foreign IT Company Registration Process in Nepal
The process differs slightly for Nepali founders and foreign investors. Both paths are explained below.
Step 1: Reserve the Company Name
Firstly, a unique name is reserved on the CAMIS portal at camis.ocr.gov.np. Three names are submitted in English and Nepali. Approval takes 1 to 3 working days.
Step 2: Obtain Foreign Investment Approval (Foreign Founders Only)
Secondly, foreign investors must secure approval from the Department of Industry (DOI) or the Investment Board Nepal (IBN) under FITTA.
Key points are summarized below:
- FDI up to NPR 500 million follows a simplified approval route.
- Minimum investment thresholds have been relaxed for the IT sector under recent policy reforms.
- Registration fees for FDI-based companies have been waived under recent incentives.
The approval letter is then submitted to OCR during incorporation.
Step 3: Draft the MOA and AOA
Thirdly, the Memorandum of Association (MOA) and Articles of Association (AOA) are prepared. The MOA objectives should cover:
- Software development and IT consulting
- Export of IT-enabled services and BPO
- SaaS product development and maintenance
- Digital marketing and data processing services
A broad objects clause is recommended, so future service lines do not require amendments.
Step 4: Incorporate Through CAMIS
The application is filed online with the OCR. Documents are uploaded and fees are paid. Examination usually takes 7 to 10 working days. Once approved, the company registration certificate is issued electronically.
Step 5: Complete Tax Registrations
After incorporation, the following registrations are completed:
- PAN registration with the Inland Revenue Department
- VAT registration – mandatory above the turnover threshold; also advisable to claim input VAT refunds on local purchases
Importantly, IT services exported to foreign clients are zero-rated for VAT. Consequently, no Nepali VAT is charged on foreign invoices.
Step 6: Register the IT Industry
The company is registered as an information technology industry with the Department of Industry under the Industrial Enterprises Act, 2076. This registration is the gateway to tax incentives and export facilities. Moreover, IT companies are classified as non-polluting, so environmental clearance is minimal.
Step 7: Open Bank Accounts and Set Up Foreign Currency Facilities
A corporate NPR account is opened first. Subsequently, a foreign currency (convertible) account is requested for receiving export payments. The bank will require the registration certificate, MOA/AOA, PAN certificate, and industry registration.
Nepal Rastra Bank allows IT exporters to retain foreign currency earnings in convertible accounts. Furthermore, payments for foreign vendors and software subscriptions can be made outward with proper invoices.
Step 8: Municipal Trade License and Labor Setup
Finally, a trade license is obtained from the local municipality. If staff are hired, employment contracts and Social Security Fund enrollment are completed under the Labor Act, 2074. Additionally, foreign employees require work permits from the Department of Labor.
Documents Required
| Document | Nepali Founder | Foreign Founder |
|---|---|---|
| Name reservation approval | Required | Required |
| MOA and AOA | Required | Required |
| Citizenship copy / passport (notarized) | Required | Required |
| FDI approval letter | Not applicable | Required |
| Foreign company certificate & board resolution | Not applicable | Required (corporate investor) |
| Office address proof | Required | Required |
| Photos and specimen signatures | Required | Required |
Cost and Timeline Overview
| Item | Estimate |
|---|---|
| Name reservation | NPR 100 – 500 |
| Company registration fee | NPR 1,000 (up to NPR 1 lakh capital); waived for many FDI cases |
| Professional fees | Typically NPR 30,000 – 70,000 |
| FDI approval processing | 2 – 4 weeks |
| Incorporation | 7 – 10 working days |
| Industry registration | 1 – 2 weeks |
| Total setup timeline | 4 – 8 weeks (foreign founders) |
Tax Incentives for IT Export Companies in Nepal
This is where remote foreign IT company registration in Nepal becomes financially compelling.
| Incentive | Detail |
|---|---|
| Income tax on IT export income | Exemption of up to 75% on income from exported IT services under recent budgets (extended through FY 2084/85) |
| Standard corporate tax | 25% on domestic income |
| VAT on exported services | Zero-rated (no VAT charged; input VAT refundable) |
| VAT on local sales | 13% |
| Employment-based relief | Additional exemptions for IT companies employing 300+ Nepali staff |
| IT park benefits | 50% income tax exemption for software firms inside notified IT parks |
| Reinvestment rebate | Dividend tax relief when profits are capitalized for expansion |
Note: Incentive rates are revised through annual budgets. The current rate should always be verified before financial projections are made.
Effectively, a purely export-focused IT company can face a very low tax burden on its foreign revenue. Consequently, Nepal competes strongly with India, Bangladesh, and the Philippines as an outsourcing base.
Foreign Currency and Repatriation Rules
Foreign clients usually pay in USD or EUR. Therefore, proper handling of foreign exchange is essential.
The following rules apply:
- Export income must be received through the banking channel with proper invoicing.
- Earnings can be retained in convertible currency accounts.
- Payments to foreign vendors (cloud services, software licenses) are permitted with invoices.
- Repatriation of profits and dividends is guaranteed by FITTA after tax clearance.
- Nepal has Double Taxation Avoidance Agreements (DTAAs) with several countries, which prevents double taxation of dividends.
In practice, repatriation requires audited financials, a board resolution, and a tax clearance certificate. Furthermore, processing can take several weeks, so planning ahead is advised.
Compliance Duties After Registration
An annual compliance cycle must be maintained:
- Board meetings at least once every three months
- AGM and annual return filing with OCR
- Statutory audit (mandatory for all companies)
- Income tax and VAT returns with the IRD
- Renewal of the municipal trade license
- CSR allocation – 1% of net profit for medium and large industries
- SSF contributions for employees
- Renewal of foreign work permits where applicable
Failure to file annual returns can attract penalties up to NPR 50,000 under the Companies Act. Therefore, a compliance calendar should be maintained from the first month.
Common Mistakes to Avoid
- Skipping industry registration – Tax incentives cannot be claimed without DOI industry registration.
- Receiving payments personally – Export income must flow through the company account to qualify for incentives and retention rights.
- Missing VAT nil returns – Even zero-rated exporters must file returns to preserve input VAT refunds.
- Narrow MOA objectives – New service lines later require costly amendments.
- Ignoring repatriation paperwork – Dividends cannot be sent abroad without audit and tax clearance.
These issues can be avoided when a licensed corporate lawyer manages the setup. Moreover, professional structuring at the start saves significant tax and compliance costs later.
Why Choose Attorney Nepal Pvt Ltd
At Attorney Nepal Pvt Ltd, tech sector incorporation is handled end-to-end by experienced corporate lawyers. The following services are provided:
- Company incorporation and CAMIS filing
- FDI approval through DOI/IBN
- PAN, VAT, and industry registration
- Foreign currency account setup with bank liaison
- Work permits and labor compliance
- Annual audit coordination and tax filing
- Repatriation and dividend processing
Call to Action: Start your remote foreign IT company registration in Nepal today. Contact Attorney Nepal Pvt Ltd for a free consultation and a fixed-fee quote.
Disclaimer
This blog is published for general educational purposes only. It does not constitute legal or tax advice. Tax incentives, fees, and procedures in Nepal are revised through annual budgets and may change. For advice tailored to your situation, please consult a licensed attorney at Attorney Nepal Pvt Ltd. No attorney-client relationship is created by reading this content.
References
- Office of the Company Registrar (OCR), Nepal — https://ocr.gov.np
- CAMIS Online Registration Portal — https://camis.ocr.gov.np
- Department of Industry, Nepal — https://doi.gov.np
- Investment Board Nepal — https://ibn.gov.np
- Inland Revenue Department, Nepal — https://ird.gov.np
- Nepal Rastra Bank — https://nrb.org.np
- Ministry of Communication and Information Technology — https://moic.gov.np
- Companies Act, 2063 — Nepal Law Commission — https://lawcommission.gov.np
- Foreign Investment and Technology Transfer Act, 2019 — https://lawcommission.gov.np
- Industrial Enterprises Act, 2076 — https://doi.gov.np
- U.S. Department of State – 2026 Investment Climate Statements: Nepal — https://www.state.gov
Questions
Can a foreigner own 100% of an IT company in Nepal?
Yes, 100% foreign ownership is permitted in the IT services sector. However, prior approval from the Department of Industry under FITTA, 2019 is required.
What is the minimum investment for foreign IT companies?
General FDI rules set a minimum threshold (historically NPR 20 million), but recent policy reforms have relaxed minimum capital requirements for the IT sector. The current rule should be verified at the time of application.
Are IT export earnings taxed in Nepal?
Under recent budgets, an income tax exemption of up to 75% applies to export income from IT services, extended through FY 2084/85. Standard corporate tax of 25% applies to domestic income.
Is VAT charged on IT services sold to foreign clients?
No. Exported services are zero-rated for VAT, meaning no VAT is charged on foreign invoices and input VAT on local purchases can be refunded.
Can the company keep revenue in USD?
Yes. IT exporters may retain foreign currency earnings in convertible accounts with Nepali banks, subject to Nepal Rastra Bank regulations.
Can profits be sent back to the foreign investor?
Yes. FITTA guarantees repatriation of dividends and capital after tax clearance, audit, and bank approval.
How long does the full setup take?
For Nepali founders, 3 to 5 weeks. For foreign investors, 6 to 10 weeks including FDI approval.
Is a physical office required?
A registered address is mandatory. However, many IT companies use small offices or co-working spaces, and remote work arrangements are common.
Do foreign employees need work permits?
Yes. Foreign nationals working in Nepal require work permits from the Department of Labor under the Labor Act, 2074.
What annual filings are required?
An AGM, annual return to OCR, audited financial statements, income tax and VAT returns, trade license renewal, and SSF filings must be completed each year.
This article is for general informational purposes only and does not constitute legal advice. For advice on your specific situation, please contact Attorney Nepal directly.
