Business law in Nepal is the body of statute, regulation and case law that governs how a business is incorporated, capitalised, taxed, staffed, contracted, and — if needed — closed. The framework rests on six pillars: the Companies Act 2063 (2006) for incorporation and governance, the Foreign Investment and Technology Transfer Act (FITTA) 2075 (2019) for foreign investors, the Industrial Enterprise Act 2076 (2019) for industrial classification and incentives, the Income Tax Act 2058 (2002) for direct tax, the Labour Act 2074 (2017) for employment, and the Insolvency Act 2063 (2006) for restructuring and liquidation. Alpine Law Associates structures the full corporate file — incorporation, FDI approval at the Department of Industry, NRB share-purchase registration, sector licences, tax registration, employment contracts, commercial disputes, and shutdown — for Nepali founders, foreign investors and NRN business owners.
By Alpine Law Associates · Reviewed by Advocate Ram Bahadur Mijar — Founding Partner, Nepal Bar Council. Last reviewed: June 2026.
This page is the hub for the Alpine business-law practice. The headline numbers a 2026 founder needs are: private-limited paid-up minimum NPR 100,000 (Companies Act 2063); FDI minimum NPR 20 million for most sectors, zero for IT (FITTA 2075); corporate tax 25% general / 30% banks-telecom-insurance / 20% special industries / 15% IT (Income Tax Act 2058, FY 2082/83); statutory monthly minimum wage NPR 19,550 from 17 July 2025 (Labour Act 2074 Sec. 106–107); and SSF 31% of basic salary under the SSF Act 2074. Detailed walkthroughs of each statute live in the v6 cluster — see company registration, FDI under FITTA 2075, income tax rates, and the Industrial Enterprise Act 2076.
What does business law in Nepal cover?
Business law in Nepal covers six statutory layers stacked on every operating company. The Companies Act 2063 governs incorporation, share capital, directors’ duties, AGM and annual returns. FITTA 2075 layers on top for any company with foreign shareholding. The Industrial Enterprise Act 2076 categorises industries by capital and size, unlocking sector-specific tax incentives. The Income Tax Act 2058 and Labour Act 2074 attach immediately on first employee or first revenue. The Insolvency Act 2063 governs distress, restructuring and liquidation.
How do I register a company in Nepal in 2026?
Company registration in Nepal runs through the Office of the Company Registrar’s CAMIS portal under the Companies Act 2063. A private limited company needs 1–50 shareholders, a minimum paid-up capital of NPR 100,000 in most sectors, a Memorandum and Articles of Association, and a registered office. The OCR fee is calculated on authorised capital. Post-incorporation, the company registers PAN at the Inland Revenue Department within 30 days, opens a bank account, and — if hiring — registers with the Social Security Fund. Full step-by-step at our company registration guide and CAMIS portal walkthrough; the company compliance service covers ongoing annual filings.
What are the rules for foreign investment in Nepal?
Foreign investment in Nepal is governed by FITTA 2075, replacing the 1992 Act. The minimum threshold is NPR 20 million (roughly USD 150,000) for most sectors and zero for IT industries on the automatic route. The Department of Industry approves files up to NPR 6 billion; the Investment Board of Nepal handles investments above that bar. A negative list (agriculture below scale, retail, personal services, real-estate trading) is closed to foreign equity. Post-approval, share purchase is registered at Nepal Rastra Bank, and repatriation of dividends and capital follows the NRB Foreign Investment and Foreign Loan Management Bylaw 2078. See our full FDI guide and the FDI registration service.
The FITTA file moves through four sequential stages. Stage 1 — DOI approval: the project report, source-of-funds declaration, parent-entity papers and shareholder KYC are filed at the Department of Industry. Stage 2 — OCR incorporation: with the DOI approval letter, the Nepali company is incorporated at the Office of the Company Registrar with the approved foreign shareholding pattern. Stage 3 — Capital inflow + NRB registration: the foreign shareholder remits the equity contribution into the Nepali company’s bank account; Nepal Rastra Bank issues the share-purchase recording certificate that anchors all future repatriation. Stage 4 — Sector licence and operations: sectoral licences (NTA for telecom, MoEWRI for hydropower, NRB for banking), IRD PAN/VAT and SSF registration complete the file. Profit and capital repatriation is then routed through the same NRB record.
How does Nepal’s industrial classification work?
The Industrial Enterprise Act 2076 classifies industries into five tiers by paid-up capital and employment: Micro (up to NPR 20 lakh + up to 9 workers), Cottage (traditional skill or capital below NPR 10 crore), Small (up to NPR 15 crore), Medium (up to NPR 50 crore), and Large (above NPR 50 crore). Schedule 2 sorts industries into seven sectors — energy, manufacturing, agro and forestry, mineral, infrastructure, tourism, ITeS, and service. Classification drives the tax incentives the Income Tax Act 2058 grants, the CSR 1% rule on medium/large industries, and the registering authority (DOI for medium/large; Cottage and Small Industries department for the rest). The IEA 2076 guide walks through each tier.
What are the tax obligations for businesses in Nepal?
Corporate income tax in Nepal under the Income Tax Act 2058 (FY 2082/83) runs at 25% for general companies, 30% for banks, finance, insurance, telecom, tobacco and alcohol (40% for cigarettes and gambling), 20% for special industries (manufacturing, agro-processing, tourism), and 15% for IT companies, with a 75% rebate available on IT-export revenue. VAT applies at 13% above the NPR 5 million turnover threshold. Withholding tax catalogue: dividends 5%, rent 10%, interest 15%, service payments 15%. Filing closes at Ashoj-end through taxpayerportal.ird.gov.np. See our income tax rate guide, VAT thresholds and the tax compliance service.
What employment and labour rules apply?
The Labour Act 2074 governs every Nepali workplace with one or more employees. The statutory monthly minimum wage from 17 July 2025 is NPR 19,550 (basic NPR 12,170 + dearness NPR 7,380), with a daily floor of NPR 754 (Labour Act 2074 Sec. 106–107). Employment is permanent unless a fixed-term contract is permitted by Sec. 11. Probation tops out at 6 months. The Social Security Fund Act 2074 layers a 31% contribution (employer 20% + employee 11% of basic) for medical, accident, dependents’ and old-age coverage. See our labour law guide, minimum wage guide and the labour advisory service.
Beyond the contract and wage floor, the Labour Act 2074 imposes a stack of substantive entitlements. Working hours cap at 8 per day / 48 per week with overtime at 1.5×. Annual leave: 1 day per 20 worked days, accruing through the year. Public holidays: 13 per year, plus 1 menstrual leave per month for female employees. Sick leave: 12 days a year on half-pay. Gratuity: 8.33% of basic monthly salary, payable on separation after the qualifying period (now satisfied through SSF). Sexual-harassment policy is mandatory under the Sexual Harassment at Workplace (Prevention) Act 2071. Termination requires written notice (1 month for permanent staff), documented cause, and a clearance procedure — wrongful-dismissal claims travel through the Labour Court under Labour Act Sec. 151. The labour audit guide walks through the annual compliance check.
How do businesses resolve disputes in Nepal?
Commercial disputes in Nepal travel three routes. Litigation through the District Court (and the commercial bench of the High Court for company-law matters) under the Civil Procedure Code 2074 — typical timeline 12–24 months at first instance. Arbitration under the Arbitration Act 2055 — binding award, narrow grounds for set-aside, increasingly the contractual default in commercial agreements. Mediation under the Mediation Act 2068 — court-annexed mediation is mandatory in many civil suits, and the Mediation Council registers private mediators. Cheque-bounce disputes have a dedicated criminal track under Banking Offence and Punishment Act 2064. Read our mediation guide, cheque-bounce guide and Debt Recovery Tribunal guide.
What commercial contracts does a Nepali business need?
Commercial contracts in Nepal are governed by the Contract Act 2056. The Act requires offer, acceptance, free consent, lawful consideration and capacity. A typical operating business runs on six contract families. Shareholders’ agreement setting transfer restrictions, board composition and exit rights. Employment contracts compliant with Labour Act 2074 — permanent, fixed-term or work-based, with probation, notice and gratuity. Vendor and distribution agreements with SLA, payment terms and termination triggers. NDAs and IP-assignment clauses protecting trade secrets, source code and product designs. Service-level agreements for software, BPO and consultancy. Lease agreements for premises under the lease provisions of Civil Code 2074. Read the elements of contract, capacity to contract, performance and breach guides. The document drafting service covers the full set.
How does intellectual property work for Nepal businesses?
IP protection for businesses sits across three statutes. Trademarks are registered with the Department of Industry under the Patent, Design and Trademark Act 2022 — domestic registration runs 12–18 months, with international filings under the Madrid Protocol available since Nepal’s accession. Copyright in software, content and creative works is automatic at creation under the Copyright Act 2059 but is strengthened by voluntary registration at the Nepal Copyright Registrar’s Office. Patents and industrial designs follow the same 2022 Act framework, with limited filings to date. Trade secrets and know-how are protected contractually through NDAs and employment clauses rather than registration. See IP in Nepal, trademark registration and copyright law; the IP practice area covers contentious matters.
What annual compliance does a Nepal company have to maintain?
Every active Nepali company carries a recurring compliance calendar. OCR annual return filed within 6 months of fiscal-year end, with audited financials, AGM minutes and director list — Companies Act 2063 Sec. 80–81. IRD income tax return filed by Ashoj-end (mid-October) under the Income Tax Act 2058, with quarterly advance tax instalments. VAT monthly return by the 25th of the following Nepali month for VAT-registered businesses. SSF monthly contribution by the 15th of the following month for every Labour Act employer. Department of Industry annual update for IEA-2076 registered industries, plus sector-specific filings (NRB for banks, Insurance Authority for insurers, SEBON for listed companies). Skipping returns triggers per-day penalties under the Companies Act and recovery proceedings under the Income Tax Act. The company compliance service handles the calendar end-to-end.
What happens at company shutdown or insolvency?
Closing a company in Nepal requires a formal process. Voluntary winding-up under Companies Act 2063 Chapter 10 (Sec. 126–135) runs as either a members’ voluntary (solvent company) or creditors’ voluntary (insolvent) liquidation. Compulsory liquidation under the Insolvency Act 2063 requires a petition to the commercial bench of the High Court — grounds include unpaid debt above the statutory threshold, mismanagement, or a creditor majority resolution. The liquidator settles claims under the Sec. 57 priority order: secured creditors, employees, taxes, unsecured creditors, then shareholders. Restructuring is an alternative under Insolvency Act Chapter 4. See our company liquidation guide.
A company that has never traded, has no liabilities and has fallen behind on returns has a separate, lighter path — OCR strike-off under Companies Act Sec. 136. The directors apply with a no-objection letter from IRD, evidence of clearance of penalties, and a statement that the company has no creditors. The OCR removes the company from the live register and the file closes. This is materially faster and cheaper than full liquidation, but it is unavailable where any creditor — including the tax authority — has an unsatisfied claim. Foreign-investment companies additionally need an NRB no-objection because the share-purchase record must be cancelled. The choice between strike-off and liquidation is the single most consequential cost decision at shutdown — fixing it wrong typically doubles the engagement.
What’s the difference between business law and corporate law?
Corporate law is a subset of business law. Corporate law in Nepal narrowly means the Companies Act 2063 — incorporation, share capital, directors’ duties, board procedure, mergers and acquisitions, and dissolution. Business law covers that plus the surrounding statutes a working company must comply with daily: FITTA 2075 (if foreign-owned), IEA 2076 (industrial registration and incentives), Income Tax Act 2058 (corporate and withholding tax), Labour Act 2074 (employment), Contract Act 2056 (commercial agreements), Consumer Protection Act 2075, Competition Promotion and Market Protection Act 2063, and Insolvency Act 2063 (distress and shutdown).
When does my Nepal business need a lawyer?
Five trigger points. Pre-incorporation — to choose vehicle (private vs public, FITTA vs domestic, special-industry status), draft MoA/AoA, and structure shareholding. FDI entry — to navigate the Department of Industry, NRB share-purchase, sector negative list, and one-stop service. Hiring — to draft compliant employment contracts under the Labour Act 2074 and register with SSF. Contracting — commercial agreements, distribution, joint ventures, M&A. Distress — cheque-bounce defence, debt recovery, restructuring under the Insolvency Act 2063 before voluntary or compulsory liquidation. Founders who instruct counsel pre-incorporation typically spend a fraction of the cost of cleaning up post-incorporation gaps.
Setting up or restructuring a Nepal business? Talk to us first.
Company registration, FDI under FITTA 2075, IT-sector zero-capital incorporation, NRB share-purchase, tax and SSF registration, employment contracts, M&A and shutdown. Free first consultation by phone or video.
Free consultation+977 9841114443Frequently asked questions
The FAQ section below covers the questions clients most often raise in initial business-law consultations — incorporation vehicle and capital, FDI threshold and IT-sector route, industrial classification, corporate and withholding tax, employment and SSF, dispute resolution paths, and shutdown. Each answer cites the controlling statute and the Sec. or rule where applicable.
Related guides: Company Registration · Types of Companies · FDI in Nepal · Industrial Enterprise Act 2076 · Income Tax Rate · VAT Thresholds · Labour Law · Minimum Wages · Company Liquidation · M&A in Nepal · Electronic Transaction Act · Cheque Bounce · Company Compliance Service · FDI Registration Service · Tax Compliance Service · Labour Law Advisory · Tax Law practice area · Labour Law practice area.
