Tax Considerations:
Q: What are the documents required for PAN/VAT registration?
Any enterprise doing business in Nepal needs to register itself and obtain a PAN from the IRD. Enterprises with turnover of NPR 5 million or more, also need to register for VAT at the same department.
- Application form
- Copy of Citizenship Certificate. Foreigners: any authentic identification document
- Copy of the Company Registration Certificate (if applicable)
- Two identical passport size photos of the person who signs the application form. Partnerships: two identical size photos of each partner
- Proof of deposit if requested by Inland Revenue Office (foreigners only)
- Sketch map of the location of main office or head office.
- In case of registration for VAT, if possible, declaration of estimated taxable amount of next three months, otherwise state the non-possibility in the application
- To apply for registration of PAN, the company can use the IRD website (www.ird.gov.np) and register online as well
Q: What are the corporate income tax rates in Nepal?
Corporate tax rates in Nepal depend upon the nature of the business entity and generally ranges from 25-30%. The normal rate for entities is 25%; rates for life insurance companies are also 25%, but rates for banks and financial institutions, general insurance, and enterprises involved in the petroleum business is 30%. Special industries, enterprises operating roads, bridges, railways hydropower stations, transmission lines, etc. on a BOOT basis are given a special rate of 20%.
Q: What are the provisions for avoiding dual taxation in Nepal?
The Government of Nepal has signed different treaties and agreements to avoid dual taxation. For instance, Nepal has signed BIPPAA with five and DTAA with eleven countries.
Yes, after registration at the tax office, the industry is required to get registered in the respective sector-specific Government agency/Ministry. Industrial Enterprises Act, 2020 makes it mandatory for all business activities falling under the definition of ‘industry’ to be registered as an industry with DOI.
, the government has sharply lowered the minimum threshold for foreign direct investment to
Yes, hundred percent foreign investment is not allowed for some sectors like casino, telecommunication and aviation. Foreign investor is permitted to equity holding percentage in some industries are as follows:
In practice, the foreign investor seeks loan from foreign institutions, namely bank and financial institution (BFIs) or multi-lateral lending agencies. Foreign BFIs can form consortiums with Nepali BFIs in such circumstances to finance projects in Nepal.
Central Bank Clearance:
Q: Is the approval from Nepal Rastra Bank required for bringing the foreign investment?
Yes, it is required to take approval from the NRB bank.
(a) Investment in Greenfield Project: Approval from the Central Bank is not required. However, the proponent has to submit an information to the Central Bank.
(b) Investment through share transfer (in Brownfield Project): Approval from the Central Bank for bringing in foreign investment after getting the investment approval from IBN/DoI in the ‘Brownfield Project’ is required.
Q: What are the documents required for NRB approval for foreign investors?
If foreign investor is a company,
- Certified copy of company registration
- Certified copy of most recent audited financial report (not required for the company investing less than 1 million USD or equivalent foreign currency. Not required if the financial report prepared by the Board of Director/Highlevel management is submitted along with the proof that the audit of such report is not necessary)
- Document identifying the latest shareholder (not required for the company listed in stock exchange)
- Certified copy of source of investment
- Certified copy of resolution of the Board of Directors or authorized representative for making an investment
If foreign investor is a natural person,
- Certified copy of the passport
- Certified copy of source of investment
If a natural person is not the approved foreign investor,
- Certified copy of the passport
- Certified copy of source of investment
- Certified copy of relationship certificate with the approved foreign investor
Visa Procedure
Foreign visitors other than Indian nationals need valid passports to enter Nepal. Indian nationals need valid passports/travel document if the entry point is airport. There is a provision of seven categories of visa in the Immigration Act 2049 and Immigration Regulation 2051. These are:
Q: What are the visa provisions for a foreign investor to reside in Nepal?
A. Non-Tourist Visa:
1. Non-tourist Visa for Carrying out the Feasibility Study: As per clause 52 of the
Public-Private Partnership and Investment Act 2019, a non-tourist visa shall be provided for 6 months for foreign citizens to study, research and survey any approved foreign investment. The foreign investor or one authorized representative and their family members shall be provided business visas to stay as long as investments continue in Nepal. Foreign employees of the project acquiring labor permits shall also be allowed to stay during their period of investment in Nepal.
Required Documents
2. For a Non-tourist Visa for Carrying out the Feasibility Study:
To obtain this visa, the prospective investor should apply to DOI in the prescribed format along with the following documents:
i) Bio-Data of the applicant
ii) Photo copy of the passport with the last visa
iii) Brief description of the project in which research and study will be undertaken.
iv) Photocopy of the citizenship certificate of the Nepalese investor, if the proposed industry is going to be established as a joint venture.
To obtain this visa, the prospective investor should apply to DOI in the prescribed format along with the following documents:
i) Passport size photograph, 6 nos
ii) Recommendation letter from DOI
iii) Bio-Data of the applicant
iv) Photo copy of the passport with the last visa.
Fees and Deposits
3. Non-tourist Visa for Carrying out the Feasibility Study
The charge for this category of visa is US $ 60 per month
3. Non-tourist visa for Expatriates: If required skilled manpower is not available locally, industry can employ foreign nationals by obtaining work permit. Such expatriate personnel working in the industries will be granted a non-tourist visa for duration of one year at a time on recommendation of DOI and Department of Labour. The work permit for such persons can be provided for up to a period of 5 years on annual renewal basis.
Required Documents for Non-tourist visa for Expatriates
To obtain this visa, the prospective investor should apply to DOI in the prescribed format along with the following documents:
i) Copy of the Agreement between the industry and expatriate
ii) Progress report of the industry
iii) Bio-Data of the expatriate personnel (mainly describing the experience in the related industry) and academic certificates
iv) Photo copy of the passport with last visa
v) Name list of Nepalese workers who will be trained from the expatriate
vi) Industry registration certificate
vii) Copy of vacancy announcement advertised in national daily
- Non-tourist visa for Expatriates
The charges for this category of visa are:
- First Year US $ 60 per month.
- Second Year onwards US $ 100 per month
B. Business Visa:
The foreign investor or one authorized representative and their family members shall be provided business visas to stay as long as investments continue in Nepal. Foreign employees of the project acquiring labor permits shall also be allowed to stay during their period of investment in Nepal.
For obtaining this visa, the prospective investor should apply to DOI in the prescribed format along with the following documents:
Required Documents for Business Visa:
i) Photo copy of the passport with last visa
ii) Proof showing investment made in the company.
iii) Industry registration certificate
iv) Progress report of the industry including the current status
v) Certificate of relationship with the dependents.
vi) In case of an authorized representative, a letter authorizing representation for the foreign investor and the photocopy of passport.
vii) Contact address and telephone number of the investor
Once the recommendation letter is obtained from DOI, the investor or the authorized representative may apply to the Department of Immigration in the prescribed format along the with the following documents:
i) Passport size photograph, 6 nos
ii) Recommendation letter from DOI
iii) Certificate of Incorporation
iv) Copy of the temporary/permanent account number (PAN)
v) Copy of the share certificate (in case of equity investment)
vi) Copy of the passport with last visa
vii) Industry registration certificate
viii) Bio-Data of the passport holder
However, for the visa extension the following documents are to be submitted to the Department of Immigration:
i) Passport size photograph, 3 nos
ii) Recommendation letter from DOI
iii) Copy of the tax clearance certificate
iv) Copy of the passport with last visa
v) Bio-Data of the passport holder
Fees and Deposits
The charges for this category of visa are:
For the investments less than Rs. 10 million
i) Multiple entry, US $ 30 per month.
ii) Multiple entry, US $ 300 per year.
iii) Multiple entry, US $ 1000 for 5 years.
For the investments Rs. 10 million to Rs. 100 million
i) US $ 10 per month.
ii) Multiple entry, US $ 100 per year.
iii) Multiple entry US $ 300 for 5 years.
C. Residential Visa:
Foreign investor making an investment equivalent to more than US $ one hundred thousand, at one time and in convertible foreign currency, will be granted a residential visa on recommendation of DOI. This visa can be granted for one year at a time.
Fees and Deposits
The charge for this category of visa is US $ 700 per year for the first time and US $ 1200 per year for each renewal.
Q: Business Visa: What are the documents required for the business visa along with the Application?
- Notarized copy of passport with the latest Visa
- Letter of Foreign Investment Approval from the Department of Industry
- Copy of Industry/Company Registration Certificate
- In the case of Industry in operation, a report of industry inspection
- Notarized copies of Letter of Authorization as a Representative of foreign investor and passport
- Notarized document of the relation with the dependents
- Contact address and telephone number of the investor/representative
Q: What are the documents required for the residential visa?
In case of foreign investment equivalent to or above 1 million US dollars at a time, a foreign investor or his/her representative and family members shall be recommended for the Residential Visa.
- Notarized copy of passport with the latest Visa
- Evidence of Realized Investment equivalent or above 1 million US dollars at a time
- Copy of the Industry Registration Certificate
- Physical and Financial Progress Report of the industry
- Document of the relationship with the dependent
Q: Does the Investment Board of Nepal/Department of Industry provide visa facilitation for investors?
Yes. Based on clause 52 of PPPIA 2019, the Investment Board and Department of Industry shall facilitate foreign investors with visas in coordination with the
Department of Immigration (DoI).
