Setting up a business in Nepal and getting a business visa is possible for foreigners. However there are limitations in branche choice as far as full ownership is concerned. You need to setup a real company and proof annually that your company is in fact up and running. Only if the government commission is convinced, they will give you a business visa recommendation which you need for extending your business visa.
To register a company, a Pvt Ltd, requires a lawyer that has good contacts with the Ministry of Industry. There are lots of rules and habits that you, as a foreigner, don’t know about. Also there is some “under table” money involved to get things done, as in many Asian countries. The lawyer will take care of everything that needs to be done to get your business setup.
Ownership of a business
In general, a foreigner is not allowed to own more then 49% of a business. The other 51% or more should be owned by Nepali. There are exceptions to this rule for businesses that normaly Nepali people don’t own. The most common business is IT software development, website development and things like that. Such a business is allowed for 100% ownership by a foreigner.
Requirements for business setup
First of all you need to choose a branch of business, which results in a max 49% or full 100% ownership of the Pvt Ltd. You need to make a business plan. The lawyer will help you with that. Depending on the kind of business, the expected number of Nepali staff, business volume and things like that, the government will set a minimum amount to invest in your company. Also other requirements are decided on in this phase. In general, your lawyer can give most of this info beforehand.
The first step is to make a project report. Here you need to specify the investment, number and value of the shares and your business plan. Also you need to have a rental contract for an office location. You provide your personal details, your CV, bank creditability of your home bank, location of business, an application form which the lawyer will provide, and an authorisation letter for your lawyer so he can work on behalf of you.
Next steps in the process are the business registration, tax registration, opening a bank account, industry registration, business visa recommendation, business visa (6 months), make deposit, start your business.
You start with a 6 month business visa as soon as the process steps are finished. To extend your business visa, you need to convince a commission that your company is real, up-and-running and you have transferred your (partial) investment into the business bank account.
Each year you need to extend your business visa. Therefore you need a “business visa recommendation” which you can get when a gouvernment audit approves your business. This means that your business has to be “real”, not fake. Your (partly) investment needs to be transferred into your Nepali business bank account. Also you need to have paid your tax for the past period. Usually your bookkeeper and your accountant will invite the gouvernment commission and take care of the procedure.
When all is approved, you will get a signed business visa recommendation that you use for extending your business visa with 1 year (or 5 years if you meet the higher investment requirements).
For extending your business visa you need to proof that your minimum investment has been transferred into your business account in Nepal. The money has to come directly from your personal bank account in your country of origin. The whole amount needs to be invested, unless you made an arrangement at the start that your investment is scheduled over a couple of years.
It doesn’t matter if you own the company for 49% or 100%. The minimum investment has to come from you. We advice you to think twice about starting a business with a minority of 49% ownership. The 51% is the boss, while it’s your money involved.
As a foreigner you are not allowed to own real estate or a car/motorbike. On the other hand, your Nepali company is allowed for that. So if you want, your company can buy a motorbike, a car and even real estate. Ofcourse you can use it, as you are the owner of the business.
Finding a lawyer
Asking at the government office, you will get the name of a lawyer. This is most likely a friend of the officer who indeed can arrange your business setup, but at high cost (and commission for the officer who sent you to this laywer). Better is to ask around. Perhaps other foreign owned companies can advise you, or perhaps a large local business. Most companies need a lawyer, so it should not be too hard to find one.