Article
3 min read
Author
Anja Simic
Published
September 17, 2021
Last Update
June 25, 2024
Table of Contents
Private firms in Nepal
Private Firm Registration in Nepal
Tax Registration in Nepal
VAT in Nepal
Nepal is located in South Asia, mostly in the Himalaya mountains. It is bordering China in the North, with the border including the world's highest mountain peak, Mount Everest, and India in the South.
Located between the two fastest-growing economies in the world, this country gives you many import and export business opportunities. However, major industries include tourism, carpets, textiles, cigarettes, cement, brick, as well as small rice, jute, sugar, and oilseed mills. Most of these businesses are operating as sole proprietorships.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
In Nepal, sole proprietorships are referred to as private firms.
The private firm is described in the Private Firm Registration Act 1958. Sole proprietorship firms do not have a separate legal and natural person, and the liability of the owner is not limited. These forms of business are mostly used by individuals undertaking trading activities: retailers, shops and importers of goods, and professional service providers like lawyers and accountants. Private firms are easy to establish and dissolve. They are also easy to control; decision making is prompt and flexible since there is only one person operating it.
As mentioned before, the private firm registration is done under the Private Firm Registration Act 1958. Here we will explain the whole process.
To register the firm, you will need to provide the documents to the
concerned department:
These are the required documents for private firm registrations:
Based on the capital of the firm, the registration fee needs to be paid. It costs between NPR 600 and 15,000.
No more than one private firm related to the same or similar objectives can be registered in the same person's name.
Now that you have our private firm settled, the next step is to register with the tax authorities. We will guide you on how to register with the Inland Revenue Department and obtain a Permanent Account Number (PAN).
You need to fill out the form in the Nepali language.
A person is required to register if their turnover from the supply of taxable goods exceeds NPR 5 million or their turnover from the supply of both goods and services exceeds NPR 2 million for the last 12 months.
The normal VAT rate in Nepal is 13%. Some goods or services are exempted from VAT.
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