Nepal has emerged as a promising destination for outsourcing companies, offering competitive advantages in cost-effectiveness, skilled workforce, and favorable government policies. The Information Technology (IT) and Business Process Outsourcing (BPO) sectors have experienced significant growth, making Nepal an attractive location for establishing outsourcing operations.
The Government of Nepal actively promotes the IT sector through various incentives and supportive policies outlined in the Information Technology Policy 2019. This comprehensive guide provides detailed information about establishing an outsourcing company in Nepal, covering legal requirements, registration processes, and operational considerations.
Legal Framework for Outsourcing Companies in Nepal
Company Registration Requirements
The Company Act 2063 (2006) governs company registration in Nepal. Outsourcing companies must register under this act, typically as private limited companies. The Department of Industry (DOI) and Office of Company Registrar (OCR) handle the registration process for different types of businesses.
Foreign investors can establish outsourcing companies under the Foreign Investment and Technology Transfer Act 2075 (2019). This act provides clear guidelines for foreign investment in Nepal’s IT sector, including outsourcing services.
Regulatory Compliance Framework
Outsourcing companies must comply with multiple regulatory requirements:
- Nepal Rastra Bank (NRB) regulations for foreign exchange transactions
- Inland Revenue Department (IRD) for tax registration and compliance
- Department of Labor and Employment for labor law compliance
- Nepal Telecommunications Authority (NTA) for telecommunications services
Industry-Specific Regulations
The Information Technology Policy 2019 specifically addresses outsourcing services and provides framework for:
- Export promotion of IT services
- Infrastructure development support
- Human resource development initiatives
- Quality certification requirements
Types of Outsourcing Companies in Nepal
Information Technology Outsourcing
IT outsourcing companies provide software development, web development, mobile application development, and technical support services. These companies benefit from Nepal’s growing pool of IT professionals and competitive labor costs.
Business Process Outsourcing (BPO)
BPO companies handle various business processes including:
- Customer service and support
- Data entry and processing
- Content moderation
- Digital marketing services
- Financial and accounting services
Knowledge Process Outsourcing (KPO)
KPO companies offer high-value services requiring specialized knowledge:
- Research and analytics
- Legal process outsourcing
- Medical transcription
- Engineering services
Creative Process Outsourcing
These companies focus on creative services such as:
- Graphic design and multimedia
- Content writing and translation
- Video editing and animation
- Digital marketing and social media management
Step-by-Step Registration Process
Step 1: Company Name Reservation
Begin the registration process by reserving your company name through the Office of Company Registrar. Submit the name reservation application with three preferred names. The OCR verifies name availability and approves unique names that comply with naming conventions under the Company Act 2063.
The name reservation process typically takes 1-2 working days. Once approved, the reserved name remains valid for 35 days, during which you must complete the company registration process.
Step 2: Prepare Required Documents
Gather all necessary documents for company registration. For Nepali promoters, prepare citizenship certificates, passport-size photographs, and address verification documents. Foreign investors must provide passport copies, visa documents, and investment approval from the Department of Industry.
Additional documents include the company’s Memorandum of Association (MOA) and Articles of Association (AOA), which outline the company’s objectives, share structure, and operational framework.
Step 3: Investment Approval and Registration
Foreign investors must obtain investment approval from the Department of Industry before company registration. Submit the investment proposal with detailed business plans, financial projections, and technology transfer agreements if applicable.
The DOI evaluates the proposal based on Nepal’s investment priorities and issues investment approval within 15-30 working days for standard applications.
Step 4: Company Registration with OCR
File the company registration application with the Office of Company Registrar along with all required documents and fees. The OCR reviews the application, verifies document authenticity, and processes the registration.
Upon successful verification, the OCR issues the Certificate of Company Registration, officially establishing your outsourcing company in Nepal.
Step 5: Post-Registration Compliance
Complete post-registration requirements including tax registration with the Inland Revenue Department, social security registration, and labor law compliance. Obtain necessary licenses and permits specific to outsourcing operations.
Register with relevant industry associations and obtain quality certifications to enhance business credibility and market access.
Required Documents for Registration
For Nepali Promoters
- Citizenship certificate (original and copy)
- Passport-size photographs
- Address verification documents
- Bank account opening certificate
- Memorandum and Articles of Association
For Foreign Investors
- Valid passport with visa
- Investment approval from DOI
- Technology transfer agreement (if applicable)
- Financial capability certificate
- Character certificate from home country
Company Documents
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Feasibility study report
- Environmental impact assessment (if required)
- Office lease agreement or ownership documents
Additional Requirements
Outsourcing companies may need specific permits depending on their service offerings:
- Telecommunications license for voice-based services
- Data protection compliance certificates
- Export license for international service delivery
- Quality certifications like ISO standards
Registration Timeline
The complete registration process for outsourcing companies typically takes 30-45 working days, depending on the complexity and investor nationality.
Name Reservation: 1-2 working days Investment Approval (for foreign investors): 15-30 working days Company Registration: 7-15 working days Post-registration compliance: 10-15 working days
Expedited processing options are available for additional fees, reducing the timeline by 30-50% in most cases.
Registration Costs
Government Fees
- Name reservation: NPR 100
- Company registration: NPR 1,000-5,000 (based on authorized capital)
- Investment approval: NPR 2,000-10,000
- Various permits and licenses: NPR 5,000-25,000
Professional Service Fees
- Legal consultation: NPR 25,000-75,000
- Document preparation: NPR 15,000-35,000
- Registration assistance: NPR 20,000-50,000
Total estimated cost ranges from NPR 100,000 to NPR 300,000, depending on company size and complexity.
Legal Framework and Compliance
Primary Legislation
The Company Act 2063 (2006) serves as the primary legislation governing company formation and operations in Nepal. This act defines different types of companies, registration procedures, and ongoing compliance requirements.
The Foreign Investment and Technology Transfer Act 2075 (2019) specifically addresses foreign investment in Nepal, providing clear guidelines for international investors establishing outsourcing companies.
Tax Regulations
The Income Tax Act 2058 (2002) governs taxation of outsourcing companies. IT companies enjoy various tax incentives including:
- Tax exemption for the first five years of operation
- 50% tax reduction for the next three years
- Export income exemption for IT services
Labor Laws
The Labor Act 2074 (2017) regulates employment relationships, working conditions, and employee rights. Outsourcing companies must comply with:
- Minimum wage requirements
- Working hour limitations
- Social security contributions
- Employee safety standards
Data Protection and Privacy
While Nepal lacks comprehensive data protection legislation, outsourcing companies handling international client data must implement robust security measures and comply with international standards like GDPR for European clients.
Post-Registration Requirements
Tax Registration and Compliance
Register with the Inland Revenue Department within 30 days of company registration. Obtain a Permanent Account Number (PAN) and comply with regular tax filing requirements including income tax, value-added tax, and withholding tax obligations.
Social Security Registration
Register employees with the Social Security Fund under the Social Security Act 2074 (2017). This mandatory registration provides social security benefits to employees and ensures compliance with labor regulations.
Banking and Financial Compliance
Open corporate bank accounts and comply with Nepal Rastra Bank regulations for foreign exchange transactions. Outsourcing companies earning foreign currency must follow export proceeds realization requirements.
Industry Certifications
Obtain relevant industry certifications to enhance credibility:
- ISO 9001 for quality management
- ISO 27001 for information security
- CMMI for software development processes
- SOC 2 for service organization controls
Ongoing Compliance Obligations
Maintain regular compliance with:
- Annual general meetings and board resolutions
- Financial statement preparation and audit
- Tax return filing and payment
- Regulatory reporting requirements
- License renewal and permit updates
Government Incentives and Support
IT Policy Benefits
The Information Technology Policy 2019 provides numerous incentives for outsourcing companies:
- Infrastructure development support
- Human resource development programs
- Export promotion assistance
- Research and development grants
Special Economic Zones
Establish operations in Special Economic Zones (SEZ) to access additional benefits including:
- Streamlined regulatory processes
- Enhanced infrastructure facilities
- Additional tax incentives
- Export facilitation services
Skills Development Programs
The government supports skills development through various programs:
- Technical education and vocational training
- Industry-academia partnerships
- Certification and training programs
- International exposure opportunities
Frequently Asked Questions
What types of outsourcing companies can be established in Nepal?
Nepal allows establishment of IT outsourcing, BPO, KPO, and creative process outsourcing companies. These include software development, customer service, data processing, research analytics, and digital marketing services under current regulations.
How long does it take to register an outsourcing company in Nepal?
The complete registration process takes 30-45 working days for standard applications. This includes name reservation, investment approval for foreign investors, company registration, and post-registration compliance requirements with various government departments.
Where should outsourcing companies register in Nepal?
Companies register with the Office of Company Registrar for domestic registration or Department of Industry for foreign investment. Additional registrations required with Inland Revenue Department, Social Security Fund, and relevant regulatory authorities.
What are the minimum requirements for establishing an outsourcing company?
Minimum requirements include authorized capital of NPR 100,000, at least two promoters, registered office address, compliance with Company Act 2063, and specific licenses based on service offerings and target markets.
What is the estimated cost of registering an outsourcing company?
Total registration costs range from NPR 100,000 to NPR 300,000, including government fees, professional services, and compliance requirements. Costs vary based on company size, foreign investment involvement, and specific service requirements.
