US Company Formation from Nepal (2026): What Nepali Law Allows, the 2025 NRB Opening for Companies, IT Firms' US Subsidiaries and Non-Resident Nepalis

Nepal's IT exporters have grown quickly. Software houses in Kathmandu and Lalitpur build products for clients in the USA, Australia and Europe. Freelancers across the country sell development, design and digital marketing worldwide. So the question of a US company comes up constantly: US clients want to contract with a US entity, international payment platforms are easier to use from one, and a US presence helps a Nepali company win work.

The US side is simple and can be done remotely. The Nepali side is not, and it is different from almost every other country in this series. Nepal has restricted its citizens and residents from investing abroad since 1964. That restriction is only now being loosened, and so far mainly for companies. This guide starts with what Nepali law allows, because that decides which structures are open to you. It then compares US LLC formation and US C-Corp formation for those who can use them.

In short: the USA does not restrict Nepali owners, but Nepal does. The Act Restricting Investment Abroad, 1964 (2021 BS) generally prohibits persons in Nepal from investing abroad, except as exempted. Under the Fifth Amendment to Nepal Rastra Bank's foreign investment bylaw (30 December 2025), a Nepali company can invest up to USD 20,000 abroad without prior NRB approval. Larger investments need approval. Nepali IT companies have a specific route to invest abroad in IT businesses. No general exemption has been gazetted for individuals resident in Nepal. Non-Resident Nepalis living abroad are not restricted in the same way. There is no US–Nepal tax treaty, so US corporate dividends to Nepal are withheld at 30%. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

The Nepali rule: the Act Restricting Investment Abroad

The Act Restricting Investment Abroad was passed in 1964 (2021 BS) to stop capital leaving Nepal. Its core provision is broad: no person in Nepal may make any kind of investment abroad, unless the government has exempted it by notice in the Nepal Gazette. Owning shares in a foreign company is an investment abroad. So is putting money into a US LLC.

For decades the Act left Nepali businesses no route to own foreign subsidiaries. Nepal's start-ups have found it hard to raise from foreign investors or to "flip" to a US parent. Commentators in Nepal have called for its replacement, and in 2025 the government's High-level Commission for Economic Reform recommended a new law to regulate, rather than restrict, investment abroad. At the time of writing, the 1964 Act is still the law. The changes so far have come through Nepal Rastra Bank's rules under it.

What changed in December 2025

On 30 December 2025, following a Nepal Rastra Bank board decision of 11 December, the Fifth Amendment to the NRB's Foreign Investment and Foreign Loan Management Bylaw relaxed outward investment for companies. Two routes matter for a US company:

• Any Nepali company may invest up to USD 20,000 abroad without prior NRB approval. Earlier rules limited outward investment to export-oriented companies with foreign-currency earnings and a profit record. Those conditions no longer apply below this amount. Investment above USD 20,000 still needs approval and must meet conditions.
• IT companies registered under Nepal's industrial enterprise law may invest abroad in IT-related businesses and obtain foreign exchange from NRB within limits linked to their capital. Nepali software firms have already used this to open US branches and subsidiaries.

How the USD 20,000 limit is counted, and exactly which documents the bank needs, are settled with your bank and NRB at the time. Expect to show your company registration, PAN, board resolution, audited accounts where relevant, and the US company's formation documents.

What the amendment does not do is create a general exemption for individuals living in Nepal. The safe reading of the law today is that a Nepali company, especially an IT company, can lawfully own a US subsidiary within these rules, while a resident individual owning a US company personally has no clear exemption. Before forming a US company in your own name while living in Nepal, take advice from a Nepali lawyer.

Non-Resident Nepalis

The position is different for Nepali citizens who live abroad. Nepalis working in the Gulf, studying or working in Australia, the UK, Japan or the USA, or settled anywhere outside Nepal, are not investing "from Nepal" when they use foreign earnings. A Nepali citizen resident in Dubai or Sydney can form a US company like anyone else there. The rules of their country of residence decide how it is taxed. See the UAE guide, the Australia guide or the country guide.

Non-Resident Nepalis who keep income, property or a business in Nepal should still take Nepali advice on how the two interact, especially before returning to live in Nepal.

The US side

US LLC formation

A single-member LLC owned by a non-resident, whether an individual or a foreign company, is disregarded for US federal income tax. Without a US office, US employees or US agents who conclude contracts, its income is generally not effectively connected with a US trade or business, so no federal income tax is due (see effectively connected income explained). There is no withholding on money it passes to its owner. It files Form 5472 with a pro forma Form 1120 every year, and missing it carries a $25,000 penalty (see Form 5472 explained).

When a Nepali company owns a single-member LLC, the IRS treats the Nepali company as carrying on the LLC's business itself. If the LLC has no US operations, that usually means no US tax. If it has US staff or a US office, the Nepali company becomes a US taxpayer, with corporate tax and possibly branch profits tax.

US C-Corp formation

A C-Corporation pays 21% federal tax on its profits, plus state tax where it does business, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents). With no US–Nepal tax treaty, dividends, royalties and related-party interest paid to Nepal are withheld at 30%.

Which suits a Nepali IT company

For most Nepali IT companies, the choice turns on what the US entity will do:

• A US contracting and sales entity with no US staff, which signs client contracts, takes payment and pays the Nepali company for development work, is often an LLC. It pays no US tax if it has no US operations, and there is no dividend withholding. Its margin should be modest, because the Nepali company does the work and should be paid an arm's-length fee for it, reflected in Nepali profits.
• A US subsidiary with a US sales manager, office or delivery team should be a corporation, so that the US tax sits in the subsidiary and not on the Nepali parent. Profits are usually reinvested in US growth rather than paid up as 30%-withheld dividends.
• A start-up that will raise from US investors needs a Delaware C-Corporation, and probably a restructuring that the 1964 Act and NRB rules must allow (see raising US investment as a foreign founder).

An example: a Lalitpur software company

These are illustrative figures, not a client case, at रु136 to the dollar.

A Lalitpur software company with 40 engineers builds mobile apps for clients in the USA. Clients keep asking to sign with a US entity and pay by ACH.

The company's board approves forming a Wyoming LLC. Its bank processes the outward investment of USD 5,000 under the NRB rules, documented as an investment abroad by a Nepali IT company. The LLC opens a US business account and signs client contracts.

In a year the LLC bills US$600,000. It pays the Nepali company US$540,000 for development under an intercompany agreement, priced at cost plus a margin consistent with Nepali transfer pricing practice. That is about रु7.34 crore, received in Nepal as export earnings. The LLC keeps US$60,000 for its US costs (legal, insurance, travel and sales commissions) and a small margin.

In the USA, the LLC files Form 5472 and a pro forma 1120. It has no US staff or office, so it has no US income tax. In Nepal, the company's export income is taxed under Nepali rules. Nepal offers concessions for income from IT and service exports, and the company's auditor applies them.

Freelancers living in Nepal

Most enquiries from Nepal come from individual freelancers, and the honest answer is that a US company in your own name is not clearly permitted while you live in Nepal. The lawful options today are:

• Invoicing foreign clients directly from Nepal as a registered sole proprietor or freelancer, and receiving payment through the channels NRB allows, including bank transfer and approved payment services.
• Registering a Nepali IT company or firm, which can then use the company routes above to own a US entity if the business grows.
• Waiting for the reform recommended in 2025, which may replace the 1964 Act with a regulatory regime.

Income from exporting services is taxable in Nepal for residents, who are taxed on worldwide income. The Finance Act each year sets concessions for export income, so check the current rate with a Nepali tax adviser.

Nepali tax on income from a US company

Nepali residents are taxed on worldwide income under the Income Tax Act 2058 (2002). You are resident if you spend 183 days or more in Nepal in an income year. There is no tax treaty between Nepal and the USA, so double taxation is relieved only by Nepal's unilateral foreign tax credit, for any US tax actually paid.

For a Nepali company that owns a US subsidiary, dividends received are foreign income and taxed in Nepal, with a credit for the 30% US withholding up to the Nepali tax. A Nepali company's auditor should also review the pricing of transactions with the US company.

Banking and payments

US banks and fintechs generally accept companies with Nepali owners, after standard due diligence. For a company owned by a Nepali company, they will want:

• the parent's company registration certificate;
• its PAN;
• its share register;
• a board resolution authorising the US company.

Provide a specific business description, an English website showing real projects, and a US business address with your own suite number. Make sure details match across the state filing, EIN letter and application.

On the Nepali side, money coming back to Nepal arrives as export earnings or as returns on the investment, through the bank that handled the outward investment. Keep the investment approval, intercompany agreement and invoices together. See US business bank accounts for non-residents and why banks reject non-resident applications.

Which state

• Wyoming for a contracting LLC or small corporation with no US premises: low yearly costs.
• New Mexico, the cheapest, with no annual report.
• Delaware for a corporation that will raise investment or serve enterprise clients who expect it.
• Texas, Virginia, New York or California if the US team will be based there. Several have large Nepali communities.

See best state for non-residents and the state selector.

What it costs

State fees and the first-year registered agent are included. Nepali legal, bank and audit costs for the outward investment are separate. See what a US LLC costs every year.

Common mistakes

• Forming a US company in your own name while living in Nepal without checking the Act Restricting Investment Abroad.
• Funding the US company informally instead of through the bank under NRB rules.
• Leaving too much profit in the US entity when the Nepali company does the work, which undermines the transfer pricing and the export income.
• Using a disregarded LLC for a US operation with US staff, which makes the Nepali company a US taxpayer.
• Skipping Form 5472 because the LLC owed no US tax.

Frequently asked questions

Can a Nepali citizen own a US company? US law allows it. Nepali law restricts investment abroad by people in Nepal. A Nepali company can invest abroad within the NRB rules, and Non-Resident Nepalis living abroad are not restricted in the same way. Resident individuals have no general exemption at the time of writing.

What did the December 2025 NRB amendment change? It lets any Nepali company invest up to USD 20,000 abroad without prior NRB approval, removing earlier export and profit conditions. Larger investments still need approval. IT companies also have a route to invest abroad in IT businesses.

Is there a US–Nepal tax treaty? No. US dividends, royalties and related-party interest to Nepal are withheld at 30%.

Will a US LLC owned by my Nepali IT company pay US tax? Not if it has no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.

Do I need an ITIN? Not to form the company or obtain its EIN. See what is an ITIN and who needs one.

How UCB can help

We form US LLCs and corporations for Nepali companies investing under the NRB rules and for Non-Resident Nepalis abroad. That covers the state filing, EIN, registered agent, US business address and bank application. Each year we file the company's federal return through our US tax filing service. Your Nepali lawyer, bank and auditor handle the outward investment and Nepali tax, and we supply the US documents they need. See our formation, EIN and bank account package.

Expanding to the US from Nepal? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.