Annual Compliance and Tax Filing in Nepal

Who Must File Annual Compliance Reports in Nepal?

• Private limited companies: Must file annual returns with OCR and income tax returns with IRD each year, regardless of profit or turnover.
• Public limited companies: Face the same obligations as private companies, plus additional disclosure requirements, including pre-AGM reports filed 21 days before the meeting.
• Branch offices of foreign companies: Required to file with OCR and IRD, and must additionally report to Nepal Rastra Bank on capital flows and repatriation.
• Liaison offices: Must file income tax returns and comply with payroll withholding rules, even though they are not revenue-generating entities.
• Sole traders and partnerships: Required to file annual income tax returns with IRD; small taxpayers with turnover under NPR 3,000,000 and net income under NPR 300,000 may qualify for a simplified presumptive tax regime.
• NGOs and non-profits: Generally exempt from income tax but must still file annual returns with IRD and report separately to the Social Welfare Council and District Administration Office.

Exemptions to note: Entities with zero activity are not exempt from filing. A nil return is still a return, and skipping it invites penalties just the same as if income had been earned.

Annual Compliance Snapshot: Key Deadlines at a Glance

1. Annual Return / Confirmation Statement

• Purpose: To confirm and update the company’s registered details, including directors, shareholders, share capital structure, and registered office address, as required under Sections 80 and 81 of the Companies Act 2063.
• Due date: Within 6 months of the fiscal year-end, meaning by mid-January for companies on the standard Nepali fiscal year. Public companies must also file a post-AGM return within 30 days of the AGM.
• Pre-AGM report: Public companies and larger private companies must submit a detailed report to OCR 21 days before the AGM, covering share issuances, director and auditor details, major shareholders, inter-company agreements, and a statement of legal compliance.
• Required documents: Audited financial statements signed by a registered auditor, the Board of Directors’ report, AGM minutes, Form No. 11 (annual return form), and updated shareholder and director details.
• Filing fee: Fees vary based on the company’s authorized capital. There is no flat rate; the OCR fee schedule scales with company size, so check the current schedule on the CAMIS portal before filing.
• How to file (online via CAMIS portal):
  1. Log in to the OCR’s CAMIS portal at ocr.gov.np.
  2. Navigate to the annual return section and select the relevant fiscal year.
  3. Upload all required documents in PDF format.
  4. Review and submit; pay the applicable fee online.
  5. Download and retain the acknowledgment receipt.
• Physical submission note: Some documents still require physical submission with proper attestation. Confirm current requirements with OCR before assuming a fully digital process.

2. Corporate Income Tax Return

CIT Rates by Sector (FY 2081/82 / 2024-25):

Small and presumptive taxpayers: Individuals with annual business turnover up to NPR 3,000,000 and net income under NPR 300,000 may pay a flat small taxpayer tax ranging from NPR 2,500 to NPR 7,500, depending on business location, rather than filing a full return. 

Note that professionals like doctors, lawyers, auditors, engineers, and consultants cannot use this method.

E-filing procedure:

1. Log in to the IRD taxpayer portal (ird.gov.np) using the company PAN.
2. Compute taxable income: start with net profit per financial statements, add back disallowed expenses, deduct exempt incomes, apply depreciation per IRD schedules, and carry forward any losses (allowable for up to 7 years).
3. Apply the applicable CIT rate and subtract any advance tax already paid.
4. Upload the tax computation worksheet and, where required, the tax audit report.
5. Generate a payment voucher and settle the balance through the portal’s online payment gateway.

Advance tax payment schedule: Companies with expected tax liability above the threshold must pay advance tax in three installments during the fiscal year, typically in Poush (December), Chaitra (March), and Ashadh (June/July). Interest applies on any shortfall in advance tax payments.

3. Audited or Unaudited Financial Statements

Every registered company in Nepal must get its accounts audited by a registered auditor annually. There is no “unaudited” route for incorporated entities; the Companies Act 2063 makes audit mandatory across the board.

When the audit is triggered:

All private and public companies incorporated under the Companies Act 2063 require a statutory audit regardless of size, turnover, or activity level. The audit must be conducted by an auditor registered with the Institute of Chartered Accountants of Nepal (ICAN).

Audit thresholds that increase scrutiny or reporting complexity:

• Companies with a turnover exceeding NPR 10,000,000 face more detailed tax audit requirements alongside the statutory audit.
• Public companies, listed companies, and banks face additional audit committee reporting requirements.
• Foreign-invested companies may require an auditor sign-off on NRB-related capital flow disclosures.

Accepted accounting standards:

Nepal has adopted Nepal Financial Reporting Standards (NFRS), which are based on IFRS but adapted for the local context by ICAN. 

All companies are expected to prepare accounts under NFRS. Smaller entities may use Nepal Financial Reporting Standards for Small and Medium-Sized Entities (NFRS for SMEs) where applicable. 

Full IFRS is generally not required unless the company is publicly listed or specifically required by a regulator.

Where the audited accounts go:

• To OCR: as part of the annual return filing, within 6 months of the fiscal year-end.
• To IRD: the tax audit report accompanies the CIT return, due by mid-October.
• Board approval of the financial statements must happen before the AGM and before any filing.

4. Beneficial Ownership and KYC Declarations

• What is required: Companies must maintain a Beneficial Ownership (BO) register identifying any natural person who ultimately owns or controls 25% or more of shares or voting rights, or exercises significant control through other means.
• Where it lives: The BO register is maintained at the company’s registered office and must be available for inspection. OCR filings include BO-related disclosures as part of the annual return process.
• KYC obligations: Directors, shareholders, and beneficial owners must provide valid identity documents, addresses, and PAN details. This information must be kept current and updated within 30 days of any change.
• Update frequency: Whenever there is a change in ownership, directorship, or control structure, the company must notify OCR within 30 days and update the internal BO register accordingly.
• Penalties for non-filing: Failure to maintain or update the BO register, or providing inaccurate information, can attract OCR penalties ranging from NPR 5,000 to NPR 50,000, depending on company size and the duration of non-compliance. Directors may be held personally liable.
• NRB requirements for foreign-invested companies: Companies with foreign shareholding must also keep Nepal Rastra Bank updated on capital structure changes, and audited accounts confirming capital inflows must be submitted when repatriating profits.

5. Payroll, VAT/GST, and Other Periodic Filings

Monthly obligations:

• VAT return: Due by the 25th of the following month for all VAT-registered entities. Standard VAT rate is 13%. Registration is mandatory once annual turnover exceeds NPR 5,000,000. File via the IRD portal using the e-VAT return format or an approved template. A nil return must still be filed if there is no activity.
• TDS / withholding tax deposit and return: TDS must be deducted on salary, rent (10%), interest (15%), dividends (5%), professional and service fees (15%), and contract payments (1.5%). Deposit the withheld amount and file the monthly eTDS return by the 25th of the following month. Issue TDS certificates to vendors and employees.
• SSF contributions: Employers must contribute to the Social Security Fund by the 15th of each month. SSF enrollment is compulsory for all employees from day one, with enrollment required within 15 days of hiring.

Quarterly obligations:

• Advance tax installments: Three installments during the fiscal year based on estimated annual income. Interest applies on underpayments.

Annual periodic filings:

• Annual TDS reconciliation statement: Filed with IRD to reconcile all TDS deducted, deposited, and certificates issued during the year.
• Payroll and salary tax summary: Year-end payroll reconciliation submitted to IRD confirming total salaries paid and taxes withheld.
• Import/export reporting: Businesses involved in international trade must coordinate customs documentation, VAT at import, and input credit claims with each transaction, with records available for annual audit review.
• Digital service tax: Non-resident digital service providers with aggregate Nepal transactions exceeding NPR 3,000,000 annually must register and remit digital service tax via the IRD portal.

Penalties for Late or Inaccurate Filings in Nepal

• OCR late filing: Fines range from NPR 1,000 to NPR 20,000, depending on company size and how long the filing is overdue.
  Delays beyond 3 months attract significantly higher fines, and delays beyond 6 months can result in progressive daily penalties. Under Section 81 of the Companies Act, directors are personally liable for late filings.
• Strike-off risk: Companies that remain non-compliant for extended periods face deregistration by OCR. Restoration requires payment of all accumulated fines before reinstatement is considered.
• IRD income tax late filing: Late filers generally face a fee of Rs. 100 per month or 0.1% per annum of the assessable income (whichever is higher), plus 15% p.a. interest on outstanding tax.
• VAT non-compliance: Penalties of up to 100% of the VAT amount due, plus interest, for late filing or non-payment. Repeated VAT defaults can trigger an IRD audit and, in serious cases, license suspension.
• TDS failure: Penalty equal to the full withholding tax amount not deducted or remitted, plus interest. Repeat offenders face the possibility of imprisonment for up to 6 months and suspension of business operations.
• Audit non-submission: A penalty of NPR 1,000 per month of delay for late submission of audited reports to IRD applies.
• Loss of good standing: Non-compliant companies are blocked from participating in government tenders, renewing licenses, opening or operating bank accounts freely, and attracting foreign investment. Tax clearance certificates, required for profit repatriation and visa renewals, are denied to companies with pending obligations.
• Director personal liability: In cases of deliberate evasion or prolonged default, the IRD and OCR can hold directors personally accountable for unpaid taxes and fines.

Annual Compliance Cost Breakdown

60-Day Compliance Sprint Checklist

Regulatory and Compliance Obligations

• Office of the Company Registrar (OCR): File annual returns, post-AGM reports, and update director and shareholder records within mandated timeframes each year.
• Inland Revenue Department (IRD): Submit corporate income tax returns, tax audit reports, VAT returns, and TDS filings on their respective monthly and annual schedules.
• Social Security Fund (SSF): Register all employees from day one and contribute monthly; non-enrollment exposes the company to back-dated liabilities and administrative penalties.
• Nepal Rastra Bank (NRB): Foreign-invested companies must report capital inflows, outflows, and profit repatriation; NRB clearance is required before dividends can leave Nepal.
• Department of Labour (DoL): Maintain compliant employment contracts, factory registration records, and labour audit documentation; periodic labour inspections do happen.
• Local municipality and ward office: Renew the annual business operating license each Shrawan; operating without a current license puts every other government interaction at risk.
• Social Welfare Council (SWC): NGOs and non-profits must submit annual programme reports and financial statements to SWC in addition to standard OCR and IRD obligations.
• ICAN (Institute of Chartered Accountants of Nepal): All statutory audits must be conducted by an ICAN-registered auditor; engaging an unregistered auditor invalidates the audit for regulatory purposes.

Keeping all of these obligations coordinated across a single fiscal year is where most businesses quietly start to slip.

If you want a platform that tracks every one of these deadlines in one place and alerts you before anything is due, Commenda is built exactly for that. It works across 70 countries, so your Nepal obligations sit alongside every other market you operate in.

Common Mistakes and How to Avoid Them

• Using the wrong fiscal year dates: Nepal’s fiscal year runs mid-July to mid-July (Shrawan 1 to Ashadh end), not January to December.
• Missing director signatures on annual filings: OCR returns and audited financials require wet or authenticated digital signatures from all current directors.
• Under-reporting income from multiple revenue streams: Businesses that earn through consulting, commissions, or digital sales alongside their primary activity often omit secondary streams.
• Late updates to the beneficial ownership register: Any change in shareholding or directorship must be reported to OCR within 30 days; companies that update annually during the return cycle, rather than at the point of change, accumulate unreported periods that attract penalties.
• Ignoring currency conversion rules for foreign transactions: Income received in foreign currency must be converted using Nepal Rastra Bank’s rate on the date of receipt, not the year-end rate; using unofficial or average rates understates or overstates taxable income and creates audit exposure.

How Commenda Simplifies Annual Compliance and Tax Filings

Commenda is a global compliance and entity management platform that helps businesses file on time, stay organized across jurisdictions, and cut the administrative overhead that builds up around annual obligations.

• Deadline tracking on autopilot: Commenda’s dashboard monitors all your filing deadlines in real time, sends alerts before due dates, and assigns tasks to the right team members so nothing gets missed in a busy quarter.
• Pre-filled forms and guided workflows: The platform pre-populates filing documents using your existing entity data and walks teams through each compliance step with built-in checkpoints, reducing manual data entry and the errors that come with it.
• Filing across 70 countries from one platform: Whether your business operates only in Nepal or across multiple markets simultaneously, Commenda consolidates every jurisdiction’s annual returns, tax filings, and license renewals into a single compliance view.
• Cuts admin time by up to 80%: By automating routine tasks like reminders, document generation, and workflow routing, Commenda gives finance and legal teams their time back, time that goes toward actual business decisions rather than chasing paperwork.

Annual compliance in Nepal is manageable when the system is working for you, not the other way around. If your team is still relying on spreadsheets and calendar reminders to stay on top of IRD, OCR, VAT, and SSF obligations, it is worth seeing what a purpose-built platform can do. 

Book a demo with Commenda and get a clear picture of your full compliance exposure across Nepal and every other market you operate in.