Corporate Compliance and Tax Requirements in Nepal

Running a company in Nepal means dealing with two separate regulatory bodies every year: the Office of the Company Registrar (OCR) and the Inland Revenue Department (IRD). They run on different deadlines, and missing either has real consequences.

Nepal's fiscal year follows the Nepali calendar and ends on the last day of Ashad. All deadlines count forward from that date.

The two bodies you report to:

• OCR, which governs your company's legal standing, director records, shareholder structure, and annual return filings.
• IRD / Local IRO, which governs tax assessments, VAT, and income declarations.

Part 1: Corporate Compliance (OCR)

OCR compliance runs in sequence. Each step depends on the one before it.

Step 1: The Annual Audit

Before anything can be filed, your books need to be audited by a chartered accountant licensed by the Institute of Chartered Accountants of Nepal (ICAN). An auditor outside ICAN is not legally valid.

The auditor is typically appointed at the previous year's Annual General Meeting to audit the current year's accounts. Their work produces four documents: an Audited Balance Sheet, a Profit and Loss Account, a Cash Flow Statement, and the Auditor's Report. Everything that follows depends on these.

Step 2: The Annual General Meeting

Once the audit is done, the company holds its Annual General Meeting (AGM) under Section 76 of the Companies Act.

Public companies must hold the AGM within 6 months of the fiscal year end (by Poush end).

Private companies have more flexibility, but there is a common misunderstanding here. If your Articles of Association do not require a physical AGM, you can skip the meeting itself and pass written resolutions approving the financial statements instead. That is legitimate. But skipping the physical meeting does not extend your submission deadline. Audited financials still have to reach the OCR by Poush end, regardless of how the approval was done.

At the AGM, the company reviews the audited accounts, approves the director's report, decides on dividend distribution, and appoints the auditor for the coming year.

Step 3: Annual Return Filing

Within 30 days of the AGM, the company must submit its annual returns to the OCR through the CAMIS portal.

Documents required:

• Approved audited financial statements and auditor's report
• Director's report
• AGM attendance details (shareholders present in person, virtually, or by proxy)
• Minutes or written resolutions from the AGM

Filing fees are calculated based on authorized capital, starting around NPR 1,000 for smaller companies.

Part 2: Tax Compliance (IRD)

Tax filings run on a separate calendar and go to a different office.

Income Tax Return

Throughout the year, companies pay self-assessed installment taxes at three points: by Poush end, Chaitra end, and Ashad end. These are advance payments against your estimated tax liability.

The final income tax return is due within 3 months of the fiscal year end — Ashwin end.

If your audit is not ready in time, you can apply to your local Inland Revenue Office for an extension. A successful application gives you up to 3 additional months, pushing the final deadline to Poush end.

Monthly Filings: VAT and TDS

VAT returns must be filed and collected VAT deposited within 25 days of the end of each Nepali month.

Withholding Tax (TDS), that is deducted on salaries, rent, and service fees, must be deposited within 15 days of month end, along with a monthly TDS statement.

These deadlines run continuously throughout the year. They do not pause during audit season or around the AGM window.

Deadlines at a Glance

Two Misconceptions Worth Addressing

These come up often enough to deserve explicit treatment.

"Our AoA doesn't require an AGM, so the 6-month deadline doesn't apply to us"

Private companies without an AGM requirement can validly skip the physical meeting. The error is assuming the OCR submission deadline therefore doesn't apply. Section 80(b) of the Companies Act applies to every company. Audited financial statements must reach the OCR within 6 months of the fiscal year end. How the approval happened (physical meeting or written resolution) has no bearing on this deadline. Missing it triggers the same late fines as for any other company.

"We filed a tax extension, so we have more time for OCR filings too"

An IRD extension applies only to your income tax return filing with the IRD. It has no legal effect on OCR deadlines. These are separate regulatory tracks under separate government bodies and one does not defer to the other. A company can be fully current with the tax office while simultaneously accruing daily fines at the OCR for missing the Poush end return. If you are approaching Poush end and your audit is not ready, the options are to accelerate the audit or prepare for OCR penalties. A tax extension does not cover both.

What Happens If You Miss the Deadlines

OCR penalties: Late annual return filing attracts compound progressive daily fines based on authorized capital. Beyond the financial cost, extended non-compliance results in the company being marked "Non-Compliant" on the OCR register. Once that status applies, the company cannot transfer shares, update director information, or make other registrar-level changes. Prolonged non-compliance can eventually lead to administrative strike-off under Section 136 of the Companies Act.

IRD penalties: Late or unpaid income tax attracts interest at 15% per annum on the outstanding balance. Separate flat penalties apply for late submission of VAT returns and TDS statements, and these are calculated independently, so multiple missed monthly filings compound quickly.

Corporate compliance is not a single stressful week of paperwork at year end. It is a continuous monthly and annual cycle. Treat your audit as the first task of the new fiscal year in Shrawan, not a last-minute work before Poush. Keep the OCR and IRD tracks separated in your own planning because they do not communicate with each other, and the assumption that they do is where most compliance problems start.