Nepal has been known for and its economy is also reliant on hospitality and mountain expeditions. Nepal has quite a virtuous geographical scenario consisting of lakes, gorges, rivers, and most of the tallest mountains in the world, including, but not limited to Mount Everest. Putting such a scenario into use, Nepal has been conducting various campaigns for the increment of tourism within Nepal, which relates directly and is proportional to the development of travel and tourism along with hospitality-oriented industries in Nepal.
Regardless of the increasing numbers of hotel businesses including foreign and domestic, what does it take to incorporate or register such hospitality-oriented businesses in Nepal?
The registration starts with a private limited company (for small-scale businesses, registration at the Small and Cottage Industries Office). However, it does not end there. The business persons interested in such business should be aware of the capital structure, environmental impact, star rating, hotel license, association memberships, et cetera, to be obtained from the local government, the federal government, and associations.
In the case of a travel agency or trekking agency, the regulatory authority is the tourism board. The business must be registered in the Department of Industries. Following this process, a certain deposit is to be made for the issuance of the license. The amount of deposit for obtaining a license for trekking agency and travel agency varies. Obtaining a Permanent Account Number (PAN) either with or without Value Added Tax (VAT) could be done parallelly following registration of business at the ward office of such business being registered. House Lease/Rent Agreement must be finalized beforehand for registration of business at Ward Office and obtaining Permanent Account Number.
Whereas, opening a hotel, resort, restaurant or any other hospitality-oriented business is also a simple process if you happen to know the procedures relating to it. This also includes the incorporation of an entity either through the Department of Industries (DOI) or the Office of Company Registrar (OCR).
After the incorporation of the company, one must register the same entity as a business in the related Ward Office before having it registered at the tax office for obtaining Permanent Account Number. The entity has to be registered at the Department of Industries in accordance with the capacity of the hotel and register as an industry by providing the Department with information about the hotel such as its financials, bed capacity, and human resources. If required, the hotels must also take environment examination approval from the DOI based on the bed capacity and location where the hotel is intended to be established.
The Tourism Department has set out certain guidelines for the rating of the resort or hotel as a star hotel. We must fulfill such criteria and apply at the Department for getting tagged as a star hotel or a luxury resort. Also, approvals regarding casinos are also to be granted by the Department.
Foreign investment in hotels is allowed, however, the Foreign Investment and Technology Transfer Act, 2019 restricts approval in the rural tourism sector and trekking agencies. Foreign investors must take prior approval from the Department of Industries prior to registration of the company. Please click here to learn more about foreign investment.
A.H.N. Legal is an excellent long-term partner for accessing your needs and providing you with day-to-day information regarding your hospitality business such as Hotels, Resorts, Cafés, Restaurants, Travel Agencies, Trekking Agencies, Casinos, et al.
THIS WRITE-UP SHOULD NOT BE CONSIDERED AS A LEGAL OPINION OR EXPERT OPINION. THIS HAS BEEN WRITTEN FOR DISBURSING BASIC MINIMAL KNOWLEDGE TO THE CURIOUS BUSINESS PERSONNEL AND ENTREPRENEURS.
If you have any queries relating to this writeup, please consult:
Riwaj Sharma Acharya
Partner
A.H.N. Legal
Phone Number: +9779851080791
Email Address: riwaj@ahnlegal.com