Every company and most businesses operating in Nepal need a Permanent Account Number (PAN), and those above the turnover threshold also need to register for Value Added Tax (VAT). Getting both right from the start is straightforward, but the details matter: a company's PAN is issued quickly at incorporation, while VAT registration and the separate registration of each branch are steps first-time founders routinely miss.
What is a PAN in Nepal?
The PAN, issued by the Inland Revenue Department (IRD), is the tax identification number for individuals and businesses in Nepal. Companies must obtain a PAN as part of the post-incorporation steps, typically within a short window of the certificate of incorporation. Salaried employees, landlords and self-employed professionals also hold personal PANs for withholding and filing purposes, so the number follows the person or entity, not the business name.
What is VAT registration?
VAT applies to businesses whose taxable turnover reaches the legal threshold, and registration happens at the Inland Revenue Office. Once registered, the business charges VAT on its sales, claims input VAT on its purchases, and files periodic returns. Businesses below the threshold can still apply for voluntary registration, which many B2B suppliers do because it lets customers claim input credit on their invoices.
Documents you will need
- Certificate of incorporation (for companies) or registration certificate for other entities
- Memorandum and articles of association, where applicable
- Details of the business premises, including the address and rental or ownership documentation
- Identification of the authorised representatives and directors
- Bank account details of the business
Registration steps for a new company
- Incorporate the company with the Office of the Company Registrar.
- Apply for the PAN with the Inland Revenue Office soon after incorporation.
- Register for VAT once your turnover will cross the threshold, or apply voluntarily.
- Register each branch or permanent establishment separately, where applicable.
- Bookkeep the PAN and VAT numbers into invoices, contracts and accounts from day one.
Consequences of late registration
Operating without a PAN where one is required attracts penalties, and the same applies to VAT. Late VAT registration also means the business cannot issue valid VAT invoices for the period before registration, which complicates customer billing and input claims. Because the tax obligations of a company run from incorporation even before revenue begins, an early tax registration saves money and administrative headache later. Our guide to setting up a company in Nepal covers where these steps sit in the overall process.
Annual tax compliance after registration
With PAN and VAT in place, the ongoing obligations begin: monthly or periodic VAT returns, social security contributions if you have employees, and the annual corporate income tax return with the audited financial statements. Missing a filing date accrues fines quickly and invites scrutiny, so most businesses keep a compliance calendar from the start. Our PAN and VAT registration service and annual compliance support are designed around exactly these obligations.
How we can help
We handle PAN and VAT registration for companies, branches and foreign-invested entities, and support the ongoing filing and compliance that keeps a business in good standing with the Inland Revenue Department. Explore our tax and regulatory compliance services or contact our tax team.