Business Registration Certificate vs PAN vs VAT: Which Comes First in Nepal?
New entrepreneurs in Nepal often ask the same question in slightly different words: do I need a PAN before I register my company, or after? Do I need VAT from day one? The confusion is understandable, since these three registrations are handled by different authorities and serve different purposes — but they follow a specific, logical sequence, and getting the order wrong is one of the most common (and most avoidable) causes of delay for first-time founders.
Step-by-Step Correct Sequence
The dependency chain runs in one direction — each step requires the previous one to be complete:
Step 1: Company Registration at OCR
Everything starts with incorporating your legal entity at the Office of the Company Registrar (OCR), now handled through the digital CAMIS portal (camis.ocr.gov.np) under the Companies Act 2063. This involves name reservation, drafting the Memorandum and Articles of Association, submitting promoter documentation, and paying registration fees that scale with your authorised capital. With clean documentation and no queries from OCR, this typically takes 7 to 14 working days; complex structures (foreign direct investment, multiple corporate shareholders, larger authorised capital) can stretch to 3–4 weeks.
Step 2: PAN Registration at IRD
Only once you hold your Certificate of Incorporation can you register for a Permanent Account Number (PAN) with the Inland Revenue Department. PAN is mandatory for every company, regardless of size or sector — you cannot open a corporate bank account, issue a proper invoice, or legally hire staff without it. This step is comparatively fast, typically 1 to 3 working days, but it's a hard dependency: PAN registration in Nepal requires your company registration details, so attempting it before incorporation isn't possible.
Step 3: VAT Registration at IRD (If Required)
VAT registration is conditional, not automatic. It becomes mandatory once your actual or projected annual turnover crosses the applicable threshold — commonly cited as NPR 50 lakh for goods-based businesses and NPR 30 lakh for services or mixed businesses (some sources reference a services threshold around NPR 20–30 lakh depending on the specific update year, so confirm the current figure with IRD or a CA). Voluntary early registration is also allowed even below the threshold, and some businesses choose this specifically to claim input VAT credit on their expenses. VAT registration typically takes 3 to 7 working days once documentation is complete, and may involve a physical or documentary inspection step.
Why Order Matters for Compliance
This isn't just bureaucratic sequencing for its own sake — each registration genuinely depends on data and legal status established by the one before it:
- PAN registration requires proof of incorporation — the company registration certificate and details are part of what IRD verifies when issuing a PAN, so there's no valid path to registering PAN first.
- VAT registration requires an active PAN — VAT is essentially layered on top of your existing PAN record at IRD, not a separate, independent registration.
- Banking, invoicing, and hiring all cascade from PAN — a corporate bank account generally requires both your company registration certificate and PAN, meaning skipping ahead or trying to operate before PAN is issued creates practical business obstacles well beyond just tax compliance.
- Post-incorporation deadlines are already tight — the Companies Act 2063 requires steps like filing shareholder details ("Share Lagat") within 90 days of registration, and delays in PAN registration can stall this entire downstream compliance timeline, sometimes triggering compounding fines.
Typical Timeline for Each Step
| Step | Authority | Typical Timeline |
|---|---|---|
| 1. Company Registration | OCR (CAMIS portal) | 7–14 working days (up to 3–4 weeks for complex cases) |
| 2. PAN Registration | Inland Revenue Department | 1–3 working days |
| 3. VAT Registration | Inland Revenue Department | 3–7 working days (if required or chosen) |
For a straightforward local private limited company with clean documentation, the realistic total from starting incorporation to holding both PAN and (if needed) VAT can be roughly two to three weeks — though this varies with document readiness, whether foreign investment is involved, and IRD processing volume at the time.
Frequently Asked Questions
Can you get PAN before completing company registration?
No — for a registered company, PAN registration requires the completed Certificate of Incorporation from OCR as part of the application. The sequence is fixed: company registration must be finalised first. (Individual freelancers and sole proprietors who aren't forming a company have a somewhat different, simpler path to PAN that doesn't route through OCR company registration in the same way — but for anyone incorporating a Private Limited or similar company structure, incorporation comes first.)
Is VAT registration mandatory for every new company?
No — VAT registration depends on your turnover crossing the applicable threshold for your business type (goods vs services vs mixed), or on your own voluntary choice to register early to claim input credits. Many small companies operate for a period on PAN alone before VAT becomes mandatory.
What happens if I delay PAN registration after incorporating?
Delays in PAN registration can stall your entire post-incorporation compliance timeline, since banking, invoicing, hiring, and other statutory deadlines (like the 90-day shareholder filing requirement) often depend on having an active PAN in place. It's best treated as an immediate next step rather than something to defer.
Do sole proprietorships and partnerships follow the same sequence?
The general logic — legal registration first, then PAN, then VAT if applicable — still applies, though sole proprietorships typically register at the local ward office rather than through OCR's CAMIS portal, which is generally a faster process than full company incorporation. The PAN-then-VAT sequence at IRD remains the same regardless of entity type.
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