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Nepal has 20% employer SSF (pension, medical, accident, gratuity), progressive income tax, mandatory festival allowances (Dashain and Tihar — 2 months' basic salary/year), and a cost-competitive Kathmandu tech talent pool. Rippling EOR handles SSF, IRD, and Nepal Labour Act compliance.
Nepal is a South Asian lower-middle-income economy with a growing IT outsourcing and software development sector in Kathmandu. Nepal's tech talent is well-educated, English-proficient, and highly cost-competitive for USD-paying employers. EOR is popular for US, UK, and Australian companies accessing Nepal's growing tech talent pool. The SSF employer contribution (20%) and festival allowances are the primary cost planning items.
Setting up a Nepali Pvt. Ltd. requires OCR registration, SSF/IRD/Department of Labour employer registration. EOR is recommended for 1–10 employees or where SSF multi-branch enrollment, festival allowance management, and Nepali-fiscal-year-aligned tax filing (mid-July to mid-July) are complexities.
SSF employee: 11% on gross salary (pension 10%, medical 0.5%, accident 0.3%, gratuity 0.2% — within SSF total). Income tax (PIT): progressive 1–36% withheld monthly; NPR 500,000 basic exemption (single), NPR 600,000 (couple).
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SSF employer: 20% on gross salary (pension 10%, medical 7%, accident 1%, gratuity 2%). Total SSF: 31% of gross. Festival allowances: budget 2 months' basic salary per year for Dashain and Tihar (near-universal market practice). Total effective employer on-cost approximately 30%+ of gross including festival allowances.
PIT progressive: 1% (up to NPR 600,000); 10% (600,001–800,000); 20% (800,001–1,100,000); 30% (1,100,001–2,000,000); 36% (above 2,000,000). Basic exemption: NPR 500,000 (single); NPR 600,000 (couple). Fiscal year mid-July to mid-July.
Annual leave: 18 working days per year (after 1 year). Sick leave: 15 days paid per year. Maternity: 14 weeks (98 days) at full salary. Public holidays: ~30+ days (Nepali calendar; varies by religion and festival).
Notice: 1 month. Retrenchment severance: 1 month's basic salary per year of service. Gratuity funded within SSF. Department of Labour notification for collective dismissals. Rippling EOR manages full termination process.
Non-Nepali nationals require work permits from the Department of Labour. Processing: 4–8 weeks. Rippling EOR supports permit applications through its Nepali entity.
Statutory: SSF 20% employer, 18 working days annual leave, 14 weeks maternity at full salary, 15 days sick leave paid. Festival allowances: Dashain and Tihar bonuses (2 months' basic salary/year — near-universal market standard). Kathmandu is the primary market.
Rippling EOR Nepal operates through a local Nepali entity. Key Nepal-specific handling: SSF employer contributions (20%), PIT withholding aligned to Nepali fiscal year, festival allowance management (Dashain and Tihar), and Labour Act termination calculations.
Nepal's SSF (Samajik Suraksha Kosh) replaced the old EPF and Gratuity Fund. Employer total: 20% (pension 10%, medical 7%, accident 1%, gratuity 2%). Employee: 11%. Total SSF: 31% of gross. Monthly contributions remitted to SSF. Annual SSF statements issued. Gratuity is funded within SSF (2% employer), so no separate gratuity liability exists — the SSF covers it.
Dashain and Tihar festival allowances are near-universal market practice in Nepal — equivalent to 1 month's basic salary each, paid during each festival season (typically October and November). Not all employers are legally required, but market expectation means non-payment leads to significant talent retention issues. Rippling EOR includes festival allowances in standard Nepali employment packages.
Nepal's fiscal year runs from mid-July (Shrawan 1) to mid-July of the following year (Ashadh end) — aligned with the Nepali calendar. Annual PIT returns are due after mid-July fiscal year end. Rippling EOR manages Nepal's fiscal year-aligned tax compliance.
Notice: 1 month. Severance (retrenchment): 1 month's basic salary per year of service. Gratuity is funded through SSF (2% employer/year). Department of Labour notification required for collective dismissals. Rippling EOR calculates full termination package.
