Ride sharing has become one of the fastest-growing transportation services in Nepal, especially in urban areas like Kathmandu and Pokhara. With the rise of mobile apps connecting drivers and passengers, many entrepreneurs and investors are now looking to register a ride sharing company in Nepal. However, the legal framework is not as straightforward as in other industries.
What is Ride Sharing Business?
Ride sharing is a modern form of passenger transport where people use mobile applications to book rides with registered drivers. Instead of using traditional taxis, private vehicle owners provide rides through apps and earn money per trip. This business is essentially a digital platform that connects riders and drivers. The company develops and manages the app, facilitates payments, and charges a commission on each ride. Drivers usually use their private vehicles, while the company ensures compliance with provincial laws and safety requirements.
Popular examples of ride sharing models worldwide include Uber, Lyft, and Grab. In Nepal, similar apps have emerged, catering to both local commuters and tourists like Pathao, Indrive, Yango, etc.
Governing Laws
Currently, Nepal does not have a single federal law specifically for ride sharing. Instead, both federal laws and provincial laws regulate different aspects of the industry.
Federal Laws
- Motor Vehicles and Transportation Management Act, 1993 – Prohibits private vehicles from being used for passenger transport.
- Motor Vehicles and Transport Management Regulation, 1997 – Allows suspension of vehicle registration if a private vehicle is used for public transport.
- Industrial Enterprises Act, 2020 – Classifies ride sharing as a service industry, making it eligible for business registration.
- Foreign Investment and Technology Transfer Act, 2019 – Permits up to 70% foreign ownership in this businesses.
Provincial Laws
- Bagmati Province Motor Vehicles and Transportation Management Act, 2019 – Allows private vehicles to carry passengers after following prescribed procedures and securing insurance.
- Gandaki Province Vehicle and Transportation Management Act, 2019 – Contains similar provisions as Bagmati.
- Gandaki Province Vehicle and Transportation Management Regulation, 2024 – Authorizes provincial rules for ride sharing.
- Gandaki Province Ride Sharing Management Regulation, 2025 – Specifically requires ride sharing companies to register in Gandaki Province and allows both private and public vehicles to be used.
Note: While federal law restricts private vehicles for passenger use, Bagmati and Gandaki provinces have made legal exceptions that recognize and regulate ride sharing services.
Who Regulates Ride Sharing in Nepal?
The following authorities play a role in regulating this business:
- Office of the Company Registrar (OCR) – Company incorporation.
- Inland Revenue Department (IRD) – Tax and VAT/PAN registration.
- Department of Industry (DOI) – Industry classification under service sector.
- Ministry of Labour, Employment, and Transport (Bagmati Province) – Provincial oversight.
- Ministry of Physical Infrastructure Development and Transportation Management (Gandaki Province) – Licensing authority.
- Local Government (Ward Office) – Local business registration.
How to Register a Ride Sharing Business in Nepal
Registering a ride sharing company in Nepal is a multi-stage process. Below is a simplified step-by-step guide.
Step 1: Register Your Company (OCR)
- Reserve your company name.
- Draft and sign the MOA and AOA.
- Submit scanned copies along with founder’s National ID, notarized witness documents, and application to OCR.
Step 2: Tax Registration (IRD)
- Apply for PAN or VAT at IRD Nepal.
- Required documents include:
- Company Registration Certificate.
- MOA and AOA.
- PAN/VAT reservation certificate.
- Citizenship documents of founders.
- Rent agreement and land ownership certificate.
- Company seal.
- Note: In Gandaki Province, VAT registration is mandatory for ride sharing companies.
Step 3: Local Level Business Registration
- Register your business at the ward office.
- Submit:
- Business registration form.
- OCR documents (MOA, AOA, certificate).
- Rent agreement, landowner’s citizenship, property tax receipt.
- PAN certificate.
- Passport-size photos of founders.
- Passport (if foreign shareholders are involved).
Step 4: Industry Registration (DOI)
- It is classified as a service industry.
- Submit:
- Application form (Schedule 1).
- Citizenship or passport.
- Company registration documents.
- Industry location map.
- Power of attorney.
- FDI approval letter (if applicable).
- Recommendation from local authority.
Step 5: Obtain License
- Bagmati Province: No clear licensing process yet.
- Gandaki Province: Regulated under the Ride Sharing Regulation, 2025. Required documents include:
- Company registration documents.
- VAT registration certificate.
- Company resolution/minute.
- Vehicle fitness certificates.
- List of vehicles and drivers.
- Vehicle tax receipts and renewal documents.
FAQs on Ride Sharing in Nepal
1. Is ride sharing legal in Nepal?
Yes, it is legal in Nepal, but the rules differ between provinces. Federal law restricts private vehicles from being used for passenger transport, but Bagmati and Gandaki provinces allow ride sharing if proper registration and licensing are completed.
2. Can private vehicles be used for ride sharing in Nepal?
Yes, in Bagmati and Gandaki provinces, private vehicles can be used for ride sharing services after completing registration, securing passenger insurance, and meeting regulatory requirements.
3. How can I register a ride sharing company in Nepal?
You must follow a multi-step process that includes company registration (OCR), tax registration (IRD), local business registration, industry registration (DOI), and obtaining a provincial license (in provinces like Gandaki).
4. Can foreigners invest in ride sharing businesses in Nepal?
Yes, foreigners can invest up to 70% in a ride sharing company under the Foreign Investment and Technology Transfer Act, 2019.
5. Is ride sharing available in Kathmandu and Pokhara?
Yes, ride sharing services are already operating in Kathmandu and Pokhara. Bagmati and Gandaki provinces have introduced specific laws to regulate these services.
6. Do I need VAT registration for a ride sharing company?
Yes, especially in Gandaki Province, VAT registration is mandatory for obtaining a ride sharing license.
7. What documents are needed for registration in Nepal?
Key documents include: company registration certificate, MOA and AOA, VAT/PAN certificate, vehicle fitness certificates, insurance, and tax clearance receipts.
Conclusion
Ride sharing business in Nepal is growing rapidly, but the legal framework is still evolving. Federal law remains restrictive, while provinces like Bagmati and Gandaki have taken proactive steps to regulate and support such services.
If you want to start a such company in Nepal, you must:
- Incorporate the company.
- Register for PAN/VAT.
- Register at the local level.
- Register the industry at DOI.
- Obtain a provincial ride license.
As demand for digital mobility increases, clearer nationwide laws are expected in the future. Until then, compliance with provincial regulations is key to running a successful and legal ride sharing business in Nepal.