A surprising number of inactive companies in Nepal aren't formally closed — they're just not operating, while PAN, VAT, and OCR obligations quietly continue to accrue penalties in the background. Closing a company properly is a distinct process, not something that happens automatically when you stop trading.
Why "just stopping" doesn't work
Registration, PAN, and VAT don't expire on their own. A company that stops operating without formal deregistration is still expected to file annual returns and compliance documents — and the fees, late filing penalties, and interest on unfiled returns accumulate whether or not the business is actually running.
The general sequence
Closure typically starts with settling final tax obligations and obtaining tax clearance, followed by closing VAT registration if applicable, then filing final financial statements, and finally submitting the closure application to OCR with a board resolution or the proprietor's formal decision to dissolve.
Tax clearance comes first, not last
You can't close a company with outstanding tax dues or unfiled returns — tax clearance is effectively a prerequisite for the rest of the closure process, which is why founders who've let filings lapse often discover they need to catch up before they can close, rather than closing to escape the backlog.
VAT and PAN closure are separate steps
Closing your company registration at OCR doesn't automatically close your VAT or PAN registration — each needs its own deregistration application. Skipping this is how a "closed" company ends up with an active PAN still technically expected to file.
What it actually takes
Company registration and PAN/VAT certificates, final financial statements, a board resolution or proprietor's closure decision, and confirmation of tax clearance. The specific sequence and documentation depend on your entity type and whether any liabilities remain outstanding.
Why this is worth doing properly
An improperly closed company can leave a director or proprietor personally exposed to accumulating penalties years later — precisely the scenario the recent tax amnesty schemes have been designed to help people escape. Closing correctly the first time avoids ever needing that kind of relief.
