Once confined largely to the IT and consulting sectors, remote work in Nepal surged during the Covid-19 pandemic as office closures worldwide forced companies to adapt. Advances in information technology have accelerated this shift, with many firms now operating entirely remotely, even if legally based in specific locations.

A growing number of young professionals have embraced this trend in Nepal, landing full-time remote jobs with foreign companies. However, Nepal’s labor laws have not kept pace, creating complications for workers attempting to legally repatriate their earnings. With no formal recognition of remote work, many are compelled to route their salaries through informal channels or treat them as remittances.

A report by the High-Level Economic Reform Advisory Commission states that Nepal’s existing Labor Act does not account for remote employment. It identifies three types of remote workers: regular remote employees, digital nomads and independent professionals. The first are full-time staff working outside traditional office settings. Digital nomads, by contrast, work while traveling, often from scenic locations. Independent professionals typically run their own internet-based businesses without being tied to a single employer.

The idea of digital nomadism gained prominence after the 1997 publication of Digital Nomad by Sujio Makimoto and David Manners, which envisioned a world where people could work from anywhere thanks to technology. Today, an estimated 40 million digital nomads are active worldwide—most between the ages of 30 and 39. Many countries, recognizing the economic benefits, now offer special visas to attract these skilled workers.

Nepal has significant potential to become a destination for remote workers and digital nomads. A supportive policy framework could increase foreign currency inflows, retain skilled professionals, extend tourists stays and foster entrepreneurship among local youth. It could also attract investment from multinational companies in Nepal’s growing knowledge economy.

However, the concept is not free from challenges. Niraj Bhusal, who earned a Master’s in Information and Communication Engineering from China’s Huazhong University of Science and Technology in 2023, points to weak internet and transportation infrastructure, along with the lack of legal recognition for digital nomads, as major barriers. Now working as a computer operator at the Ministry of Finance, Bhusal added that while the 5G technology could help address connectivity issues, a legal framework recognizing remote work is essential for enabling visas, taxation and other services for digital professionals.

Nepal has several natural advantages as a remote work destination. According to the Khanal commission’s report, Nepal’s beautiful landscapes, favorable climate, low cost of living, skilled workforce and expanding reliable electricity supply make it an attractive choice. However, significant investments in IT infrastructure, especially in ensuring reliable internet connectivity, are urgently needed to capitalize on these advantages.

Globally, many countries have introduced targeted policies to attract remote workers and digital nomads. Estonia’s e-Residency program, launched in 2014, allows entrepreneurs worldwide to open and manage companies remotely without ever setting foot in the country. Since its launch, more than 120,000 e-residents from over 170 countries have registered 33,000 businesses, collectively generating an annual turnover exceeding 15 billion euros. Similarly, Georgia’s Work from Georgia program offers simplified tax structures, streamlined banking facilities and digital nomad visas. Applicants must show a monthly income of at least $2,000 or savings of $24,000 and enjoy a flat 1% income tax if their annual earnings remain below $155,000.

Successful programs typically offer long-term, multiple-entry digital nomad visas, ease of fund transfers, minimum income thresholds, mandatory health insurance, access to public services and favorable tax treatment. Some even go further, allowing digital nomads to purchase property or register vehicles, recognizing the long-term economic contributions these individuals can make.

In a broader context, global instability has accelerated the remote work movement. Political conflicts, such as the Russia-Ukraine war, have prompted skilled workers to seek more stable environments, with destinations like Dubai witnessing a sharp influx. At the same time, companies benefit from hiring remote talent in lower-cost countries which reduces salary pressures and improves service delivery across time zones.

To position Nepal competitively in this emerging global landscape, the Khanal commission has proposed a set of comprehensive reforms. These include formally recognizing remote work under the Labor Act and enabling online registration through a platform similar to India’s e-Shram portal. It has also recommended allowing Nepali citizens and Non-Resident Nepalis (NRNs) to work remotely for foreign employers, open convertible currency bank accounts, and contribute to Nepal’s Social Security Fund. It has proposed levying a flat 5% income tax on remote earnings to simplify compliance, and allowing NRNs to repatriate earnings without prior approval.

For foreign digital nomads, the commission has recommended introducing a five-year multiple-entry visa based on proof of monthly income or savings, combined with mandatory health insurance. These nomads would be allowed to open convertible currency accounts, repatriate surplus earnings and purchase vehicles. The proposed 5% income tax would apply only if their stay in Nepal exceeds 183 consecutive days in a calendar year. To support this vision, the commission has emphasized the need for robust digital infrastructure and co-working spaces in key urban centers such as Kathmandu, Bharatpur, Pokhara and Lumbini. It has suggested encouraging the private sector to participate in building the necessary infrastructure to make Nepal remote work-ready.

(This article was originally published in  May 2025  issue of New Business Age Magazine.)