- office types under the Companies Act
- 2
- registration steps
- 6
- continuous presence that triggers registration
- 1 month
- to file audited accounts with OCR
- 6 months
Not every foreign company entering Nepal needs a new Nepali company. The Companies Act, 2063 (2006) contains a provision for foreign companies that operate through an office in Nepal; published guides point to section 154 for both branch and liaison offices. The two forms look similar on paper but carry very different permissions, tax consequences and risks.
What is the difference between a branch and a liaison office in Nepal?
Branch office. A branch is an extension of the foreign parent, not a separate legal person. It may carry on lawful business in Nepal of the kind the parent carries on, sign contracts, invoice customers and earn income. Its liabilities are the parent's liabilities.
Liaison office. A liaison office is a contact point. Published legal guides describe it as a channel for communication and coordination between the foreign company and local parties, for example helping local users import and use the parent's products without charging a fee, or coordinating with a Nepali agent the parent has appointed. It must not earn income, advertise or market, or enter into transaction contracts. It also has no separate legal personality.
What is not an office at all. Published guides note that merely holding shares in a Nepali company, or appointing an agent or distributor, does not by itself create a branch. If the foreign company instead carries on business through an office or a regular contact person in Nepal for a continuous period of one month or more, the Companies Act expects it to register. Operating unregistered is therefore a risk, not a neutral choice.
Choose on what the company will actually do in Nepal, not on which form is quicker to register. A liaison office used to run commercial operations is a compliance problem waiting to surface.
Which authority approves a branch or liaison office?
This is the point on which published sources disagree.
Some Nepali law-firm guides say both offices are registered with the Office of the Company Registrar (OCR) under the Companies Act, with a sector approval needed only where the activity is regulated (for example, an IT business needing approval from the relevant ministry), and no separate Department of Industry approval for a liaison office.
Other guides say the branch or liaison office needs prior approval from the Department of Industry (DOI) under the Foreign Investment and Technology Transfer Act, 2075 (FITTA) before OCR registration.
We have softened our earlier wording, which stated DOI approval as a fixed first step. Practice can vary by activity and sector, so confirm the current route with OCR and DOI before filing. Regulated sectors such as banking and insurance also need their own regulator's consent.
How do you register a branch office in Nepal?
The sequence below reflects published guides; the order of the first two steps depends on the point above.
Approval, where required. DOI approval under FITTA and/or the relevant sector regulator or ministry, with a description of the intended activities.
Registration with OCR. The application is filed with the foreign company's documents and a proposed plan for the office. One guide reports a typical timeline of roughly two to three weeks for a liaison office and longer for a branch if government approval is delayed; treat any such timeline as indicative only.
Tax registration. The office obtains a PAN from the Inland Revenue Department and, for a branch whose activity is subject to VAT, VAT registration.
Local ward registration. The business is registered with the local ward office once premises are secured.
Bank account. A local account is opened for operating funds.
Foreign exchange records. Funds brought in from the parent should come through banking channels so they can be evidenced later. Confirm with your bank and Nepal Rastra Bank (NRB) what documentation they require for inward funding of an office.
What documents are required?
Certificate of incorporation, memorandum and articles of the parent, with Nepali translation, notarized.
Board resolution approving the office.
Passport copies of the directors, notarized.
Appointment letter and citizenship certificate of a Nepali representative authorized to receive notices.
Power of attorney.
A proposed plan for the office. For a liaison office this plan defines the boundary of what it may do, so write it carefully.
A signed company profile and a director's declaration that the information is correct.
Any government approval letter or agreement with a Nepali authority, where applicable.
Parent financial statements are commonly asked for, particularly in DOI-route applications. Authentication requirements for foreign documents vary, so ask the authority what it will accept.
Is there a minimum capital or fee?
The Companies Act sets no minimum capital for a branch or liaison office; the parent funds the office according to its expected costs. OCR charges a registration fee that varies by office type and, for a branch, by the stated investment amount. We could not confirm a reliable current figure from a primary source, so ask OCR for the fee schedule that applies to your filing rather than relying on a number quoted in a secondary guide.
How is a branch or liaison office taxed?
Branch. A branch earning income in Nepal is taxable under the Income Tax Act, 2058. Tax explainers from Nepali law firms put the corporate rate for a permanent establishment at 25 percent, with a further 5 percent tax on profit remitted to the head office, treated as final. We could not verify these rates against the current statute, and rates for particular sectors differ, so confirm them with the Inland Revenue Department or a tax adviser before modelling cash flows. The branch must also operate VAT and withholding tax where they apply, and keep full accounts.
Liaison office. With no income, tax exposure is minimal, but it must still hold a PAN and comply with tax law, including withholding on payments it makes locally, such as rent and salaries. If its real activity drifts into earning, IRD can assess it on substance rather than the label on its registration.
Foreign company without an office. The permanent-establishment concept in the Income Tax Act can apply even where no office is registered; published summaries refer to a 90-day threshold for service and construction activity within a 12-month period. A foreign company sending staff to Nepal should have its position reviewed rather than assume that no office means no Nepal tax.
Can a branch send profit to its head office?
A branch cannot freely send profit abroad. Published guides describe a process of tax clearance, audited financial statements and approval through the foreign exchange framework administered by Nepal Rastra Bank. Reports of a 2024 NRB revision describe a simpler self-declaration route for entities that are not under a sector regulator, but NRB should confirm the details. A liaison office has no profit to repatriate; its funding flows one way, from the parent to cover costs.
What are the annual obligations?
Audited financial statements. Published guides state that audited statements must be filed with OCR within six months of the fiscal year end and sent to the head office within three months of their preparation. An auditor must be appointed.
Initial compliance document. A guide mentions a compliance document to be submitted to OCR within three months of registration; check what OCR expects in your case.
Changes. Update OCR if the parent's name or address changes.
Other laws. Labour, social security, PAN, VAT and withholding returns apply as for any local business.
Closure
The guides we reviewed give no stand-alone closure procedure, so we do not state one. In practice, closing an office means settling tax and employee obligations, obtaining tax clearance, and notifying OCR and any approving authority. Plan the exit with the authorities before you open; non-compliance can lead to cancellation of registration.
Branch, liaison office or subsidiary: which should you choose?
A subsidiary is a separate Nepali company with its own liability shield and FITTA approval for foreign shareholding. A branch is simpler to establish but exposes the parent to Nepal liabilities. A liaison office is the lightest form but cannot trade. If the plan is to sell, hire at scale or bid for contracts, a subsidiary is often the cleaner structure; if it is to explore the market first, a liaison office may do, provided it stays inside its mandate.
Frequently asked questions
Can a liaison office in Nepal earn income?
No. A liaison office is a contact point only. It must not earn income, advertise or enter into commercial contracts; doing so can lead to reassessment by IRD and cancellation of registration.
Does a branch office need a minimum capital in Nepal?
The Companies Act sets no minimum capital for a branch or liaison office. The OCR fee for a branch is reported to scale with the stated investment amount, so confirm the current schedule with OCR.
Does a foreign company need to register if it only has an agent or distributor in Nepal?
Published guides say appointing an agent or distributor, or holding shares in a Nepali company, does not by itself create a branch. A continuous office or regular contact person in Nepal for one month or more is what triggers registration.
Is a branch or a subsidiary better for a foreign investor?
A branch is simpler to set up but exposes the parent to Nepal liabilities. A subsidiary is a separate company with its own liability shield and needs FITTA approval. For selling, hiring at scale or bidding for contracts, a subsidiary is often cleaner. See our FDI approval guide for that route.
Our team of chartered accountants can compare the three structures for your plan, support the PAN, VAT and annual filings, and help you prepare repatriation. See our FDI services in Nepal and company registration support, or talk to us before any application is filed.
*Prepared from published sources, October 2026. General guidance only; confirm against the current text of the law and with the relevant authority.*
