A branch office allows a foreign company to carry out business activities in Nepal without forming a separate Nepali company. It functions as an extension of the parent company, operating under the same name, ownership, and management structure.
Setting up a branch office in Nepal requires approval from a concerned ministry, registration with the Office of the Company Registrar, tax registration, and compliance with local laws.
This guide explains the branch office registration process in Nepal in simple terms, based on the Companies Act, 2063, the Foreign Investment and Technology Transfer Act, 2075 (FITTA), and related government procedures.
1. What Is a Branch Office Under Nepalese Law?
A branch office is an office established by a foreign company at a place different from its head office, to carry out business activities on behalf of the parent company in Nepal. It is not a separate legal entity. The branch operates under the name, ownership, and overall responsibility of its parent company incorporated abroad.
A branch office can perform activities such as sales, marketing, project execution, or coordination, depending on what the parent company and the concerned Nepali authorities permit. While the branch may have its own staff and daily operations in Nepal, all major decisions, liabilities, and legal responsibilities ultimately remain with the foreign parent company.
This is different from a liaison office, which can only carry out non-commercial coordination activities and cannot enter into contracts or generate revenue in Nepal.
KEY INFORMATION
- A branch office of a foreign company can be incorporated without the approval of the relevant ministry or department if government contracts don’t exist.
- A branch office can also obtain virtual office addresses to operate in Nepal.
- They cannot issue work or business visas, unless government contracts allow so.
- Profit-making activities can be conducted and repatriated by obtaining approval from the local bank via NRB.
- 25% Corporate Tax on Profits is applicable
- The Branch Office cannot usually obtain an Import-Export License or engage in activities related to importing, exporting, and trading for profit purposes.
- The application filed via engagement with Axion Partners (once accepted by the firm), is approved.
1.1. Why Do Foreign Companies Register a Branch Office in Nepal?
Branch office registration gives a foreign company legal recognition to operate in Nepal. Without registration, a foreign company cannot lawfully enter into contracts, open a bank account, hire employees, or pay taxes in Nepal.
Registration under the Companies Act, 2063 and the Foreign Investment and Technology Transfer Act, 2075 allows the branch to:
- Enter into commercial contracts in its own name
- Open and operate a bank account with a commercial bank in Nepal
- Hire local employees and consultants
- Register for tax purposes and pay applicable taxes
- Conduct the specific business activities approved by the concerned ministry
Foreign companies commonly set up a branch office in Nepal when they are awarded a specific project, such as a government contract, an infrastructure project, or a technical assistance program, rather than establishing an entirely new Nepali company.
2. What Is the Step-by-Step Process for Branch Office Registration in Nepal?
Branch Office Registration Process in Nepal involves several sequential steps. Each step must generally be completed before proceeding to the next.
Step 1: Obtain Approval Letter from the Concerned Ministry
The foreign company must submit an application to the ministry concerned with the branch office’s proposed business activities. The application should include details of the branch’s intended activities, the proposed capital investment, and background information about the parent company.
The ministry reviews the application, may request additional clarification or documents, and if satisfied, issues an approval letter permitting the establishment of the branch office. The relevant ministry depends on the sector of activity, as shown in the table below.
Note: The above requirement isn’t mandatory.
Step 2: Register the Branch Office with the Office of the Company Registrar
Once the ministry approval letter is obtained, the company must apply for registration with the OCR. This application includes the ministry approval letter along with the notarized and translated constitutional documents of the parent company. The OCR reviews the submitted documents and, if all requirements are satisfied, issues a branch office registration certificate.
Step 3: Register with the Inland Revenue Office for PAN and, If Applicable, VAT
After obtaining the registration certificate from the OCR, the branch office must apply for a Permanent Account Number (PAN) with the concerned Inland Revenue Office. PAN registration is mandatory for every branch office to meet its tax obligations under the Income Tax Act, 2058.
If the branch’s expected annual turnover exceeds the threshold applicable to VAT registration (NPR 30,00,000/- for Branch Offices), the branch must also register for Value Added Tax. At least one authorized representative or shareholder is generally required to be physically present for biometric registration.
Step 4: Register with the Local Ward Office
Following tax registration, the branch office must register with the local ward office where its business premises are located. This step confirms the branch’s local presence and is generally required for local-level business operation.
Step 5: Open a Bank Account with a Commercial Bank
The final step is opening a bank account with a commercial bank in Nepal. This account is used for all official transactions of the branch office, including receiving investment funds, paying employees, and settling tax liabilities. Banks conduct their own know-your-customer verification, which may be completed physically or, for shareholders residing abroad, through video conferencing.
3. Which Ministries Are Concerned With Branch Office Activities?
The concerned ministry depends on the sector in which the branch office intends to operate. Some common categories are listed below.
| Business Activity | Concerned Ministry |
|---|---|
| Research, education, and skill development | Ministry of Education, Science and Technology |
| Hydropower and renewable energy projects | Ministry of Energy, Water Resources and Irrigation |
| ICT, software, and digital governance projects | Ministry of Communication and Information Technology |
| Healthcare, sanitation, and medical research | Ministry of Health and Population |
| Tourism, culture, and civil aviation | Ministry of Culture, Tourism and Civil Aviation |
| Industrial development and trade facilitation | Ministry of Industry, Commerce and Supplies |
| Environmental protection and forestry | Ministry of Forest and Environment |
4. What Documents Are Required for Branch Office Registration?
The documentation required at each stage of registration can vary slightly depending on the nature of the branch’s activities, but generally includes the following:
- Approval letter issued by the concerned ministry
- Notarized and translated Memorandum of Association and Articles of Association of the parent company
- Registration certificate of the parent company issued in its home country
- Application from the promoters or founders of the parent company
- Project report describing the intended business activities in Nepal
- Power of attorney authorizing a representative in Nepal to act on behalf of the company
- Passport copy of the promoter
- Contract letter, if the branch is established to execute a government-awarded project
- Details of the registered office, capital structure, and business objectives of the parent company
- Names, addresses, and citizenship or passport details of directors, managers, and key officials
- Name and address of the authorized representative based in Nepal
For tax registration at the Inland Revenue Office, additional documents are needed, including board minutes authorizing tax registration, the rent agreement for the branch’s business premises, and the property owner’s citizenship or land ownership documents.
5. What Is the Government Fee for Branch Office Registration in Nepal?
The government fee for registering a branch office in Nepal with the Office of the Company Registrar is calculated based on the amount of investment made by the foreign company. The applicable fee structure is as follows:
| Investment Amount (NPR) | Government Fee (NPR) |
|---|---|
| Up to 1,00,00,000 | 15,000 |
| 1,00,00,001 to 10,00,00,000 | 40,000 |
| 10,00,00,001 to 20,00,00,000 | 70,000 |
| 20,00,00,001 to 30,00,00,000 | 1,00,000 |
| 30,00,00,001 to 40,00,00,000 | 1,30,000 |
| 40,00,00,001 to 50,00,00,000 | 1,60,000 |
| More than 50,00,00,000 | Additional fee at the rate of NPR 3,000 per NPR 10 million |
6. What Is the Timeline for Registering a Branch Office in Nepal?
The overall timeline for branch office registration largely depends on how quickly the concerned ministry issues its approval letter, since this is a precondition for all subsequent steps. Axion Partners provides a 10-14 Days Timeline for Incorporating a Branch Office.
| Step | Estimated Timeline |
|---|---|
| Ministry approval letter (Optional) | Usually within a month, depending on the nature of the project |
| Registration at the OCR | Around 2 to 7 working days |
| PAN or VAT registration at the Inland Revenue Office | Around 1 to 2 days |
| Registration at the local ward office | Around 1 to 2 days |
| Opening a bank account | Around 1 to 5 days |
Once ministry approval is granted, the remaining registration steps can typically be completed within a week, based on standard processing practice.
7. What Are the Annual Compliance Requirements for a Branch Office in Nepal?
A branch office registered in Nepal is subject to ongoing compliance obligations under the Companies Act, 2063, similar in many respects to a domestically incorporated company.
7.1. Maintaining Annual Accounts
The branch office must prepare an audit report, obtain a tax clearance letter, and acquire a company update letter from the OCR each year. These documents must be submitted to the OCR within six months after the end of the financial year.
7.2. Submission of Parent Company Reports
Where required, the branch office must also submit a copy of its parent company’s annual financial statement, audit report, and board of directors’ report, prepared according to the law of the parent company’s home country. This submission must be made to the OCR no later than three months after such documents are finalized abroad.
READ: FDI COMPANY REGISTRATION PROCESS IN NEPAL
7.3. Language Requirement
If any submitted financial document is not in Nepali or English, an authenticated translation into either language must accompany the original document.
7.4. Specific Compliance for Liaison Offices
Where a foreign company maintains only a liaison office rather than a branch office, it must submit an auditor-certified statement covering staff salaries and allowances, rent and operating expenses, and applicable tax deductions, to the OCR after the end of each financial year.
Foreign companies are advised to plan their internal reporting timelines to align with these Nepali compliance deadlines, particularly where financial year-ends differ between the parent company and Nepal. Firms such as Axion Partners assist foreign companies with structuring their compliance calendar accordingly.
COMPARISON CHART BETWEEN BRANCH OFFICE, LIAISON OFFICE & FDI COMPANY
| Particular | Branch Office | Liaison Office / Contact Office | FDI Company |
|---|---|---|---|
| Legal Type | Extension of the foreign parent company in Nepal | Representative/contact office of the foreign parent | Separate Nepal-incorporated company |
| Separate Legal Entity? | No — foreign parent operates through Nepal branch | No — remains part of foreign parent | Yes — normally incorporated as Nepal Pvt. Ltd./other permitted company |
| Foreign Ownership | 100% foreign parent | 100% foreign parent | Up to 100% foreign ownership in most permitted sectors; sector-specific caps may apply |
| Minimum Investment | No general NPR 20 million FDI threshold; capital/funding depends on approval, project and regulator | No general minimum investment; office expenses normally funded by foreign parent | Generally NPR 20 million per foreign investor/project. Important exception: qualifying ICT investment through the Automatic Route has no minimum threshold. (Department of Industry) |
| Main Purpose | Carry out actual business/project/contract in Nepal | Maintain presence, communication, coordination and representation | Establish and operate a long-term commercial business in Nepal |
| Can Conduct Business? | Yes, but generally within the activity/project for which the foreign company obtained the required permission | No commercial/income-generating business | Yes, within its registered and FDI-approved business activities |
| Can Earn Revenue in Nepal? | Yes | No | Yes |
| Can Issue Invoices? | Yes, for permitted Nepal operations | No, not for income-generating activities | Yes |
| Can Enter Commercial Contracts? | Yes, within approved scope | Very limited; cannot use the liaison office to conduct revenue-generating business | Yes, in its own name |
| Local Clients / Customers | Can serve them if covered by the approved business/activity | Cannot commercially sell goods/services to them | Can freely serve customers subject to licence/sector rules |
| FDI Approval | Not ordinary equity FDI; normally requires permission/approval from the competent authority before OCR branch registration | Not ordinary FDI; regulatory permission may be required depending on the case | Yes, DOI/competent authority approval or Automatic Route, depending on sector/project |
| OCR Registration | Required under Section 154 of Companies Act | Required under Section 154 of Companies Act | Company incorporated with OCR under Companies Act |
| Industry Registration | Depends upon nature/project and competent authority approval | Generally not an operating industry | Normally required where the activity constitutes an industry |
| Local Shareholder Required? | No | No | Generally No where 100% FDI is permitted; some sectors have foreign-equity restrictions |
| Parent Company’s Liability | Direct exposure is substantially greater because the branch is part of the foreign company | Parent remains responsible for the liaison office | Normally liability is ring-fenced in the Nepal company, subject to law/guarantees |
| Funding | Parent company may remit funds/capital for Nepal operations | Parent remits operating expenses from abroad | Foreign equity investment is formally brought into Nepal and recorded through the prescribed banking/FDI mechanism |
| Profit | Can generate profit from Nepal operations | Cannot generate business profit | Can generate and retain/distribute profit |
| Repatriation | Profit/investment and earnings may be remitted subject to tax, audited accounts, proof of investment/recording and applicable NRB foreign-exchange approval | No dividend/profit repatriation because it cannot earn business income; closure/unutilised funds are handled through the applicable FX procedure | Foreign investor can repatriate dividends/profits, share-sale proceeds, liquidation proceeds and approved technology-transfer/royalty amounts, after applicable tax and prescribed FX formalities. |
| Tax Position | Nepal-source business income taxable; branch/permanent-establishment rules apply | Normally no business income; nevertheless payroll, TDS and other compliance obligations may arise | Nepal corporate income tax applies; dividend/withholding and other taxes apply as relevant |
| Annual Audit/Reporting | Required; Nepal operations must be audited and reported | Reporting of office expenditure, employees, TDS etc. required | Full company audit, tax filing, OCR and industry compliance |
| Best Suited For | Foreign contractor/company coming to Nepal for a specific project, contract or permitted business operation | Foreign company that only wants a non-commercial representative presence | Foreign investor wanting to build, operate and own a continuing Nepal business |
| Major Limitation | Usually tied closely to parent company’s approved activity/project; parent has direct exposure | Cannot earn income or commercially trade in Nepal | More incorporation, FDI, industry, tax and corporate-governance compliance |
FAQs
Can a foreign company operate a branch office without ministry approval?
Yes, Ministry approval is not a mandatory precondition before applying for registration at the Office of the Company Registrar. Without this approval letter, the OCR will register the branch office, regardless of the sector or nature of the proposed business activity.
Is a separate foreign investment approval required in addition to branch registration?
Establishing a branch office is itself recognized as a form of foreign investment under FITTA. A separate investment approval isn’t required.
Can a branch office repatriate profits earned in Nepal to the parent company abroad?
Repatriation of profit is governed by Nepal Rastra Bank foreign exchange regulations and FITTA provisions. Branch offices seeking to repatriate earnings must follow the applicable NRB procedure, which typically requires supporting tax clearance and audited financial documents.
Does a branch office pay tax differently from a Nepali company?
A branch office is registered separately for PAN and, where applicable, VAT with the Inland Revenue Office. It is taxed under the Income Tax Act, 2058 on income attributable to its Nepal operations, similar to how any taxpayer conducting business in Nepal is assessed. 25% Corporate Tax is Applicable.
Can a Branch Office issue work or Business Visa in Nepal?
A Branch or Representative Office cannot issue work or Business Visas in Nepal unless the branch is authorized via a governmental contract.
What Is the Legal Framework Governing Branch Offices in Nepal?
Branch office registration in Nepal is primarily governed by two statutes, along with supporting regulations issued by relevant government agencies.
| Legal Framework | Key Provisions |
|---|---|
| Companies Act, 2063 (Chapter 16) | Registration of a branch office at the Office of the Company Registrar and related compliance requirements |
| Foreign Investment and Technology Transfer Act, 2075 (FITTA) | Recognizes the establishment or expansion of a branch office as a form of foreign investment |
In addition to these two Acts, the Income Tax Act, 2058 governs tax obligations of the branch office, and Nepal Rastra Bank regulations apply where foreign exchange transactions, capital repatriation, or banking matters are involved. The Office of the Company Registrar (OCR) is the primary authority responsible for registering and overseeing branch offices under the Companies Act.
You may refer to the official website of the Office of the Company Registrar at https://ocr.gov.np/ for updated procedures and notices, the Department of Industry at https://doind.gov.np/ for matters relating to foreign investment approval, and Nepal Rastra Bank at https://www.nrb.org.np/ for foreign exchange and banking related regulations.
