The registration of a foreign company’s branch office in Nepal is regulated by the Companies Act, 2006 (2063). The Office of the Company Registrar (OCR) is the designated authority overseeing the registration process.
Legal Requirement for Registration
As per Section 154 of the Companies Act, 2006, a foreign company must register a branch office with the OCR before conducting any business or transactions in Nepal.
If a foreign company carries out business activities for more than one month through an established office, appoints a representative for continuous contact, or provides services within Nepal, it is deemed to have established an office. Investing in shares of a Nepalese company, providing loans, or participating in its management, with necessary government approvals, does not qualify as operating a business for the purposes of branch office registration.
Procedure for Branch Office Registration
Application Submission
The foreign company must submit an application for branch office registration along with the required documents to OCR.
Approval from Relevant Authorities
The company must obtain an approval or recommendation letter from the concerned government authority. If the company has been selected through a competitive process or has entered into a contract with a government entity, such selection or contract serves as the necessary approval.
Issuance of Registration Certificate
OCR evaluates the application and supporting documents before granting registration and issuing a branch office certificate.
Tax Registration
The branch office must register for Permanent Account Number (PAN) and Value Added Tax (VAT) at the Inland Revenue Office.
Local Business Registration
The company must also register with the local ward office.
Required Documents for Branch Office Registration in Nepal
- Application for registration at OCR
- Company Registration Certificate, Memorandum of Association (MOA), and Articles of Association (AOA) of the foreign company, along with notarized Nepali translations
- Signed company profile
- Declaration from the directors or representatives regarding the authenticity of submitted information
- Board resolution authorizing the establishment of the branch office in Nepal
- Passport copies of all directors
- Citizenship certificate of the branch office’s authorized representative in Nepal
- Proposed operational plan
- Appointment letter of the authorized representative
- Power of Attorney
- Agreement between the foreign company and the Nepalese government authority (if applicable)
- Approval or recommendation letter from the relevant authority (if available).
Government Fees
Registration fees are based on the proposed investment amount:
| Investment Amount (NPR) | Registration Fee (NPR) |
|---|---|
| Up to 10,000,000 | 15,000 |
| 10,000,001 – 100,000,000 | 40,000 |
| 100,000,001 – 200,000,000 | 70,000 |
| 200,000,001 – 300,000,000 | 100,000 |
| 300,000,001 – 400,000,000 | 130,000 |
| 400,000,001 – 500,000,000 | 160,000 |
| Above 500,000,000 | 3,000 + 3,000 for each additional 10,000,000 |
If the proposed investment is not specified, a flat registration fee of NPR 100,000 applies.
Timeline for Registration
The registration process typically takes 2 to 3 weeks to complete.
Permitted Business Activities
A branch office in Nepal can engage only in activities similar to those conducted by the parent company in its home country, provided they are permitted under Nepalese law.
Approval Requirements
Section 154(2) of the Companies Act mandates approval from a competent government authority. Generally, registration is granted based on an official license, selection process, or agreement with a Nepalese government entity.
Minimum Investment Requirement
The law does not impose a minimum investment threshold for registering a branch office in Nepal. The investment amount should align with the operational requirements of the business.
Branch Office vs. Liaison Office
• A branch office can conduct income-generating activities in Nepal.
• A liaison office cannot engage in revenue-generating operations; it serves solely as a point of contact.
Legal Status of a Branch Office
• The capital injected for operating a branch office is not classified as foreign investment and does not require foreign investment approval unless a local subsidiary is established.
• Registering a branch office does not create a separate legal entity; it remains an extension of the foreign company.
Compliance Requirements
• Tax registration at the Inland Revenue Department
• Submission of initial compliance report to OCR within three months of registration
• Appointment of an auditor and annual financial reporting to OCR
• Submission of the parent company’s financial statement to OCR within three months of its preparation
• Submission of financial statements to the Inland Revenue Department
• Annual business tax and monthly rent tax payments to the local ward office
Branch Office vs. Local Subsidiary
A local subsidiary requires approval from the Department of Industry (DOI) for Foreign Direct Investment (FDI) and must meet minimum capital requirements. It is a distinct legal entity separate from its parent company.
A branch office, however, is registered directly with OCR after obtaining necessary approvals and does not constitute a separate legal entity. Only foreign companies, not individuals or entities, can establish a branch office in Nepal.
FAQs
What is a Branch Office in Nepal?
A branch office in Nepal is an extension of a foreign company that is permitted to conduct business and commercial activities similar to the head office in Nepal. Unlike liaison offices, branch offices can generate income and are allowed to operate within the scope of the parent company’s business objectives.
How to Register a Branch Office in Nepal?
To register a branch office in Nepal, follow these steps:
- Apply to the Department of Industry (DOI) with required documents:
- Certificate of incorporation of the parent company
- Board resolution for branch establishment
- Power of attorney and financial statements
- Details of proposed activities
- Register at the Office of the Company Registrar (OCR) as branch office of a foreign company
- Register for a Permanent Account Number (PAN) at the tax office
Can a Foreign Company Open a Branch Office in Nepal?
Yes, a foreign company can legally open a branch office in Nepal under the Companies Act. The parent company must register at the OCR and comply with local regulations regarding taxation, employment, and reporting.
What Activities Can a Branch Office in Nepal Perform?
A registered branch office in Nepal can:
- Offer services and products of the parent company
- Enter into commercial contracts
- Receive income from operations
- Employ local and foreign staff
However, the activities must not fall on the negative list of investment restricted by DOI and NRB for foreign investments.
What is the Minimum Capital Requirement for Branch Office Registration in Nepal?
There is no fixed minimum capital requirement for registering a branch office in Nepal.
What are the Documents Required to Register a Branch Office in Nepal?
The following documents are typically required for branch office registration in Nepal:
- Notarized certificate of incorporation of the parent company
- Memorandum and Articles of Association
- Board resolution authorizing branch setup
- Details of local representative
- Audited financial statements of the parent company
- Description of business activities and and corporate profile
How Long Does It Take to Register a Branch Office in Nepal?
The registration process for a branch office in Nepal usually takes 3 to 5 weeks, depending on the speed of approvals from:
- Office of the Company Registrar
- Inland Revenue Office
- Timelines can vary based on the complexity of the application and compliance with documentation.
What is the Difference Between a Branch Office and a Liaison Office in Nepal?
The main difference is:
- A branch office in Nepal can conduct business and earn revenue
- A liaison office can only communicate and coordinate; no income-generating activities are allowed
A branch office has broader operational rights and is treated as an income-earning foreign entity under Nepalese law.
Is Tax Applicable to Branch Offices in Nepal?
Yes, branch offices in Nepal are subject to tax under the Income Tax Act of Nepal. They must:
- File annual tax returns
- Withhold tax on payments
- Pay corporate tax at standard rates (currently 25% for most businesses)
Branches are also required to register for VAT if annual turnover exceeds the VAT threshold.
Can a Branch Office Own Property in Nepal?
In general, a branch office cannot own land or immovable property in Nepal under current regulations unless permitted under a specific government decision or special provision. However, it can lease property for business purposes.
What are the Compliance Requirements for Branch Offices in Nepal?
A branch office in Nepal must:
- Maintain proper financial records at Inland Revenue Office
- Submit periodic reports to the OCR
- Comply with Nepal’s labour, tax, and corporate laws