Introduction
Branch office registration in Nepal refers to the legal process through which a foreign company establishes a physical and operational presence within the country. Unlike a subsidiary, a branch office is not a separate legal entity but an extension of the parent company. It is governed by Nepalese laws, including the Companies Act, 2063 (2006) and Foreign Investment and Technology Transfer Act, 2075 (2019). Branch offices typically carry out limited activities approved by the concerned authorities. Registration is mandatory before commencing any business operation.
Legal Definition and Purpose
According to Section 154 of the Companies Act, 2063, a foreign company is required to register its branch if it intends to conduct business or establish a liaison in Nepal. A branch office serves to represent the parent company and may engage in income-generating activities, depending on the approval granted. Its existence is legally valid only after obtaining the required registration and foreign investment approval. The primary purpose of a branch office is to expand the parent company’s business operations while maintaining central control.
Key Requirements for Registration
To establish a branch office in Nepal, foreign companies must fulfill several requirements:
- Legal existence and registration in the country of origin.
- Approval from the Department of Industry (DOI) if the branch is investment-related.
- Approval from Nepal Rastra Bank (NRB) for inward remittance and transactions.
- Specific nature of business that complies with local laws.
- Appointment of an authorized representative in Nepal.
- Proof of business address within the country.
These requirements ensure that only compliant and eligible companies set up branch operations.
Eligibility Criteria for Companies/Investors
A foreign company must meet the following eligibility criteria to register a branch office:
- The company must be legally incorporated and in good standing in its home jurisdiction.
- The intended business activity must not fall under the restricted sectors as per the Foreign Investment Policy of Nepal.
- The foreign company must demonstrate financial capacity to operate in Nepal.
- Investment in the branch must meet the minimum capital requirement specified by DOI (usually NPR 20 million or above for certain sectors).
Branches engaged in non-commercial activities may be subject to different rules.
Step-by-Step Registration Procedure
The process to register a branch office in Nepal involves multiple steps:
Prepare Documentation
Legal documents of the foreign company.
Business plan and intended activities.
Apply to Department of Industry (DOI)
Submit application with required documents.
Obtain foreign investment approval.
Obtain Approval from Nepal Rastra Bank (NRB)
For foreign currency transactions and fund remittance.
Register with the Office of Company Registrar (OCR)
Submit documents and pay fees.
Register for PAN/VAT
At the Inland Revenue Office for tax purposes.
Obtain Local Municipality Registration
For operational compliance.
Begin Operations
After completion of all regulatory steps.
Each step must be completed in sequence for legal operation.
Documents Required for Registration
The following documents are required:
- Certified copy of the Certificate of Incorporation of the parent company.
- Memorandum and Articles of Association.
- Latest Annual Report or Financial Statement.
- Power of Attorney authorizing a representative in Nepal.
- Board resolution approving branch office setup.
- Proposed office address in Nepal.
- Details of business activity to be carried out.
- Passport copies of authorized representatives.
- Approval letter from DOI and NRB.
All foreign documents must be notarized and translated into Nepali.
Timeline for Registration Completion
The typical timeline for branch office registration in Nepal ranges from 4 to 6 weeks, subject to the completeness of documents and approval cycles:
- DOI Approval: 7–10 working days
- NRB Approval: 5–7 working days
- OCR Registration: 5–10 working days
- PAN/VAT and Local Registration: 3–5 working days
Delays may occur if additional clarifications or documents are required.
Cost and Government Fees Breakdown
The cost of registering a branch office includes both government and incidental fees:
- DOI Approval Fee: NPR 10,000 to NPR 50,000
- NRB Approval: No direct fee, but service costs may apply
- OCR Registration Fee: Depends on capital injection (approx. NPR 15,000–50,000)
- PAN/VAT Registration: Free, but agent costs may apply
- Legal and Consulting Fees: Varies by firm, usually NPR 100,000+
Fees must be paid through official channels and are non-refundable.
Compliance and Document Checklist
A proper checklist ensures compliance with Nepalese laws:
- Approval letter from DOI and NRB
- OCR Certificate of Registration
- PAN and VAT Certificates
- Appointment letter for local representative
- Annual tax return filings
- Record of inward remittances
- Lease agreement of office premises
- Municipal registration certificate
- Renewal of licenses (if applicable)
- Updated documents in case of any changes
Maintaining accurate records is essential for legal operation.
Laws Governing the Process
The registration and operation of branch offices in Nepal are governed by:
- Companies Act, 2063 (2006)
- Foreign Investment and Technology Transfer Act, 2075 (2019)
- Industrial Enterprises Act, 2076 (2020)
- Income Tax Act, 2058 (2002)
- Nepal Rastra Bank Act, 2058 (2002)
These laws outline eligibility, reporting, taxation, and investment regulations.
Authorities Involved in Registration
Multiple government authorities are involved:
- Department of Industry (DOI): Foreign investment approval
- Nepal Rastra Bank (NRB): Currency and remittance control
- Office of Company Registrar (OCR): Company registration
- Inland Revenue Department: Tax registration and compliance
- Local Government Office: Municipal operational approval
Each authority has a clearly defined role in the process.
Annual Filing and Tax Compliance
A registered branch must comply with annual filing and tax obligations:
- File annual tax returns with the Inland Revenue Department.
- Maintain audited financial statements.
- Submit periodic reports to DOI and NRB if applicable.
- Renew municipal registration annually.
- Pay corporate income tax at the standard rate of 25% (as per Income Tax Act).
- Deduct and deposit TDS where applicable.
Non-compliance may result in penalties or cancellation of registration.
Post-Registration Formalities
After registration, the branch office must:
- Open a corporate bank account.
- Deposit foreign investment funds via NRB.
- Commence business within 6 months of registration.
- Hire local employees, if necessary.
- Maintain books of accounts in Nepal.
- Display name and registration number at the office location.
Compliance with labor and environmental regulations may also be required based on business activity.
Legal Services Offered for Registration
Professional firms offer a wide range of legal services:
- Drafting and notarization of legal documents
- Due diligence and pre-approval consulting
- Assistance in obtaining DOI, NRB, and OCR approvals
- Document translation and certification
- Filing annual returns and tax advisory
- Post-registration operational guidance
- Representation in government offices
- Dispute resolution support
Engaging experts helps ensure full legal compliance.
Benefits and Limitations of Registration
Benefits
- Legally represent the parent company in Nepal
- Allowed to generate revenue from approved business activities
- Access to Nepalese markets and workforce
- Use of international brand recognition
- Easy repatriation of profits under NRB rules
Limitations
- Not a separate legal entity; liabilities remain with the parent
- Restricted activities without additional approval
- Must adhere strictly to local compliance
- Subject to government scrutiny and annual filings
- Higher operational and consulting costs
FAQs
What is a branch office in Nepal?
A branch office is an extension of a foreign company that operates in Nepal under local regulations without forming a separate legal entity.
Who can open a branch in Nepal?
Any legally registered foreign company engaged in permitted business sectors may apply for a branch office registration in Nepal.
How long does the process take?
The full registration process generally takes 4 to 6 weeks, depending on document readiness and government processing times.
What are the required documents?
Core documents include the parent company’s incorporation certificate, MOA, financials, power of attorney, and approval letters from DOI and NRB.
What is the cost to register?
Total cost may range between NPR 150,000 to 300,000 including government and legal service fees, depending on the sector and capital.
Which authority handles registration?
The Department of Industry, Nepal Rastra Bank, and the Office of Company Registrar are the primary authorities for branch registration.
Do branches pay tax in Nepal?
Yes, branch offices are subject to corporate income tax and other applicable taxes under the Income Tax Act of Nepal.
Are there annual compliance needs?
Yes, branch offices must file annual returns, maintain audited accounts, and comply with reporting requirements to various authorities.
Can branches hire local employees?
Yes, branch offices can employ Nepalese citizens in compliance with labor and tax laws.
Is approval from Nepal Rastra Bank needed?
Yes, NRB approval is mandatory for foreign currency transactions and remittance of investment funds.