Introduction
A liaison office in Nepal serves as a communication and coordination office for a foreign company. It does not engage in commercial or revenue-generating activities but facilitates interaction between the parent company and entities in Nepal. Establishing a liaison office requires approval from the Department of Industry (DOI) and registration with the Office of the Company Registrar (OCR), under the Companies Act, 2063.
Legal Definition and Purpose
As per Section 154 of the Companies Act, 2063, a liaison office is an office established by a foreign company for the purpose of liaisoning, coordination, and information dissemination. Its main purpose is to represent the parent company in Nepal, build relationships, and gather market information. It cannot conduct business, earn revenue, or sign commercial contracts within Nepal.
Key Requirements for Registration
To register a liaison office in Nepal, the following conditions must be met:
- Foreign parent company must be legally established.
- Intention should be limited to liaison activities.
- Must obtain approval from the Department of Industry (DOI).
- Appointment of a local representative.
- Office space and a local address in Nepal.
- Non-commercial objectives only.
Eligibility Criteria for Companies/Investors
Only foreign companies that are legally incorporated in their home jurisdiction and intend to operate non-commercial offices in Nepal are eligible. The company should:
- Not fall under the restricted sectors under Nepal’s investment policy.
- Submit a clear plan of liaison activities.
- Ensure inward remittance of operational expenses.
- Comply with local laws regarding non-commercial presence.
Step-by-Step Registration Procedure
Prepare Required Documentation
Apply to the Department of Industry (DOI)
Submit liaison office proposal
Obtain approval letter
Register with Office of Company Registrar (OCR)
File documents with approved structure
Register for PAN at Inland Revenue Department (IRD)
Register with Municipality Office
Open a Bank Account for Fund Remittance
Each step must be completed in order for legal operation.
Documents Required for Registration
- Parent company’s Certificate of Incorporation
- Memorandum and Articles of Association
- Board resolution for liaison office setup
- Latest financial report or audit report
- Power of attorney to local representative
- Lease agreement for office space in Nepal
- Copy of passport of authorized signatory
- Notarized translations in Nepali (if applicable)
- Letter of approval from DOI
- Liaison office proposal outlining activities
Timeline for Registration Completion
The timeline generally spans 3 to 5 weeks:
- DOI Approval: 7–10 working days
- OCR Registration: 5–7 working days
- PAN and Municipal Registration: 3–5 working days
If documentation is incomplete or incorrectly formatted, the process may take longer.
Cost and Government Fees Breakdown
- DOI Approval Fee: NPR 15,000 to 25,000
- OCR Registration Fee: NPR 15,000 to 30,000
- PAN Registration: Free (service charges may apply)
- Municipal Registration Fee: Based on location, approx. NPR 2,000 to 5,000
- Legal Assistance: Varies between NPR 80,000 to NPR 150,000
Compliance and Document Checklist
- Approval letter from DOI
- Company registration certificate from OCR
- PAN certificate
- Lease agreement and office registration
- Appointed local representative information
- Updated copy of parent company’s documents
- Annual renewal filings (if required)
- Maintain non-commercial status
- Record of inward remittance for expenses
Laws Governing the Process
The process of setting up a liaison office is regulated by:
- Companies Act, 2063 (2006)
- Foreign Investment and Technology Transfer Act, 2075 (2019)
- Industrial Enterprises Act, 2076 (2020)
- Income Tax Act, 2058 (2002)
- Local Government Operation Act, 2074
These laws define limitations and procedures for non-commercial operations.
Authorities Involved in Registration
- Department of Industry (DOI): Grants liaison office approval
- Office of Company Registrar (OCR): Registers the office as a foreign entity
- Inland Revenue Department (IRD): Issues PAN for compliance
- Municipal Authorities: Office operation registration
- Nepal Rastra Bank (NRB): Monitoring inward remittance for operational funding
Annual Filing and Tax Compliance
- No income tax required if no revenue is earned
- File annual reports confirming non-commercial status
- Maintain inward remittance records
- Submit audit report (if required by OCR)
- Renew municipal registration annually
- Keep updated documentation of parent company
Post-Registration Formalities
- Set up a local office space
- Appoint and register local representative
- Open a local bank account for fund management
- Submit inward remittance evidence
- Ensure compliance with DOI and OCR terms
- Begin liaison activities within 6 months of approval
- Update authority with any changes in parent company
Legal Services Offered for Registration
- Documentation drafting and notarization
- Representation at DOI, OCR, and IRD
- Translation and attestation of documents
- Office setup assistance
- Legal advisory on scope of activities
- Local representative appointment support
- Post-registration compliance guidance
Benefits and Limitations of Registration
Benefits
- Legally recognized presence in Nepal
- Eases communication with Nepalese stakeholders
- Allows market research and feasibility studies
- Facilitates promotional and representative tasks
- Can hire local staff for support activities
Limitations
- Cannot engage in commercial or trading activities
- Cannot generate revenue locally
- Subject to periodic scrutiny of non-commercial status
- No liability protection as in full-fledged company
- Restricted scope of activities
FAQs
What is a liaison office?
It is a representative office for foreign companies to communicate and coordinate, without earning income in Nepal.
Can it conduct business in Nepal?
No, it is restricted from engaging in any commercial, trading, or revenue-generating activities.
Who approves the office setup?
The Department of Industry (DOI) approves the setup, followed by registration at the Office of the Company Registrar.
How long does it take?
It generally takes around 3 to 5 weeks, depending on document accuracy and authority workload.
What are the main documents needed?
You need incorporation papers, a board resolution, a liaison proposal, financial reports, and a power of attorney.
Are there yearly compliance needs?
Yes, the office must submit annual reports confirming non-commercial activities and maintain operational records.
Does it pay taxes in Nepal?
No, unless it violates non-commercial limitations. Otherwise, only compliance-related filings are necessary.
Can it hire staff locally?
Yes, it can hire employees to support its liaison activities, subject to labor law compliance.
What is the main benefit of this office?
It allows foreign companies to have a legal, non-commercial presence for market research and networking.
Do I need an agent in Nepal?
Yes, a local representative or agent must be appointed to act on behalf of the parent company.