Branch Office Registration in Nepal

Written by: Top Corporate lawyer of Nepal

Branch Office Registration in Nepal is governed by the Companies Act 2063 (2006) and regulated by the Office of Company Registrar (OCR). For foreign companies seeking market entry, understanding this process has become essential, especially after Nepal's 2024 investment law reforms.

What is Branch Office Registration in Nepal?

A branch office registration in Nepal is the legal process by which foreign companies obtain permission to operate locally through an office extension. Unlike a subsidiary, a branch office does not create a separate legal entity; instead, it functions as an operational arm of its parent company.

Legal Framework for Branch Office Setup Nepal

The Foreign Investment and Technology Transfer Act (FITTA) 2075 and Companies Act Section 154 establish the foundation. Section 154(1) states that no foreign company may conduct business transactions without branch office registration in Nepal through OCR. If a transaction continues for one month or more, or if a person is appointed for regular contact, the company is deemed to have established an office in Nepal.

Why Branch Office Setup Nepal is Preferred

Branch office setup Nepal offers several advantages. Revenue generation is permitted, direct contracts can be executed, and profits may be repatriated after tax compliance. Additionally, foreign investment approval is not required since the investment is not considered FDI under FITTA 2019.

Branch Office Registration Nepal Legal Requirements

Essential Documents for Branch Office Registration Nepal

Documentation must be submitted online through OCR's portal. All foreign documents require notarization and Nepali translation.

Table 1: Required Documents and Notarization Status

SN	Document	Notarization Required
1	Parent company registration certificate, MOA, AOA	Yes
2	Application for branch office registration	No
3	Board resolution establishing branch office	No
4	Citizenship copy of Nepalese representative	Yes
5	Appointment letter for authorized representative	No
6	Signed company profile	No
7	Passports of all foreign directors	Yes
8	Power of Attorney	Yes
9	Government authority approval letter	Not required if contract exists

 

Government Authority Approval for Branch Office Nepal

Branch office registration in Nepal requires approval from the relevant government authority under Section 154(2). However, if the foreign company has executed an agreement or been selected by a competent body, that agreement is deemed as approval.

Branch Office Registration Process Nepal: Step-by-Step Guide

Step 1: Agreement with Government Authority

A contract or selection by a competent authority (Department of Industry, Investment Board) must be obtained. This serves as the basis for branch office registration in Nepal.

Step 2: Online Application Submission

Applications are submitted through OCR's official portal (ocr.gov.np). Documents must be uploaded with digital signatures. The system automatically generates an application number for tracking.

Step 3: Document Verification

OCR verifies submitted documents within 7 working days. If discrepancies are found, a 90-day correction period is provided under Section 155.

Step 4: Physical Document Submission

After online approval, physical copies must be submitted at OCR's Tripureshwar office. Original notarized documents with apostille verification are required.

Step 5: Registration Certificate Issuance

Upon satisfactory verification, OCR issues the branch office registration certificate within 15 days of physical submission.

Step 6: Local Registration

Registration at the concerned ward office must be completed within 30 days of receiving OCR certificate.

Step 7: PAN/VAT Registration

Branch office registration in Nepal is incomplete without tax registration. PAN application must be filed within 30 days at the Inland Revenue Department. VAT registration is mandatory if annual turnover exceeds NPR 5 million for services or NPR 10 million for manufacturing.

Table 2: Timeline for Branch Office Registration Nepal

Stage	Time Required
Document preparation	5-7 days
Government approval	10-15 days
OCR online verification	7 days
Physical submission and verification	15 days
Certificate issuance	7 days
PAN/VAT registration	7-10 days
Total Estimated Timeline	30-45 days

Branch Office Registration Nepal Government Fees

Fees are calculated based on proposed investment amount, not authorized capital.

Table 3: OCR Fee Structure for Branch Office Nepal

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 per additional 10 million

If no investment amount is specified, a lump sum fee of NPR 100,000 is charged. Additional fees include PAN registration (NPR 1,000) and municipality registration (NPR 5,000-15,000).

Post-Registration Compliance for Branch Office Nepal

Branch office registration in Nepal requires ongoing compliance:

1. Initial Compliance: Must be filed at OCR within 3 months of registration
2. Annual Financial Statements: To be submitted within 6 months of fiscal year-end
3. Parent Company Balance Sheet: Must be filed within 3 months of preparation
4. Tax Returns: Monthly VAT returns by 25th and annual income tax by Ashad end
5. Audit Appointment: Mandatory within 3 months of registration
6. Local Tax Payment: Monthly rent tax and annual business tax at ward office

Penalties for Non-Compliance

Section 154 violations incur fines up to NPR 500,000. Late compliance submissions attract penalties of NPR 10,000 per month. Failure to register within one month of business commencement results in deemed violation status.

Branch Office vs Liaison Office vs Subsidiary: Key Differences

Table 4: Comparison of Foreign Company Structures in Nepal

Parameter	Branch Office	Liaison Office	Subsidiary (FDI)
Revenue Generation	Permitted	Not permitted	Permitted
Legal Status	No separate entity	No separate entity	Separate legal entity
Foreign Investment Approval	Not required	Not required	Required (DOI/IBN)
Minimum Capital	No minimum (Act silent)	No minimum	USD 150,000+
Tax Liability	Taxed on Nepal income	Generally not taxed	Taxed on worldwide income
Registration Authority	OCR	OCR	OCR after DOI approval
Repatriation	Allowed after tax clearance	Not applicable	Allowed under FITTA
Compliance Burden	Moderate	Light	High

Recent Legal Changes for Branch Office Nepal 2024-2025

In April 2024, Nepal amended FITTA through an ordinance, simplifying approval procedures. All approvals are now processed through the Department of Industry, eliminating the NPR 6 billion threshold for Investment Board approval. Foreign companies are now permitted contract manufacturing, previously prohibited.

Foreign Company Branch Office Tax Implications Nepal

Branch office registration in Nepal creates permanent establishment status. Tax obligations include:

• Corporate Income Tax: 25% on Nepal-sourced income
• VAT: 13% on goods and services
• Withholding Tax: 5% on rent, 15% on technical fees
• Dividend Tax: Not applicable (branch profits, not dividends)
• Digital Service Tax: 2% if providing electronic services

Branch Office Nepal Registration Services: Professional Assistance

While branch office registration in Nepal can be completed independently, professional services ensure compliance and expedite processing. Experienced legal firms handle document preparation, government liaison, and post-registration compliance.

Call to Action: For expert assistance with branch office registration in Nepal, contact registered legal practitioners with proven track records in foreign investment compliance.

Frequently Asked Questions (FAQs)

What is the minimum capital for branch office registration in Nepal?

The Companies Act is silent on minimum capital. Investment is determined by operational needs. However, FITTA 2019 requires USD 150,000 for FDI companies, which doesn't apply to branches.

How long does branch office registration in Nepal take?

Typically 30-45 days, depending on government authority responsiveness. Document preparation may require an additional week.

Can a branch office own property in Nepal?

No. Branch office registration in Nepal does not permit property ownership. Leasing is required for office space.

What business activities are permitted for branch offices?

Activities must be similar to the parent company's business and permissible under Nepali law. Specific sectors like defense, currency printing, and security services are restricted.

Is VAT registration mandatory for all branch offices?

Only if turnover exceeds NPR 5 million annually for services or NPR 10 million for manufacturing. However, voluntary registration is permitted.

How are profits repatriated from branch offices?

Repatriation requires: (1) IRD tax clearance certificate, (2) NRB approval for foreign currency transfer, (3) audited financial statements showing profit availability.

What is the difference between branch office and liaison office registration?

Branch office registration in Nepal permits income generation and commercial activities. Liaison offices are restricted to non-revenue functions like market research and coordination.

Can a branch office be converted to a subsidiary later?

Yes, but the branch must be closed, and new company incorporation under FDI process must be initiated, including minimum capital injection and separate legal entity creation.

What happens if a company operates without branch office registration?

Section 154 violations result in deemed establishment status. Penalties up to NPR 500,000 and potential business suspension may be imposed by OCR.

Do branch offices need industry-specific licenses?

Yes. Sector-specific approvals are required from relevant authorities (e.g., NRB for financial services, Nepal Telecommunications Authority for telecom).

Conclusion

Branch office registration in Nepal has been streamlined through recent legal reforms, making it attractive for foreign companies seeking market presence. The process requires careful attention to documentation, timeline management, and ongoing compliance.

For successful branch office setup Nepal, companies should engage experienced legal professionals, ensure timely tax registrations, and maintain rigorous compliance schedules. The 2024 FITTA amendments have reduced bureaucratic hurdles, positioning Nepal as an increasingly favorable destination for foreign business operations.

References

1. Office of Company Registrar Nepal: ocr.gov.np - Visit OCR Portal for Branch Office Registration
2. Department of Industry: doi.gov.np - Foreign Investment Approval Guidelines
3. Nepal Rastra Bank: nrb.org.np - Foreign Exchange Regulations
4. Inland Revenue Department: ird.gov.np - PAN/VAT Registration Procedures
5. Investment Board Nepal: ibn.gov.np - Foreign Investment Policies
6. UNCTAD Investment Policy Monitor: unctad.org - Nepal Investment Reforms 2024
7. Ministry of Industry, Commerce and Supplies: moics.gov.np - Industrial Enterprises Act 2076
8. Nepal Government National Portal: nepal.gov.np - Official Government Resources
9. World Bank Doing Business: doingbusiness.org - Nepal Business Environment Data
10. International Labour Organization: ilo.org - Labor Law Compliance Nepal

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Branch office registration in Nepal involves complex legal procedures; consultation with qualified legal professionals is strongly recommended.