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Foreign Company Registration Nepal procedures are frequently questioned by international businesses seeking to establish presence in the growing Nepalese market. Are you uncertain about whether to register a branch office or subsidiary, what approvals are required from the Department of Industry, or how Section 154 of the Companies Act applies to your expansion plans? Understanding Foreign Company Registration Nepal requirements is essential because operating without proper registration constitutes a criminal offense under Nepalese law.
The Foreign Company Registration Nepal framework for branch offices is established under Section 154 of the Companies Act, 2063 (2006). This legislation mandates that no foreign company may carry on business transactions in Nepal without registering a branch office with the Office of Company Registrar (OCR). Consequently, proper registration ensures legal compliance, operational authorization, and access to Nepal's emerging market opportunities in hydropower, tourism, IT services, and manufacturing.
Furthermore, the branch office structure offers distinct advantages over subsidiary incorporation, including simplified profit repatriation and no dividend withholding tax. This comprehensive tutorial is presented to clarify every aspect of Foreign Company Registration Nepal for branch office establishment.
What Is Foreign Company Registration Nepal for Branch Offices?
Foreign Company Registration Nepal for branch offices refers to the statutory process by which international companies establish operational presence in Nepal without creating a separate legal entity. Governed primarily by Section 154 of the Companies Act, 2063, the branch office functions as an extension of the foreign parent company, conducting business activities under the parent's name and direct control.
Moreover, Foreign Company Registration Nepal distinguishes branch offices from liaison offices (which cannot engage in income-generating activities) and subsidiary companies (which are separate legal entities). As a result, branch offices are ideal for foreign companies seeking direct operational control without the complexity of establishing a distinct Nepalese corporate entity.
In addition, the Foreign Investment and Technology Transfer Act (FITTA), 2019, provides the broader framework for foreign investment, though branch office registration itself does not constitute foreign direct investment requiring DOI approval for capital injection. However, specific government contracts or projects may necessitate additional approvals from relevant ministries.
Key Legal Framework for Branch Office Registration
| Legislation | Key Provisions | Governing Authority |
|---|---|---|
| Companies Act, 2063 | Section 154: Mandatory branch office registration | OCR |
| FITTA, 2019 | Foreign investment and technology transfer framework | DOI |
| Income Tax Act, 2058 | Taxation of branch office income | IRD |
| Labor Act, 2074 | Employment compliance for branch staff | DoL |
| Nepal Rastra Bank Act | Foreign exchange and profit repatriation | NRB |
Branch Office vs. Subsidiary: Critical Decision Factors
Before initiating Foreign Company Registration Nepal, companies must evaluate structural options:
| Feature | Branch Office | Subsidiary Company |
|---|---|---|
| Legal Status | Extension of parent company, no separate legal personality | Separate legal entity under Nepalese law |
| Liability | Parent company fully liable for all branch obligations | Limited to capital invested in subsidiary |
| Taxation | 25% corporate tax on Nepal-sourced income only; no dividend tax | 25% corporate tax; 5% withholding tax on dividends to parent |
| Profit Repatriation | Simplified—after audit and tax clearance, no additional approvals | Requires board resolution, dividend declaration, NRB approval |
| Operational Control | Direct parent company control | Independent management with shareholder oversight |
| Capital Requirements | No statutory minimum; investment based on operational needs | Minimum capital requirements apply (sector-specific) |
| Contractual Capacity | Operates under parent's authority | Independent contracting capacity |
| Local Perception | May be viewed as temporary presence | Signals long-term commitment to local market |
Consequently, branch offices are preferred for:
- Project-specific operations with defined timelines
- Service providers seeking direct parent company control
- Companies prioritizing tax-efficient profit repatriation
- Businesses testing Nepalese market before major investment
Step-by-Step Foreign Company Registration Nepal Process
The branch office registration process is structured sequentially. Therefore, following these steps ensures compliant Foreign Company Registration Nepal:
Step 1: Government Authority Approval (If Applicable)
For companies engaged in government projects or contracts:
- Obtain Recommendation Letter: From relevant ministry or government department
- Contract Documentation: Executed agreement with competent authority serves as approval
- Sector-Specific Clearance: Additional approvals for regulated industries (hydropower, telecom, etc.)
Note: If selected by competent authority through tender or contract, such selection is deemed approval for branch registration purposes.
Step 2: Name Reservation with OCR
Apply for branch office name approval:
- Proposed Name: Typically "Parent Company Name Nepal Branch" or similar
- OCR Portal: Online submission through CAMIS system
- Approval Timeline: 10-14 working days
- Restrictions: Names containing "CASINO," "CONSULTANCY," or misleading terms may face rejection
Step 3: Document Preparation and Authentication
Prepare comprehensive documentation package:
- Parent company registration certificate (authenticated)
- Memorandum and Articles of Association (notarized translation)
- Board resolution authorizing Nepal branch establishment
- Company profile and business description
- Director passports (copies notarized in home country)
- Power of attorney for Nepal representative
- Letter of appointment for authorized representative
- Proposed branch office operational plan
- Declaration of document authenticity by parent company directors
Authentication Requirements:
- Documents in foreign languages require certified Nepali translation
- Passports and identification documents must be notarized in issuing country
- Corporate documents may require apostille or embassy legalization
Step 4: OCR Application Submission
Submit complete application to Office of Company Registrar:
- Application Form: Prescribed format for branch office registration
- Fee Payment: Based on proposed investment amount (see fee structure below)
- Document Verification: OCR examines compliance with Section 154
- Supplementary Information: Additional documents if OCR requests clarification
Step 5: Registration Certificate Issuance
Upon satisfactory verification:
- Branch Office Certificate: Issued by OCR confirming legal registration
- Registration Number: Unique identification for compliance and reporting
- Validity: Continues until cancellation or parent company dissolution
Step 6: Post-Registration Compliance
Complete mandatory post-registration formalities:
- PAN Registration: Tax identification with Inland Revenue Department
- VAT Registration: If annual turnover exceeds NPR 5 million
- Local Ward Registration: Municipal business operating license
- Bank Account Opening: Local currency account for operational transactions
- Initial Compliance Filing: With OCR within 3 months of registration
Documentation Requirements for Foreign Company Registration Nepal
Proper documentation ensures registration success. Therefore, the following documents are required:
| Document | Purpose | Authentication |
|---|---|---|
| Application for Branch Office Registration | Formal request to OCR | Signed by authorized representative |
| Parent Company Incorporation Certificate | Proof of legal existence | Notarized in home country |
| MOA and AOA of Parent Company | Constitutional framework | Notarized Nepali translation |
| Board Resolution | Corporate authorization for branch | Notarized, apostilled if required |
| Director Passports | Identity verification | Notarized in issuing country |
| Power of Attorney | Authority for Nepal representative | Notarized, registered in Nepal |
| Letter of Appointment | Representative designation | Company letterhead, signed |
| Authorized Representative ID | Nepal-based contact | Citizenship certificate or passport |
| Proposed Operational Plan | Business activities description | Company preparation |
| Government Approval Letter | If applicable for projects | From relevant ministry |
| Company Profile | Business background | Company preparation |
| Declaration of Authenticity | Verification of submitted documents | Signed by parent company directors |
Fee Structure for Foreign Company Registration Nepal
Government fees are determined by proposed investment amount:
| Proposed Investment (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 | 160,000 + NPR 3,000 per additional 10,000,000 |
Note: If proposed investment amount is not fixed, applicable government fee is NPR 100,000.
Timeline for Foreign Company Registration Nepal
Understanding processing times enables effective planning:
| Stage | Duration | Notes |
|---|---|---|
| Document preparation and authentication | 2-4 weeks | Depends on notarization and translation requirements |
| Government approval (if required) | 2-6 weeks | For project-based registrations |
| Name reservation | 10-14 days | OCR processing time |
| OCR application review | 2-3 weeks | Document verification and query resolution |
| Certificate issuance | 3-5 days | Upon satisfactory compliance |
| Post-registration compliance | 1-2 weeks | PAN, VAT, ward registration |
| Total Estimated Time | 6-12 weeks | Varies based on complexity and government approvals |
Taxation and Compliance for Branch Offices
Foreign Company Registration Nepal entails ongoing tax and regulatory obligations:
Income Tax Obligations
- Corporate Tax Rate: 25% on Nepal-sourced income
- Taxable Income: Only income attributable to Nepal operations
- Transfer Pricing: Transactions with parent company must be at arm's length
- Tax Filing: Annual income tax returns with IRD
Withholding Taxes
- Service Fees to Parent: Subject to withholding tax
- Interest Payments: Withholding tax applicable
- Royalties: Withholding tax on technology transfers
Profit Repatriation
- Process: Simplified compared to subsidiaries
- Requirements: Annual audit, tax clearance, NRB approval
- Advantage: No dividend withholding tax (as profits are not dividends but branch earnings)
Annual Compliance Requirements
| Compliance | Frequency | Due Date | Authority |
|---|---|---|---|
| Quarterly compliance filing | Quarterly | Within 3 months of quarter end | OCR |
| Annual financial statements | Annual | Within 6 months of fiscal year-end | OCR |
| Parent company financials | Annual | Within 3 months of parent company preparation | OCR |
| Income tax return | Annual | As prescribed by IRD | IRD |
| Local ward tax | Annual | As per municipality | Local Ward Office |
Permissible and Restricted Activities
Branch offices face operational scope limitations:
Permissible Activities
- Business activities identical to parent company's home country operations
- Project execution under government contracts
- Service provision to local and international clients
- Import/export within approved scope
- Local hiring and employment
Restricted Activities
- Activities outside parent company's registered objectives
- Retail banking (requires separate license)
- Activities reserved for Nepalese nationals in negative list sectors
- Real estate speculation (development permitted with approval)
Comparison: Branch Office vs. Liaison Office
Understanding distinctions prevents registration errors:
| Feature | Branch Office | Liaison Office |
|---|---|---|
| Legal Basis | Section 154, Companies Act | Section 154, Companies Act |
| Income Generation | Permitted | Prohibited |
| Activities | Full business operations | Market research, coordination, promotion |
| Funding | Parent company investment or local earnings | Parent company funding only |
| Taxation | Corporate income tax applicable | No income (no tax liability) |
| Registration Fee | Based on investment (NPR 15,000-160,000+) | Fixed NPR 50,000 |
| Staff Hiring | Full local and expatriate employment | Limited coordination staff |
| Contracting | Direct contractual capacity | No direct contracts |
Frequently Asked Questions About Foreign Company Registration Nepal
Is branch office registration mandatory for all foreign companies?
Yes. Section 154(1) mandates that no foreign company may carry on business in Nepal without branch office registration. Operating without registration constitutes a criminal offense.
What is the difference between branch office and FDI?
Branch office registration does not constitute foreign direct investment. FDI requires DOI approval for establishing a subsidiary company with separate legal personality. Branch offices are extensions of the parent company.
Can a branch office be converted to a subsidiary later?
Yes. Foreign companies may establish branch offices initially and later incorporate subsidiary companies through FDI approval. The branch may be closed or maintained alongside the subsidiary.
Are there minimum capital requirements for branch offices?
No statutory minimum exists. Investment should be commensurate with operational requirements. However, practical minimums apply for banking relationships and operational credibility.
How long does branch office registration take?
Typically 6-12 weeks from document preparation to final registration, depending on authentication requirements and government approvals needed.
Can branch offices hire foreign employees?
Yes, subject to work permit requirements under Labor Act and immigration regulations. Local employment must comply with Nepalese labor laws and social security requirements.
What happens if a branch office closes?
Closure requires OCR notification, tax clearance, settlement of local liabilities, and cancellation of registration. Parent company remains liable for obligations incurred during operation.
Are branch office profits taxable in the parent country?
Depends on parent country's tax laws and double taxation treaties. Nepal-sourced income is taxable in Nepal; parent country may provide foreign tax credit or exemption.
Can branch offices open bank accounts in Nepal?
Yes. Local currency (NPR) accounts are permitted for operational transactions. Foreign currency accounts require NRB approval for specific purposes.
Is audit mandatory for branch offices?
Yes. Annual audit by ICAN-registered auditor is mandatory. Audited financial statements must be filed with OCR within 6 months of fiscal year-end.
Conclusion: Executing Foreign Company Registration Nepal Successfully
Foreign Company Registration Nepal for branch offices provides international companies with efficient market access and operational flexibility. Therefore, careful attention to documentation requirements, authentication procedures, and ongoing compliance ensures successful establishment and maintenance.
Consequently, engagement of qualified legal professionals experienced in cross-border corporate matters is strongly recommended. The interplay between Companies Act requirements, tax obligations, and sector-specific regulations necessitates expert guidance.
For professional assistance with Foreign Company Registration Nepal, Attorney Nepal provides comprehensive international corporate services. Their team of specialists handles document authentication, OCR liaison, compliance management, and regulatory navigation to ensure seamless branch office establishment.
Contact Attorney Nepal today to expand into Nepal with legal precision and strategic advantage