If “company registration in Nepal” is on your roadmap, you face an early fork in the road: open a branch of your foreign company or incorporate a Nepal subsidiary. The choice affects liability, tax, repatriation, and speed. This guide breaks down both paths with clear steps, timelines, and compliance.
You will learn when a branch wins, when a private limited subsidiary wins, how approvals work, and what to budget. We also share a decision framework you can apply in minutes.
Pick a branch when you need a quick, project-bound presence under foreign control and name.
Pick a subsidiary when you need long-term operations, local invoicing flexibility, investors, or Nepal-specific incentives.
Both routes require registration, tax numbers, and compliance. The subsidiary offers better ring-fencing of risk and funding options.
Foreign investment rules apply if you inject capital or bring technology.
Taxes differ mainly in cross-border withholding and treaty use, not the headline corporate rate.
Branch office of a foreign company
Private limited subsidiary (Nepal company, foreign shareholding)
Liaison/representative office (non-trading, information only) — included here only to contrast scope
Project/contract office (often treated as a branch form tied to a specific contract)
This article focuses on branch vs subsidiary, as those are the two trading options most foreign investors weigh.
Companies Act 2063 (2006) governs company formation and foreign company registration in Nepal.
Foreign Investment and Technology Transfer Act (FITTA) 2019 and its Regulations govern foreign investment approvals, capital, and technology transfer.
Industrial Enterprise Act (IEA) 2019 lays out industry categories and incentives.
Income Tax Act 2002 and VAT Act 1996 govern corporate tax, withholding, and VAT.
Labour Act 2017 governs employment contracts, hours, benefits, and terminations.
Nepal Rastra Bank (NRB) circulars and directives handle foreign exchange, capital inflows, and repatriation.
Immigration Rules govern investor and work visas.
Tip: If your model involves equity capital from abroad, FITTA considerations will sit alongside your Companies Act tasks.
| Dimension | Branch (foreign company) | Subsidiary (Nepal private limited) |
|---|---|---|
| Legal status | Same legal person as head office | Separate Nepal legal person |
| Governing law | Companies Act foreign company provisions; sector approvals as needed | Companies Act for incorporation; FITTA for foreign shareholding |
| Scope | Trade only within permitted scope and approvals; often project-bound | Full operational scope per MOA/sector list |
| Liability | Head office bears liabilities | Liability ring-fenced to Nepal entity (limited to paid-up capital) |
| Branding | Uses foreign company name (with “Nepal Branch/Project Office”) | Local name; can match global brand |
| Approvals | Sector or project approvals + foreign company registration | FITTA approval (if foreign equity) + incorporation |
| Capital | No share capital; fund via remittances from HO | Paid-up share capital; equity from foreign shareholder(s) |
| Banking | Project/branch account; inflows typically from HO | Capital account for equity; current accounts for operations |
| Tax profile | Permanent establishment; Nepal-source income taxed | Resident taxpayer on worldwide income (with Nepal nexus) |
| Corporate tax | Headline rate broadly aligns with resident rates; incentives limited | Headline rate; can tap IEA/FITTA incentives where eligible |
| Withholding | Cross-border remittances often trigger WHT; treaty relief may apply | Dividends, interest, royalties subject to WHT; treaty relief possible |
| Repatriation | Profit repatriation to HO, subject to tax and NRB compliance | Dividend repatriation to foreign shareholder, post-tax and approvals |
| Accounting & audit | Nepal books required; audit usually mandatory | Nepal books; statutory audit usually mandatory |
| Compliance load | Moderate; tied to project scope and filings | Higher breadth: corporate secretarial, board governance, AGM, returns |
| Speed to start | Often faster when tied to a signed contract | Slightly longer due to FITTA + incorporation steps |
| Best for | Contract execution, EPC, short-medium projects | Long-term operations, hires, local sales, fundraising |
Choose a branch if most of these are true:
You have a specific contract in Nepal with a clear end date.
You need to invoice under the foreign company’s name for that project.
You want tight control from head office.
You will remit costs and working funds from the foreign parent.
Sector rules explicitly allow branch operations for your activity.
You are not seeking local investors now.
Choose a subsidiary if most of these are true:
You need long-term market presence and local brand equity.
You plan to hire local teams and sign local customer contracts.
You may raise capital later or add local JV partners.
You need wider scope and flexibility in activities.
You want liability ring-fencing within Nepal.
You aim to access incentives tied to sectors, regions, or reinvestment.
Branch: Trades only within approval scope. Good for EPC, construction, consulting tied to a project.
Subsidiary: Trades per its MOA and sector permissions. Best for ongoing sales, services, manufacturing, or tech ops.
Liaison office: No trading. Market research and coordination only.
Project office: A branch variant tied to a single contract.
Minimum investment threshold: Nepal sets a minimum foreign investment amount. This threshold does change. Confirm the current NPR figure before you structure capital.
Instruments allowed: Equity shares, reinvested earnings, technology transfer, and others permitted by law.
Prohibited or restricted sectors: Certain activities may be fully restricted or need special approvals. Always check your sector list before sign-off.
Valuation & source of funds: Show legitimate source. Use banking channels for every remittance.
Repatriation: Dividends and capital gains can be repatriated after taxes and NRB compliance. Keep your tax clearance tidy to avoid delays.
Practical note: If your investment is equity into a subsidiary, expect FITTA approval alongside incorporation. If you run a branch funded by head office, focus on project approvals, foreign company registration, and NRB inflow documentation.
Corporate income tax: The general rate is commonly around 25%. Sectoral incentives can reduce or increase effective rates.
VAT: Standard rate 13% on taxable supplies. Some sectors are zero-rated or exempt.
Withholding tax: Dividends, interest, royalties, and service fees may attract WHT. Tax treaties can change rates.
Permanent establishment: A branch is typically a PE. A subsidiary is a resident taxpayer.
Losses and incentives: Loss carryforward and investment incentives exist with conditions.
Transfer pricing: Arm’s length pricing applies for related-party transactions. Maintain documentation.
Always model net repatriation outcomes. Headline rates do not tell the full story when cash must cross borders.
Subsidiary and branch can hire local employees under the Labour Act.
Work permits and business visas are available for eligible foreign directors and specialists.
Maintain employee contracts, payroll, social security (SSF) compliance, and grievance processes.
Confirm scope & sector: Ensure your activity is eligible for a branch or project office.
Prepare documents: Board resolution, constitutional docs, Certificate of Incorporation, latest audited accounts, and a local address.
Translate & notarise: Use certified translations and consular/legalisation where required.
Foreign company registration: File under Companies Act provisions for a foreign company.
Sector approvals: Obtain project/sector clearances if your industry needs them.
Tax registration: Obtain PAN and VAT (if applicable).
Banking: Open a branch/project account. Fund via head-office remittances.
Labour & SSF: Register for employer obligations before hiring.
Accounting setup: Nepal chart of accounts, compliance calendar, audit partner.
Go-live: Invoice and operate within the permitted scope only.
Indicative timeline: Often faster than a FITTA-based subsidiary when tied to a signed contract and a complete document set. Factor time for legalisations.
Name & activity definition: Align with sector rules and investment plan.
Shareholding structure: Foreign shareholder(s) and percentage split.
FITTA approval: Apply for foreign investment approval for equity.
Draft constitutional docs: MOA/AOA tailored to your control and veto needs.
Incorporation filing: Register the private limited company.
Capital inflow: Remit equity via banking channels and document the source.
PAN & VAT: Obtain tax registrations based on expected turnover and supplies.
Banking: Capital account + operational accounts.
Board setup & governance: Appoint directors, define signing matrix, adopt board calendar.
Labour & SSF: Employer registration, policies, contracts.
Accounting & audit: Appoint auditor, adopt policies, implement ERP or accounting system.
Go-live: Issue local invoices, enter commercial contracts, and operate.
Indicative timeline: Longer than a branch due to FITTA. Good planning keeps you on schedule.
Annual financial statements and statutory audit
Annual return and board/AGM formalities
Tax filings: VAT returns, TDS/WHT, corporate tax estimates and final return
Labour & SSF: monthly contributions and filings
NRB: foreign inflow reporting and repatriation approvals
Change filings: directors, address, shareholding changes
Set reminder owners for Legal, Finance, HR, and NRB liaison.
Government fees: Registration and stamping vary by capital and form.
Professional fees: Legal, FDI, tax, payroll setup, and audit.
Translations & legalisations: Allow for certified translations and consular costs.
Banking and FX: Wire fees and spreads for capital inflows and repatriation.
Ongoing: Accounting, payroll, HR, audit, and compliance reviews.
Build a year-one budget that includes one-off formation plus 12 months of operations.
Scope drift (branch): Operate beyond permitted scope.
Mitigation: Build a contract register and scope checklist.
Repatriation delays: Missing documents or tax clearances.
Mitigation: Maintain NRB files, tax clearance, and board resolutions in real time.
Turnover triggers: VAT/withholding thresholds and sector caps.
Mitigation: Tax calendar and dashboard alerts.
Related-party pricing: Transfer pricing exposures.
Mitigation: Intercompany policy and benchmarking.
Labour compliance gaps: Contracts and SSF lapses.
Mitigation: Standard HR playbook and monthly compliance audit.
Is your Nepal presence project-bound or long-term?
Do you need local equity or JV capital now or later?
Is liability ring-fencing important to your board?
Will you do broad local sales and hiring?
Do you want access to sector incentives and local contracts?
If most answers lean project/short-term, start with a branch. If they lean long-term/expansion, go subsidiary.
Entry assessment: Sector allowed? Branch vs subsidiary fit?
Structure memo: Shareholding, governance, and cash-flow mapping.
Approvals plan: FITTA, sector nods, and timeline.
Document factory: Charters, resolutions, translations, and forms.
Regulatory filings: Company, tax, labour/SSF, and NRB.
Operational launch: Banking, payroll, ERP, and compliance calendar.
Quarterly review: Tax, FX, and board compliance check.
Branch/project office: 4–8 weeks from complete dossier, excluding legalisation lead times.
Subsidiary with foreign equity: 6–12 weeks depending on approvals, capital flow timing, and sector checks.
EPC contractor with a signed hydro contract
Choose: Branch or project office.
Why: Contract-bound scope, head-office remittances, fixed tenure.
Watch: VAT on works, WHT on services, and repatriation planning.
SaaS company building a Nepal support and sales hub
Choose: Subsidiary.
Why: Hiring, local invoicing, long-term presence, transfer pricing controls.
Watch: TP policy, data compliance, and VAT on digital services.
Garment sourcing office with steady buyers
Choose: Subsidiary.
Why: Local suppliers, ongoing operations, potential incentives.
Watch: Indirect tax and export documentation.
Primary keyword appears in the title, first paragraph, one H2, image alt, and the conclusion.
LSI terms sprinkled naturally: foreign investment, FITTA, private limited, branch office, company incorporation, VAT, NRB, repatriation.
Short sentences and compact paragraphs for readability.
Original comparison table.
FAQ block aligned to “People Also Ask”.
Clear CTA.
Confirm sector eligibility and entry route.
Prepare KYC for shareholders/directors and foreign company (if branch).
Draft MOA/AOA (subsidiary) or board resolution (branch).
Arrange translations and legalisation.
File company/foreign company registration.
Apply FITTA (if foreign equity).
Open bank accounts; remit capital or funds.
Obtain PAN and VAT (as applicable).
Register Labour/SSF; set payroll.
Implement accounting and compliance calendar.
Go-live and start invoicing within scope.
Quarterly compliance review and NRB files tidy-up.
Passports and addresses of directors/shareholders
Certificate of Incorporation and constitution (for head office or JV partner)
Board resolutions sanctioning the Nepal setup
MOA/AOA draft (subsidiary)
Audited financials (for foreign company/parent)
Office lease or address proof in Nepal
Tax registrations and specimen signatures
Sector approvals, if any
1) Is a branch faster than setting up a subsidiary in Nepal?
Often yes, especially when tied to a signed project and complete documents. Subsidiaries need FITTA approval for foreign equity, which adds steps.
2) Can a branch do all the activities a subsidiary can?
No. A branch must operate within its approved scope. A subsidiary can adopt broader scope per its MOA and sector rules.
3) What taxes apply to a branch vs a subsidiary?
Both face corporate tax and VAT where applicable. Differences arise in withholding on cross-border payments and treaty use. Model net cash after tax.
4) Can I repatriate profits from Nepal freely?
Yes, after paying due taxes and meeting NRB conditions. Keep tax clearance and NRB documentation complete to avoid delays.
5) What is the minimum foreign investment amount?
Nepal sets a minimum foreign investment threshold, which can change. Confirm the current NPR amount before finalising your structure.