Company registration in Nepal: liaison office rules 2025

Company registration in Nepal often begins with a low-risk footprint: a liaison (representative) office. In 2025, this model lets foreign companies research the market, coordinate with agents, and build relationships without trading locally. This guide explains the legal basis, permitted activities, registration steps, documents, taxes, payroll, HR, and typical pitfalls. It is written in plain English, with short sentences and action-oriented checklists.

What is a liaison office in Nepal?

A liaison office is a non-trading presence. It represents the parent company. It can liaise, research, and coordinate. It cannot sell, invoice, earn revenue, or sign local commercial contracts. All expenses are funded from abroad. The parent remains fully liable.

Why choose it?

• Lower risk.

• Faster setup.

• Clean compliance when you only need representation, not sales.

Legal framework 

• Companies Act, 2063 (2006), Chapter on Foreign Companies.
  Registration of a foreign company’s liaison office and ongoing filings.

• FITTA 2019 (Foreign Investment and Technology Transfer Act).
  Relevant when you convert to a branch or invest in a Nepali entity.

• Nepal Rastra Bank (NRB) foreign exchange rules.
  Inward remittance to fund expenses; recording of investment when applicable.

• Inland Revenue Department (IRD) rules.
  PAN for payroll and withholding; VAT normally not required for a pure liaison.

• Labour Act and Social Security Fund (SSF).
  Minimum wage, contracts, and mandatory SSF contributions when you hire.

Permitted vs restricted liaison-office activities

Permitted 

• Market research and competitor tracking.

• Relationship management with Nepali stakeholders.

• Technical coordination with distributors or agents.

• Non-commercial customer assistance and information desks.

• Internal quality checks, sourcing support, and visits scheduling.

Restricted 

• No selling goods or services in Nepal.

• No issuing invoices or collecting local payments.

• No marketing that constitutes solicitation of sales locally.

• No signing local sales contracts or purchase orders.

• No local revenue, commissions, or fees.

Shortcut: If money would be earned in Nepal, or a contract would create local revenue, the liaison office cannot do it.

Registration pathway (step-by-step)

Target timeline: 10–20 working days in straightforward cases.

1. Decide scope and name
   Define the office name (normally “<Parent> Nepal Liaison Office”) and a short activity statement.

2. Board resolution
   Approve the establishment of a liaison office in Nepal; appoint an authorized signatory and local notice recipient.

3. Document set (prepare and notarize)

   • Charter/incorporation documents of the parent.

   • Memorandum/Articles (or equivalents).

   • Latest audited financials (if available).

   • Parent company profile and primary business line.

   • Passport copies of directors.

   • Appointment letter and ID of local notice recipient.

   • Power of attorney to the filer.
     Translations into Nepali are typically required.

4. Application to the Office of Company Registrar (OCR)
   Submit the liaison-office application under the Companies Act with prescribed fees.

5. Sectoral checks (only if applicable)
   Some sectors may require additional “no objection” or specific authorization. Your advisor will flag this early.

6. Certificate of registration
   OCR issues a liaison-office registration certificate.

7. PAN at Inland Revenue
   Obtain PAN for payroll, TDS, and compliance filings.

8. Banking and inward remittance
   Open a local bank account in the name of the liaison office. Fund all expenses through foreign inward remittances from the parent.

9. Office setup and HR compliance
   Lease space; register employees to SSF; align contracts and payroll with minimum wage rules.

10. Operational kick-off
    Start non-trading activities. Keep books, retain documents, and file annual returns on time.

Documents checklist 

• Board resolution approving the Nepal liaison office.

• Parent’s registration certificate, charter, and constitutional docs.

• Parent’s latest audited financials (if available).

• Power of attorney to local filer/representative.

• Passport copies of directors.

• Appointment letter + ID of local notice recipient in Nepal.

• Company profile and short activity note for Nepal.

• Nepali translations where required.

• Draft lease or virtual office arrangement (as applicable).

Fees and typical costs

• Government filing fees: modest for liaison office registration.

• Translations and notarizations: depend on page count.

• Professional fees: vary by complexity and sector.

• Banking: standard KYC and account opening costs.

(We can provide a precise quote after a short scope call.)

Tax, accounting, and payroll: what changes in 2025?

• Corporate income tax: A pure liaison office has no Nepal-source income, so no corporate income tax should arise. If income appears, you risk re-characterization and tax exposure.

• PAN and withholding: Obtain PAN. Withhold TDS on salaries, rent, and any payments where applicable.

• VAT: No VAT registration if you do not make taxable supplies in Nepal.

• Books and filings: Maintain local books for Nepal operations. File annual returns and updates with OCR.

• Payroll: 2025 minimum wage increased. Enrol all staff in SSF and contribute monthly.

Snapshot (2025): Minimum monthly wage is NPR 19,550. Total SSF contributions equal 31% of basic salary (20% employer + 11% employee).

HR, visas, and staffing model

• Local hires: Allowed. Use compliant employment contracts.

• Expat managers: Work visas and permits apply; plan lead time.

• Outsourcing mix: For a lean presence, combine one local coordinator with parent-side teams and short-term visits.

• Policies: Adopt a local employee handbook aligned with the Labour Act (leave, overtime, benefits, termination).

Bank, currency, and remittance rules

• Funding: Bring in all operating expenses as inward foreign remittance from the parent.

• Forbidden: Local revenue or settlement of invoices from Nepali customers.

• Proof: Keep bank SWIFT copies and purpose codes for audits.

• Budgeting: Annual budget helps banks and auditors track compliance.

Compliance calendar 

Monthly

• Payroll, TDS deductions and deposits.

• SSF contributions.

• Expense recording and bank reconciliation.

Quarterly

• TDS returns.

• Internal review of activity scope (no creep into trading).

Annually

• OCR annual return and updated information.

• Financial statements for Nepal operations.

• Lease renewal and KYC refresh with bank.

Ad-hoc

• Update OCR on changes (authorized person, address, signatories).

• Board re-authorizations as needed.

Liaison vs branch vs subsidiary 

Seven frequent mistakes 

1. Hidden selling. Even “informational” webinars can slide into sales. Keep it non-commercial.

2. Local collections. Never collect fees locally. Route sales to the parent or a licensed channel.

3. No PAN. You still need PAN for payroll and TDS.

4. Skipping SSF. Enrol employees; contribute monthly.

5. Weak document trail. Keep remittance proofs and board resolutions.

6. No annual return. File with OCR on time.

7. Scope creep. Re-train teams quarterly on what a liaison can and cannot do.

Seven signs you should convert to a branch or subsidiary

1. You need to invoice Nepali customers.

2. You plan after-sales with SLAs inside Nepal.

3. You need import or inventory in Nepal.

4. You must hire a full local team with sales targets.

5. You require VAT compliance for local supplies.

6. You want limited liability and local equity incentives.

7. Government tenders require a local bidder of record.

Numbered setup roadmap 

1. Decide scope, name, and headcount.

2. Draft board resolution and POA.

3. Prepare notarized parent documents and translations.

4. Submit OCR application; pay fees.

5. Receive registration certificate.

6. Obtain PAN at IRD.

7. Open bank account; remit seed budget.

8. Sign office lease and create HR files.

9. Enrol staff in SSF; roll payroll.

10. Go live and monitor compliance monthly.

Bulleted compliance toolkit 

• Board resolution template.

• POA template.

• OCR application set and annex list.

• PAN checklist and officer visit notes.

• Payroll and SSF enrollment pack.

• Monthly compliance tracker.

• Annual return calendar with reminders.

FAQ 

1) Can a liaison office invoice in Nepal?
No. A liaison office cannot earn revenue or issue invoices locally. All operating expenses must be funded by foreign remittances.

2) Do I need Department of Industry approval?
Generally, no. Registration is through the Office of Company Registrar. Sector-specific clearances may apply in regulated industries.

3) Do I need PAN or VAT?
PAN: yes, for payroll and withholding. VAT: not if you make no taxable supplies. If activity shifts to trading, VAT may apply.

4) Can a liaison office hire staff?
Yes. Use compliant contracts, pay at least the legal minimum wage, and contribute to the Social Security Fund monthly.

5) How long does registration take?
Simple cases close in about 10–20 working days. Complex sectors or extra approvals can add time.