If you’re evaluating company registration in Nepal, you’ll quickly face a pivotal choice: incorporate a private limited company or register a branch or liaison office of your foreign parent. Each route affects control, tax, compliance, hiring, banking, invoicing, and profit repatriation. This deep guide explains both models in plain English, so you can move from “researching” to “operating” with confidence.
Who this is for: founders, finance leaders, and expansion teams at foreign companies exploring Nepal for delivery centers, sales presence, sourcing, or regional operations.
Private limited = a Nepal-incorporated subsidiary. Most flexible for invoicing, hiring, and local sales. Moderate setup, fuller compliance.
Branch = an extension of the foreign parent. Suitable for project execution or where the client requires the foreign identity. Narrower scope; compliance can be heavier in some industries.
Liaison = non-commercial presence. Ideal for research, coordination, or representation. No revenue in Nepal.
Private Limited Company (PLC / Pvt. Ltd.)
A Nepal-registered legal person with limited liability. Foreign ownership is permitted in permitted sectors, subject to investment approvals.
Branch Office
A legal extension of your foreign parent. Activities are limited to what the parent does and what the sectoral approval allows.
Liaison (Representative) Office
Non-commercial. Market research, promotion, and coordination only. No local invoicing or profit generation.
Companies Act 2063 (2006) – incorporation, governance, filings.
Foreign Investment and Technology Transfer Act 2019 (FITTA 2019) – FDI entry routes, approvals, transfer of technology, repatriation.
Industrial Enterprises Act 2076 (2020) – industrial classification, facilities, select incentives.
Income Tax Act 2058 (2002) – corporate income tax, withholding tax, permanent establishment rules.
Value Added Tax Act – VAT registration and compliance (standard rate 13%).
Nepal Rastra Bank (NRB) foreign investment regulations – inward remittance, equity registration, foreign loan approvals, and repatriation protocols.
Department of Industry / Investment Board Nepal guidelines – FDI approval thresholds, sectoral permissions, and investment procedures.
(Citations above are provided for orientation; this article intentionally includes no hyperlinks.)
Use this table to shortlist fast. Assumes standard commercial use cases and permitted sectors. Always reconfirm sector-specific rules before finalizing.
| Decision lens | Private Limited Company | Branch Office | Liaison Office | Practical takeaway |
|---|---|---|---|---|
| Legal personality | Separate Nepal entity | Same legal person as foreign parent | Not for commercial activity | Subsidiary reduces risk to parent balance sheet |
| Scope of activity | Broad (as per MOA & approvals) | Narrow, tied to parent’s scope and approvals | Research, promotion, coordination only | Choose PLC for sales/ops; liaison for early research |
| Invoicing in Nepal | Yes | Yes, when permitted | No | Revenue requires PLC or eligible branch |
| Hiring in Nepal | Yes, full employer record | Yes, as branch employer | Limited admin hires only | PLC offers clean HR stack |
| Banking | Full local accounts | Local accounts as branch | Expense accounts only | PLC banking easiest for scale |
| Tax profile | Resident company taxation | Permanent establishment taxation | No CIT (no income) | Tax clarity and incentives often better with PLC |
| Transfer pricing | Yes (related-party transactions) | Yes | N/A | Maintain intercompany documentation |
| Repatriation | Dividends via NRB approval | Profits remitted to parent via NRB | N/A | NRB process mandated in both cases |
| Compliance workload | Board, audit, annual returns, tax, VAT/TDS | Sector approvals, audit, PE filings, tax | Minimal, periodic reporting | PLC predictable; branch can be sector-heavy |
| Brand & tenders | Acts as Nepal company | Showcases foreign brand directly | Representative only | Branch helps when client insists on foreign name |
| Setup speed | Moderate | Moderate to longer (sector approvals) | Fast to moderate | Liaison fastest; PLC balanced |
| Longevity | Best for long-term scale | Good for project-based work | Short-term and exploratory | Match to horizon |
| Perception | “Local partner” optics | “Foreign expert on ground” | “Market study” | Consider client expectations |
Pick a private limited company if you need to:
Sell and invoice in Nepal, including B2B and B2C.
Hire at scale across functions with clear employer-of-record standing.
Open multiple bank accounts, manage payables/receivables, and access local payment rails.
Bid for tenders where a Nepal entity is favored.
Unlock incentives tied to industrial classifications.
Typical use cases: IT/ITES delivery centers, shared service centers, distribution, retail, e-commerce, manufacturing, and professional services.
Consider a branch if:
Your customer or regulator requires a direct foreign brand for trust or compliance.
You’ll execute time-bound projects under the parent’s contracts.
Your activities are a subset of the parent’s existing business and clearly permitted in Nepal.
Typical use cases: EPC/project execution, specialized engineering and consulting, niche software deployment where the client mandates foreign contracting.
Choose a liaison to:
Conduct market research and build a pipeline.
Coordinate between Nepal stakeholders and the foreign HQ.
Establish a brand presence without commercial operations.
Not for: sales, revenue, or deliveries within Nepal.
The exact path can vary by sector and investment size. This is the standard sequence:
Name search and reservation at the Office of the Company Registrar (OCR).
FDI approval (Department of Industry or Investment Board Nepal, based on thresholds/sector).
Company incorporation at OCR (MOA, AOA, directors, registered office, capital structure).
Tax registration: Permanent Account Number (PAN), then VAT registration when applicable.
Banking: open a capital account to receive foreign equity via banking channels and register it with NRB.
Post-incorporation approvals: sector-specific licenses or NOCs if required.
Labor onboarding: HR handbook, employment contracts, social security (as applicable), and payroll setup.
Operational readiness: office lease, accounting stack, ERP/HRIS, invoicing templates, and statutory registers.
Timeline: typically 4–8 weeks for a well-prepared file in standard sectors. Complex sectors can take longer due to extra approvals.
Define permitted activities aligning with the parent’s objects and sector permissions.
Approval for branch operation from the competent authority (industry/sector route).
Register the branch with OCR, appoint an authorized representative in Nepal, and file the parent’s charter documents.
PAN and tax registrations, and VAT registration if supplying taxable goods/services.
Open branch bank accounts and register any inward funding with NRB as required.
Set up accounting, audit, and payroll where staff are engaged.
File periodic reports as mandated by sector regulators and OCR.
Timeline: 4–10+ weeks depending on sector and document legalization.
Exact fees depend on capital, sector, translations, and legalization. Plan prudently. The figures below are directional.
Professional fees: legal, advisory, translations, and filings.
Government fees: name reservation, incorporation/registration, stamp duties, and licensing.
Document legalization: notarization, apostilles/consularization for foreign documents.
Capital remittance costs: bank charges and FX spreads.
Accounting and audit: mandatory annual audit for most entities.
Tax filings: corporate income tax, VAT returns, TDS returns, employee taxes.
Statutory returns: annual returns to OCR, changes to directors/shareholders, and board resolutions.
Payroll & HR: contracts, onboarding, social security contributions where applicable.
Registered office & secretarial: address, minute books, statutory registers.
VAT standard rate is 13% in Nepal. Whether you must register depends on your activity and turnover or specific sector rules.
A private limited is a resident taxpayer. It pays corporate income tax on Nepal-source income (and worldwide income subject to Nepal rules).
A branch is commonly treated as a permanent establishment of the foreign parent. Profits attributable to Nepal operations are taxed in Nepal.
Transfer pricing applies to both structures for related-party transactions. Maintain robust intercompany agreements and local files.
VAT at 13% applies to taxable supplies. Sectors can have exemptions or zero-rating based on law.
Withholding taxes (TDS) may apply on payments like services, rent, and dividends. Rates vary by nature of payment and residency.
PLC: dividends repatriated after audited profits and tax clearance, via NRB approval.
Branch: after tax payment and audit, branch profits can be remitted to the parent with NRB procedures.
Maintain bank FDI/loan registration evidence to avoid delays in repatriation.
Bring foreign equity through banking channels with proper SWIFT messages and narratives.
Register equity (and foreign loans, if any) with NRB to create an official repatriation trail.
Use a capital account for equity and a separate operating account for expenses and revenue.
Plan for FX documentation on every in-and outbound transaction related to investment.
Local hires: permitted under both PLC and branch. A PLC provides the cleanest employer framework.
Foreign experts: work permits and business visas follow sector rules. Show skills transfer and genuine need.
Policies: draft employment contracts, a code of conduct, leave policy, and grievance procedures aligned with Nepal labor law.
Payroll: set robust payroll with TDS, social security (if applicable), and benefits administration.
Some sectors are restricted or require special approvals for foreign investment under FITTA 2019 and related regulations.
Sensitive areas (e.g., defense, certain mass media, and select primary industries) may be restricted or capped.
Positive list sectors have clearer pathways; manufacturing and IT/ITES are commonly permitted with routine approvals.
Always vet environmental, land, and local body permissions for manufacturing or logistics footprints.
Keep board minutes, statutory registers, share certificates, and resolutions updated.
Maintain document trails for FDI, loans, intercompany charges, and service agreements.
Implement internal controls for procurement, payments, and revenue recognition.
Schedule a compliance calendar: VAT monthly/quarterly, TDS, CIT, and annual OCR filings.
Under-scoping the object clause: your MOA must reflect real activities. Keep it flexible yet compliant.
Late FDI registration: missing NRB registration complicates repatriation. Fix inputs early.
Transfer pricing blind spots: price services with benchmarking; keep intercompany contracts signed.
VAT misclassification: confirm if your supplies are taxable, exempt, or zero-rated.
Licensing creep: some sectors need multiple NOCs. Map them at the start.
Document legalization delays: notarization and apostille can stretch timelines. Start immediately.
Choose a Private Limited if you need:
Local invoices, tenders, and payment collections.
Scalable hiring and brand localization.
Predictable governance and incentives.
Choose a Branch if you need:
Parent brand visibility and contract continuity.
Sector-specific approval that favors branch form.
Short- to mid-term project execution under the foreign entity.
Choose a Liaison if you need:
An early, low-risk research presence.
Partner scouting and coordination.
Compliance comfort without sales.
Name reservation and object drafting complete.
FDI route confirmed, approvals mapped.
Incorporation/branch filing documents legalized.
PAN and VAT registrations completed.
Bank capital account opened and equity recorded.
NRB registration and approvals on file.
Accounting, audit, and payroll providers engaged.
Intercompany agreements drafted and signed.
Sector licenses and local body permissions obtained.
Compliance calendar implemented and assigned.
Companies Act 2063 (2006) – company formation, filings, audits.
FITTA 2019 – FDI permissions, technology transfer, repatriation.
Industrial Enterprises Act 2076 (2020) – industrial categorization and select incentives.
Income Tax Act 2058 (2002) – corporate tax, PE rules, withholding.
VAT Act – VAT registration, returns, and assessments.
NRB Foreign Investment directives – equity/loan registration and profit/dividend remittance procedures.
Department of Industry / Investment Board Nepal process notes – thresholds, approvals, and sectoral specifics.
Statistic to know: The standard VAT rate is 13% in Nepal under the VAT Act, shaping pricing and invoicing in many sectors.
Private limited (FDI): 4–8 weeks, assuming timely document legalization and sector clarity.
Branch: 4–10+ weeks, driven by sector approvals and parent document readiness.
Liaison: 2–6 weeks, given lighter scope.
Parent documents: COI/charter, board resolution, good standing certificate, audited accounts.
Proposed Nepal structure: MOA/AOA draft, directors, registered office.
KYC: passports, photos, addresses of directors and shareholders.
Commercial plan: activity summary, staffing, projections, intercompany pricing policy.
Banking plan: capital remittance schedule, FX documentation template.
1) IT services delivery center
You need to hire engineers fast, invoice local clients, and sign long-term leases. Private limited wins. Clear HR framework, predictable VAT/CIT, and easier vendor onboarding.
2) EPC project for a public body
The tender mandates a foreign brand with a track record. A branch can align with contract terms, allow direct execution, and keep client confidence high—subject to sector approvals.
3) Market exploration for a new product
You want interviews, distributor scouting, and events. A liaison offers low-risk presence without commercial tax exposure.
Private Limited Pros
Full commercial capability
Scalable hiring and banking
Clear governance and incentives
Private Limited Cons
Broader compliance and audit
FDI approvals and NRB steps
Branch Pros
Parent brand continuity
Useful for project mandates
Profit remittance allowed post-tax
Branch Cons
Narrower scope, sector-driven
PE tax treatment
Heavier regulator touch in some sectors
Liaison Pros
Low-cost market presence
Fastest to begin
Minimal filings
Liaison Cons
No revenue
Limited HR flexibility
Temporary by design
Define your commercial scope and expected contracts.
Pick the legal shape using the table above.
Map FDI approvals and sector licenses early.
Assemble and legalize parent documents.
Draft MOA/AOA or branch charter with future-proof objects.
Complete OCR filings and secure PAN/VAT.
Open capital and operating bank accounts.
Register equity and any loans with NRB.
Finalize intercompany agreements and a transfer pricing note.
Launch with a compliance calendar and named owners.
Choosing between a private limited company, a branch, or a liaison is not about paperwork. It’s about aligning structure with strategy, risk, and speed. For steady sales, hiring, and scale, a private limited is usually best. For mandated foreign branding and project delivery, a branch can fit. For early research, a liaison suffices. With the right plan, company registration in Nepal becomes a smooth launchpad, not a hurdle.
1) Is a private limited or branch cheaper to maintain in Nepal?
A liaison is cheapest, but it cannot earn revenue. Between private limited and branch, annual costs are comparable. The deciding factor is scope, sector approvals, and future scale rather than a small fee gap.
2) Can a liaison office invoice clients in Nepal?
No. A liaison cannot generate income, issue tax invoices, or sign commercial contracts. It is limited to research, promotion, and coordination activities.
3) How long does FDI-backed incorporation take?
A well-prepared file typically finishes in 4–8 weeks for standard sectors. Sector-heavy or regulated industries can take longer due to additional approvals.
4) Can a branch hire employees in Nepal?
Yes. A branch can hire staff and run payroll. It must comply with labor law, tax withholding, and social security rules similar to a private limited.
5) How are profits repatriated to the parent or shareholders?
Through Nepal Rastra Bank processes. Subsidiaries remit dividends; branches remit attributable profits. You’ll need audited accounts, tax clearance, and proof of registered investment.