How to Open a Branch Office in Nepal as a Foreign Company

Foreign company registration in Nepal is no longer limited to large multinationals. Today, global companies across IT, consulting, engineering, manufacturing, fintech, and professional services are opening branch offices in Nepal to access talent, reduce costs, and serve the South Asian market.

If your company wants to operate without incorporating a new local subsidiary, a branch office is often the most strategic option. It allows you to operate under your parent company’s name while remaining fully compliant with Nepali law.

This guide explains, in plain language, how to open a branch office in Nepal as a foreign company, including legal requirements, approval authorities, timelines, costs, tax implications, and compliance obligations.

What Is a Branch Office in Nepal?

A branch office is an extension of a foreign company that operates in Nepal under the same legal identity as its parent company. It is not a separate legal entity.

In Nepal, branch offices are regulated primarily under:

• Foreign Investment and Technology Transfer Act 2019

• Companies Act 2006

• Department of Industry

• Inland Revenue Department

A branch office may:

• Generate revenue in Nepal

• Hire local and foreign employees

• Sign contracts locally

• Invoice Nepali or overseas clients

Why Foreign Companies Choose Branch Offices in Nepal

Foreign companies typically choose a branch office over a subsidiary for speed, control, and lower complexity.

Key advantages

• No minimum paid-up capital

• Faster setup than a private limited company

• Full operational authority

• 100% foreign ownership

• Direct control by the parent company

Common use cases

• IT and software development firms

• Engineering and infrastructure companies

• Consulting and professional services

• Manufacturing liaison and sourcing operations

• NGOs and international contractors

Branch Office vs Subsidiary vs Liaison Office

Insight: If you plan to bill clients or employ staff, a liaison office will not be sufficient.

Step-by-Step Process: How to Open a Branch Office in Nepal

1. Obtain Approval from the Department of Industry

The first step in foreign company registration in Nepal for a branch office is approval from the Department of Industry (DOI).

You must submit:

• Parent company registration certificate

• Memorandum and Articles of Association

• Board resolution approving Nepal branch

• Project profile and business plan

• Power of Attorney for local representative

All documents must be notarised and apostilled.

2. Register the Branch Office

Once DOI approval is granted, the branch office is formally registered in Nepal under the Companies Act 2006.

At this stage:

• Branch name is approved

• Legal presence is established

• Registration certificate is issued

3. Tax Registration with Inland Revenue Department

Your branch must register for:

• PAN (Permanent Account Number)

• VAT, if applicable

This enables lawful invoicing, payroll processing, and tax compliance.

4. Open a Local Bank Account

A Nepali commercial bank account is required to:

• Receive funds from the parent company

• Pay salaries and vendors

• Settle taxes

Banks will request:

• DOI approval letter

• Branch registration certificate

• PAN certificate

5. Register for Labour and Social Security

If you hire local staff, registration is mandatory with:

• Social Security Fund

Employer contribution: 20%
Employee contribution: 11%

Timeline for Opening a Branch Office in Nepal

A realistic timeline:

1. Document preparation: 1–2 weeks

2. DOI approval: 2–4 weeks

3. Registration and tax setup: 1–2 weeks

Total: approximately 4–8 weeks

Delays usually occur due to incomplete documentation or improper apostille.

Taxation of Branch Offices in Nepal

A branch office is treated as a permanent establishment.

Key taxes

• Corporate income tax: 25%

• VAT: 13% (if applicable)

• Withholding taxes on salaries and services

Unlike subsidiaries, branch profits may be repatriated to the parent company after tax clearance.

Employment and HR Compliance

Branch offices may legally hire:

• Nepali nationals

• Expatriate employees with work permits

Key obligations:

• Labour contracts under Nepal Labour Act

• Social Security Fund registration

• Payroll tax deductions

• Annual leave, sick leave, public holidays

Non-compliance exposes the parent company to direct liability.

Common Mistakes Foreign Companies Make

Avoid these frequent issues:

• Choosing a liaison office when revenue is planned

• Underestimating employment compliance

• Missing SSF registration deadlines

• Poorly drafted parent company resolutions

• Ignoring annual reporting obligations

Annual Compliance for Branch Offices

Each year, your branch must:

• File income tax returns

• Renew registrations

• Submit financial statements

• Maintain statutory records

Failure may lead to penalties or cancellation.

When a Branch Office Is the Right Choice

A branch office is ideal if:

• You want fast market entry

• You need operational control

• You do not want local shareholders

• You plan to repatriate profits

If you want fundraising or local investors, a subsidiary is better.

FAQ: Foreign Company Registration in Nepal

Can a foreign company open a branch office in Nepal?

Yes. Foreign companies may open branch offices with approval from the Department of Industry under FITTA 2019.

How long does branch office registration take?

Typically 4 to 8 weeks, depending on document readiness and regulatory approvals.

Is a branch office taxable in Nepal?

Yes. Branch offices are taxed at 25 percent corporate income tax on Nepal-sourced income.

Can a branch office hire employees in Nepal?

Yes. Branch offices can hire local and foreign employees subject to labour and immigration laws.

Can profits be repatriated to the parent company?

Yes. Profits can be repatriated after tax clearance and regulatory compliance.

Conclusion: Foreign Company Registration in Nepal via Branch Office

Foreign company registration in Nepal through a branch office offers speed, control, and flexibility. For companies that want operational presence without forming a new entity, it is often the most efficient route.

However, compliance is strict and mistakes are costly. A well-structured setup ensures smooth operations and risk-free expansion.

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