---
title: How to Open a Branch Office in Nepal as a Foreign Company
description: Learn how foreign company registration in Nepal works when opening a branch office. Legal steps, costs, timelines, and compliance explained.
---

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# [How to Open a Branch Office in Nepal as a Foreign Company](https://digitalconsultingventures.com/insights/how-to-open-a-branch-office-in-nepal-as-a-foreign-company)

 Written by [Vijay Shrestha](https://digitalconsultingventures.com/insights/author/vijay-shrestha) | Jan 6, 2026, 4:39:53 AM

**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

| Feature | Branch Office | Subsidiary (Pvt Ltd) | Liaison Office |
| --- | --- | --- | --- |
| Legal status | Extension of parent | Separate Nepali entity | Extension of parent |
| Revenue generation | Yes | Yes | No |
| Capital requirement | No fixed minimum | NPR 100 million for FDI | No |
| Regulatory approvals | DOI + tax | DOI + OCR | DOI |
| Taxable in Nepal | Yes | Yes | Limited |
| Best for | Active operations | Long-term presence | Market research |

**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.

[View full post](https://digitalconsultingventures.com/insights/how-to-open-a-branch-office-in-nepal-as-a-foreign-company)

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