For many overseas companies, the first practical question about operating in Nepal is a simple one: how do we establish a presence here? Two structures are available, and the choice matters, because the tax and immigration authorities treat them very differently. A branch office can trade, sign contracts and invoice in Nepal. A liaison office cannot. It exists to study the market and coordinate, and it must be funded from abroad.
Choose the wrong one and you either breach the terms of your approval or take on tax and reporting duties you did not need. This guide explains the difference, who qualifies, the documents, the process and the ongoing obligations, so the decision is an informed one.
Quick answer
A foreign company that wants a physical presence in Nepal has two routes. A branch office trades, contracts and invoices. A liaison office is non-trading and limited to market research and coordination. Both require prior approval from the Department of Industry (DOI), after which the office is registered with the Office of the Company Registrar (OCR) under the Companies Act, 2063. A branch office is for doing business in Nepal; a liaison office is for studying it.
Which law applies?
A foreign company establishing a place of business in Nepal must register with the OCR. Section 154 of the Companies Act, 2063 requires registration within one month of establishing that place of business. Two regimes apply depending on the activity.
A branch office is registered under Section 155 for trading activity.
A liaison office is registered under Section 156 for non-trading activity such as market study and coordination.
In both cases, approval from the DOI must be obtained first, and foreign exchange and repatriation are supervised by Nepal Rastra Bank (NRB).
Branch office versus liaison office
| Feature | Branch office | Liaison office |
|---|---|---|
| Permitted activities | Trade, contract, invoice, import and export for the parent | Market research, coordination and liaison only |
| Can earn income in Nepal | Yes | No, and it must be funded by the parent |
| Tax registration | PAN and VAT as applicable | Limited, not for trading income |
| Profit repatriation | Yes, after tax clearance and NRB compliance | Not applicable |
| Renewal | Periodic renewal required | Periodic renewal required |
| Typical use | Executing contracts and projects, sales | Feasibility study and market entry research |
A branch office is an extension of the foreign parent. It does not have a separate legal personality, which means the parent remains responsible for the branch's obligations. That is an important point for risk planning.
Who should choose a branch office?
A branch office suits a foreign company that already has business in Nepal, whether executing a contract, servicing clients or running a project. If the Nepal operation needs to sign agreements in its own name, issue invoices, or move goods across the border, the branch is the right vehicle. Because it is tax-registered, income earned here is taxed here, and profits can be repatriated after tax clearance and NRB approval.
Who should choose a liaison office?
A liaison office is for a foreign company that is not yet doing business in Nepal and only wants to study the market, gather information or coordinate with partners. It may not earn income here, may not invoice, and is funded through remittances from the parent. It is a low-commitment way to establish a presence before committing to a branch or a locally incorporated subsidiary.
Eligibility and the negative list
Foreign companies in most sectors can apply for branch or liaison approval, but Nepal maintains a negative list of activities reserved for Nepali citizens. These include certain trading activities, travel and trekking, and some cottage industries. Activity on the negative list cannot be approved for a branch or liaison office, and sector eligibility is assessed at the DOI stage.
Documents commonly required
- An application to the DOI with the proposed office details
- Certificate of incorporation of the parent, apostilled or consularised
- Memorandum and articles of association, or equivalent charter, of the parent
- A board resolution authorising the Nepal office and nominating a representative
- Audited financial statements of the parent for the last few years
- Passport copy of the authorised representative
- A power of attorney in favour of a local representative
- A commitment to fund the office, for liaison offices
- The underlying contract, licence or project document, for branch offices
Documents executed abroad generally need notarisation and apostille or consular legalisation, and non-English documents need certified translation.
The process, step by step
- Prepare and legalise documents in the parent's home country.
- File the application with the DOI, including the activity details and source of funds.
- Obtain DOI approval to establish a branch or liaison office.
- Reserve the office name at the OCR.
- Register with the OCR under the relevant section of the Companies Act within the statutory period.
- Complete tax registration, obtaining a PAN and, for a branch, VAT where applicable.
- Open a bank account and complete NRB reporting for the initial remittance.
- Register with the local ward and obtain any sector-specific licence, such as one from the Nepal Tourism Board.
A worked example
A European engineering firm wins a maintenance contract in Nepal and needs a local presence to invoice the client. It chooses a branch office, because the operation must contract and bill locally. A second firm, still evaluating whether the Nepali market is worth entering, registers a liaison office instead, keeping its costs low and its options open while it studies demand. If the first firm had registered a liaison office, it could not have invoiced, and the contract would have stalled. If the second had registered a branch, it would have taken on tax and reporting obligations for an operation that earns nothing.
Cost and timeline
Approval and registration fees are modest by regional standards, but the realistic timeline depends on document readiness. Expect roughly two to six weeks for DOI approval and OCR registration once the file is complete, with foreign exchange and tax steps adding one to two weeks. Documents legalised abroad are usually the biggest source of delay.
Ongoing compliance
Both structures must renew their registration periodically and keep the OCR informed of changes to the registered office or representative. A branch office has full tax filing obligations, must maintain proper accounts, and must route profits through tax clearance for repatriation. A liaison office must avoid anything that looks like trading, with no invoices and no local income, and must document that it is funded by the parent.
Common mistakes
- Registering a liaison office, then trading through it. This breaches the terms of approval and risks cancellation.
- Missing the one-month registration window after establishing a place of business.
- Skipping legalisation or apostille of foreign documents, which causes rejection.
- Ignoring NRB reporting on the initial capital or funding remittance.
- Assuming a branch is a subsidiary. It is not, and the parent carries the liability.
Frequently asked questions
How long does a foreign company have to register in Nepal? Registration with the OCR is required within one month of establishing a place of business in Nepal.
Can a liaison office earn income in Nepal? No. A liaison office is non-trading and must be funded by the parent through remittances.
Can a branch office repatriate profits? Yes, after paying applicable taxes in Nepal and completing NRB compliance.
Does a branch office have a separate legal personality? No. A branch is an extension of the foreign parent, which remains liable for its obligations.
Is DOI approval needed before OCR registration? Yes. A foreign company must obtain DOI approval before registering the branch or liaison office with the OCR.
Can a foreign company open a branch in a restricted sector? No. Activities on Nepal's negative list are reserved and cannot be approved for branch or liaison registration.
How long is the approval valid? Approvals are time-bound and must be renewed periodically, and the renewal cycle is stated in the approval.
How Pluto Associates can help
We advise foreign companies on whether a branch or liaison office fits their plans, prepare the DOI application, and manage OCR registration, tax and NRB steps. If you would like a clear view of your own situation, contact our team for a consultation, message us on WhatsApp, or call +977 9802356987. We will tell you what is possible, what it costs, and how long it takes.