Branch, Liaison and Project Offices of Foreign Companies
Nepal recognises a branch office and a liaison office and nothing else. A project office is a description of an arrangement, not a legal category.
Branch or liaison office
The Companies Act 2063 (2006) knows two kinds of foreign company presence. A branch office is the registered presence of a foreign company carrying on business in Nepal. A liaison office is a registered presence forbidden to earn income. Project office, representative office, site office: each describes a commercial arrangement rather than a legal category. Where a foreign contractor operates in Nepal for the term of a single project, what it has registered is a branch.
Section 154(1) states the rule bluntly. No foreign company shall carry on any business or transaction in Nepal without a branch office registered with the Office of the Company Registrar. The section then carves out what does not count as carrying on business: investing in shares, lending money, and participating in management with approval. Those three exclusions are the legal basis on which a foreign shareholder in a Nepali subsidiary, or a foreign lender, avoids being treated as trading in Nepal in its own right.
The prior permission
Most descriptions of branch registration start with the document list. The document list is not the constraint. Section 155(1) requires the application to carry the permission of the competent authority to conduct business in Nepal, and that is the one item a foreign company cannot generate for itself.
What satisfies it depends on the activity: a signed contract with a public body, an approval from the sectoral regulator, or a licence issued under the statute governing the work. A branch is therefore no general-purpose market entry vehicle. You cannot register one and then look for work. A foreign company that wants an open-ended commercial presence, whether a sales operation, a service business or a manufacturing plant, incorporates a subsidiary instead and takes the foreign investment approval route.
Alongside the permission, the Act asks for the charter and incorporation documents with Nepali translations, the registered office and principal place of business, officer details and nationality, the proposed investment and transactions, the proposed date of commencement, a director’s declaration that the documents are accurate, and a power of attorney. It also requires the name and address of a person residing in Nepal authorised to receive notices. That is the most consequential line in the section: it is what makes the foreign company reachable by a Nepali court. Amendments to any of this must be reported within thirty-five days.
Foreign documents must be certified in accordance with the law of the company’s country of registration, and anything not in Nepali or English needs an authenticated translation.
What a liaison office may do
A liaison office exists to be present without transacting. It may represent the parent, gather information, and coordinate. It may not conduct income-earning activity of any kind. It cannot invoice, cannot contract in its own commercial interest, and cannot be the vehicle through which the parent performs work in Nepal.
The filing obligation reveals what the state is watching. A foreign company with a liaison office must file, within three months of the end of the fiscal year, a certified statement of employee salaries and the tax deducted from them. The office earns nothing, so there is no profit to examine. What there is, is payroll. Payroll is where a liaison office that has quietly started trading first shows up.
The boundary is narrow, and it is why liaison offices are often the wrong answer. If the foreign parent’s Nepali staff are negotiating, closing or delivering, the office is not a liaison office in substance, whatever the registration certificate calls it.
Cost
The Registrar charges branch registration on proposed investment.
| Proposed investment | Fee |
|---|---|
| Up to NPR 10 million | NPR 15,000 |
| NPR 10 million – 100 million | NPR 40,000 |
| NPR 100 million – 200 million | NPR 70,000 |
| NPR 200 million – 300 million | NPR 100,000 |
| NPR 300 million – 400 million | NPR 130,000 |
| NPR 400 million – 500 million | NPR 160,000 |
| Above NPR 500 million | NPR 3,000 per NPR 10 million |
| Investment not disclosed | NPR 100,000 flat |
A liaison office is a flat NPR 50,000. The schedule creates its own incentive. Declining to state an investment figure costs NPR 100,000, more than every band up to NPR 200 million. Disclosure is the cheaper option for all but the largest branches.
The tax position
A branch is a foreign permanent establishment of a non-resident person situated in Nepal. Section 68 of the Income Tax Act 2058 (2002) makes it liable for tax on its own income, and its income must be separated from that of the foreign owner. The same section then does something a subsidiary structure does not. Income sent abroad in an income year by the permanent establishment is treated as an amount equal to a distribution by that establishment, and taxed accordingly.
A subsidiary is a different animal: a Nepali resident company, taxed on its worldwide income, distributing dividends to its shareholders. Where the shareholder is a foreign investor, moving that dividend out of Nepal engages the foreign investment and exchange control regime rather than the permanent establishment rules.
Neither route is generically cheaper. They are governed by different instruments, examined by different authorities, and leave different documentation trails. Switching between them after the fact means winding one up and starting the other.
Choosing between a branch and a subsidiary
The decision is usually made on tax. Tax is the wrong first question. Four prior questions determine whether a branch is even available.
| Question | Branch | Subsidiary |
|---|---|---|
| Do you already hold a Nepali contract, licence or approval? | Required before registration | Not required |
| Is the presence open-ended? | Poor fit; tied to the underlying permission | Designed for it |
| Who bears the liability? | The foreign parent, without limitation | The Nepali company, to its capital |
| Which approval regime applies? | Companies Act registration plus the underlying permission | Foreign investment approval, then incorporation, then industry registration |
A branch is the right answer when a foreign company has won specific work in Nepal, will perform it directly with its own balance sheet behind it, and expects to leave when the work is done. It is the wrong answer when the company wants a durable Nepali business, wants liability contained, or wants Nepali partners on the equity.
One further asymmetry is easy to miss. Investing in shares, lending money and participating in management with approval do not constitute carrying on business in Nepal. A foreign parent may therefore hold and govern a Nepali subsidiary without registering anything in its own name. The moment it performs work itself rather than through the subsidiary, the registration requirement engages.
Ending a branch
The Act provides for cancellation of registration and liquidation of a foreign company’s presence. Nepali obligations do not end when the contract does. Outstanding filings, the tax position of the permanent establishment, and any liability attached to the registered agent all survive commercial completion of the work. A branch registered for a two-year construction contract and then abandoned stays on the Registrar’s books, with a Nepal-resident individual still named on it as the person to whom notices are addressed.
Exit is the part of the branch route most consistently underestimated at entry. It is worth settling in the contract that made the branch necessary in the first place.
Sources
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Government of Nepal (English translation) · In force, as amended · Tier 6 — Professional or news source
Supports: The prohibition on doing business without a registered branch, the carve-out for shareholding and lending, the 30-day decision period, the nameboard requirement, the bar on issuing securities in Nepal, and the prohibition on income-earning activity by a liaison office.
Accessed 26 August 2026
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Government of Nepal (English translation) · In force, as amended · Tier 6 — Professional or news source
Supports: The requirement for prior permission of a competent body, the documents and translations required, the named recipient of notices resident in Nepal, and the 35-day duty to report amendments.
Accessed 26 August 2026
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Government of Nepal (English translation) · In force, as amended · Tier 6 — Professional or news source
Supports: The six-month and three-month filing deadlines, the content of the Nepal-operations statement, and the liaison office salary and withholding certification.
Accessed 26 August 2026
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राजश्व / दस्तुर (Revenue and fee schedule)
Office of the Company Registrar · Current as at 26 August 2026 · Tier 2 — Official publication
Supports: Branch registration fees by proposed investment, the NPR 100,000 flat fee where investment is undisclosed, and the NPR 50,000 liaison office fee.
Accessed 26 August 2026
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Government of Nepal (English translation) · In force, as amended · Tier 6 — Professional or news source
Supports: That a foreign permanent establishment situated in Nepal is liable to tax on its own income, that its income is separated from that of its owner, and that income sent abroad is treated as an amount equal to a distribution.
Accessed 26 August 2026
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