Pakistan company registration

DOING BUSINESS IN PAKISTAN

For over a decade, Healy Consultants Group PLC has efficiently and effectively assisted Clients with i) business registration ii) business licensing iii) Pakistan business banking solutions iv) visa options v) staff recruitment strategies and vi) registered office services.

SummaryLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Best use of company?All products and servicesClose a customer deal nowManufacturing and export tradingTo secure public fundingProfessional servicesMarketing & researchSpecific projects
How soon can you invoice Clients/sign sales contracts?2 months1 month2 months2 months2 monthsCannot2 months
How soon can you hire staff?2 months1 month2 months2 months2 months2 months2 months
How soon can you sign a lease agreement?2 months1 month2 months2 months2 months2 months2 months
How long to supply corporate bank account numbers?3 months6 weeks3 months3 months3 months3 months3 months
How long to supply company registration/tax numbers?7 weeks4 weeks8 weeks9 weeks8 weeks9 weeks9 weeks
Corporate tax rate on annual net profits?31%31%31%31%31%0%31%
Limited liability entity?YesYesYesYesYesNoNo
Government grants available?YesYesYesYesYesNoYes
Government approval required for foreign owners?YesYesYesYesYesYesYes
Resident director/partner/manager/legal representative required?YesYesYesYesYesYesYes
Minimum recommended paid up share capitalUS$29,000US$29,000US$29,000US$29,000US$29,000NoneNone
Can bid for Government contracts?YesYesYesYesYesNoYes
Corporate bank account location?Standard Chartered BankAllied BankHabib BankUnited BankNational BankMCB PakistanStandard Chartered Bank
Can secure trade finance?YesYesYesYesYesNoYes
VAT payable on sales to local customers?17%17%17%17%17%None17%
Average total business set up engagement costs?US$22,850US$36,160US$33,800US$24,850US$28,250US$32,850US$30,850
Average total engagement period?2 months1 month2 months2 months2 months2 months2 months

See full table

Accounting and tax considerationsLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Statutory corporate tax payable?31%31%31%31%0%0%31%
Legally tax exempt if properly structured?NoNoNoNoYesNoNo
Group HQ tax incentives?NoNoNoNoNoNoNo
Must file an annual tax return?YesYesYesYesYesNoYes
Must file annual financial statements?YesYesYesYesYesNoYes
Must appoint an auditor?YesYesYesYesYesNoYes
Access to double taxation treaties?YesYesYesYesYesNoYes
Withholding tax on payments to foreign shareholders?12.50%12.50%12.50%12.50%NoneNone12.50%
Company RegistrationLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Resident director/partner/manager/legal representative required?YesYesYesYesYesYesYes
Minimum number of shareholders/partners?22272Parent companyParent company
Maximum shareholding for foreigners?100%100%100%100%51%100%100%
Minimum recommended paid up share capital?US$29,000US$29,000US$29,000US$29,000US$29,000NoneNone
Security deposit to be kept with Government?NoNoNoNoNoNoNo
Shelf companies available?YesYesYesYesYesNoNo
Time to incorporate a new entity?7 weeks4 weeks8 weeks9 weeks8 weeks9 weeks9 weeks
Can easily convert to a PLC?YesYesYesYesNoNoNo
Public register of shareholders and directors?YesYesYesYesYesYesYes
Can have preference shareholders?YesYesYesYesNoNoNo
Business ConsiderationsLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Good entity for trademark registration?YesYesYesYesYesNoYes
Can secure an import and export license?YesYesYesYesNoNoYes

Sponsorship by a local citizen required?No
Our Client needs to travel to Pakistan for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Can be wholly foreign owned?Yes
The entity will likely be regulated by?SECP
Minimum number of directors/managers?2
Monthly VAT reporting to the Government?Yes
Must sign an office lease agreement during incorporation?No
Shareholders & directors documents to be attested/translated?Yes
Each foreign director needs a personal income tax number?Yes
Foreign director needs a residence visa?Yes
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?None
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Click link
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average custom duties suffered?10%
Government foreign investment approval required?Yes
Average monthly office rental? (US$ per sq m)US$20
Minimum statutory monthly salary?US$130
Average monthly US$ salary for local skilled employees?US$430
Pakistani Rupee deposit interest rate? (1 year average)7.27%
Overseas remittance currency controls?Yes
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Fair
Crowd funding available in this country?Yes

Press the link headings below to read detailed, relevant, up to date information.

  • Advantages and disadvantages

    Advantages of Pakistan company registration

      business registration in Pakistan

    1. A limited liability company can be incorporated in Pakistan within 2 months, with a minimum of two shareholders and two director of any nationality. The minimum paid up share capital is US$1,000 and our Client will not need to travel to complete the registration procedures. However, foreign nationals acting as director or shareholders are subject to security checks by the Pakistani government;
    2. Annual business operating costs are low, with monthly average skilled salaries at US$320 and average monthly rental at US$ 25 per sq ft;
    3. The Pakistani Government has concluded double taxation agreement with 47 countries. Consequently, funds can be remitted to foreign shareholders with minimum withholding tax;
    4. Through rail, road, sea and air, a Pakistan registered company enjoys trading access to large economies such as China, Russia and the UAE;
    5. Pakistan’s Government offers four special economic zones offering foreign companies i) special infrastructure support ii) investment facilitation services and iii) business incentives. The four special economic zones are Karachi, Risalpur, Sialkot, and Gujranwala;
    6. The country has a variety of natural resources such as coal, gold, copper ore, uranium, oil, and gas. From 2012, foreign investors are allowed to directly trade these resources;
    7. Business documents are mostly available in English, therefore translation costs and time can be saved during company registration process;
    8. Compared to countries of the western world, the cost of living in the country is very cheap including food, transport, utilities, rent, wages etc. The price for a litre of Petrol is US$2 and a meal will cost you around US$3;
    9. Islamic banking is massive in the country. There is no restriction on repatriation of funds between international Sharia bank accounts.

    Disadvantages of Pakistan company registration

    Taxation

    Pakistan is a high tax jurisdiction which levies i) a punitive corporate tax rate of 32% on global profits ii) customs duty on exports of 9.5% and iii) sales VAT rate of 17%.

    Employee challenges

    1. English is spoken by around 10% of the population. Consequently, it is difficult for foreign entrepreneurs to start and grow their business in Pakistan, as communication is limited;
    2. The computer literacy rate is under 30%. Consequently, it is difficult for foreign investors to find computer literate employees to fasten day to day business activities;
    3. There is unrelenting civil unrest and violence in the country. Consequently, daily employee attendance is affected.

    Government

    1. Foreign entrepreneurs interested in operating a business in Pakistan cannot rely on the regulatory system to protect their business interests. Corruption is rife and contracts are arbitrary. As a result, the country ranks poorly at 139 out of 183 countries in the global corruption perception index;
    2. It is difficult to complete business tasks because daily life can be disorganized and chaotic;
    3. The government tenders favor to i) Pakistan nationals ii) companies with Pakistan nationals.

    Geography

    1. Pakistan neighbors anti-west states like Iran and Afghanistan. Consequently, it is a country lacking safety, peace, certainty, and stability;
    2. A tectonic plate boundary runs through the center of the country. Therefore, Earthquakes occur frequently. They disrupt daily business and trade.

    Infrastructure

    1. As a developing country, Pakistan is facing infrastructure issues which can be a hurdle for foreign investors;
    2. According to the World Bank survey, the demand for power is vastly exceeding the supply and the shortage of electrical power is a real and urgent problem. Thus, it highly impacts productivity.

    Business environment

    1. Pakistan’s overall Doing Business 2016 ranking is 138, recording a decline of 2 positions from the previous year, and falling by more than 30 places since 2013;
    2. Starting a company in Pakistan is increasingly difficult because the government is inefficient, and employees are unproductive and move at a slow pace.
  • Best uses for a Pakistan company

    Gateway between the Middle East and China

    China is investing large amounts in Pakistani infrastructure to build a Pakistan-China economic corridor and closer trade links with the Middle East through the country. The opening of this trade route will create significant opportunities for trading, manufacturing and logistics businesses working in one of these regions and wanting to expand into the other.

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Company registration

  • Time to incorporate: Ten weeks
  • Cost to set up: US$22,850
  • Minimum capital: US$1,000
  • Physical office required: No

Required appointments

  • Shareholders: 2
  • Directors: 2
  • Company secretary: No
  • Resident director: No

Key facts

  • Corporate tax rate: 33%
  • Corporate tax base: Worldwide
  • Shelf companies: Not Available
  • Main company type: Pvt. Ltd.

Contact us

For additional information on our company registration services in Pakistan, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Paavan Chhabra, directly:
client relationship officer - Paavan
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