DOING BUSINESS IN PAKISTAN
For over a decade, Healy Consultants 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.
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Advantages and disadvantages
Advantages of Pakistan company registration
- 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;
- Annual business operating costs are low, with monthly average skilled salaries at US$320 and average monthly rental at US$ 25 per sq ft;
- The Pakistani Government has concluded double taxation agreement with 47 countries. Consequently, funds can be remitted to foreign shareholders with minimum withholding tax;
- Through rail, road, sea and air, a Pakistan registered company enjoys trading access to large economies such as China, Russia and the UAE;
- 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;
- 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;
- Business documents are mostly available in English, therefore translation costs and time can be saved during company registration process;
- 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;
- 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
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%.
- 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;
- 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;
- There is unrelenting civil unrest and violence in the country. Consequently, daily employee attendance is affected.
- 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;
- It is difficult to complete business tasks because daily life can be disorganized and chaotic;
- The government tenders favor to i) Pakistan nationals ii) companies with Pakistan nationals.
- Pakistan neighbors anti-west states like Iran and Afghanistan. Consequently, it is a country lacking safety, peace, certainty, and stability;
- A tectonic plate boundary runs through the center of the country. Therefore, Earthquakes occur frequently. They disrupt daily business and trade.
- As a developing country, Pakistan is facing infrastructure issues which can be a hurdle for foreign investors;
- 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.
- 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;
- 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.
- Time to incorporate: Ten weeks
- Cost to set up: US$22,850
- Minimum capital: US$1,000
- Physical office required: No
- Shareholders: 2
- Directors: 2
- Company secretary: No
- Resident director: No
- Corporate tax rate: 33%
- Corporate tax base: Worldwide
- Shelf companies: Not Available
- Main company type: Pvt. Ltd.
Useful links for Pakistan
Government and public authority websites:
- Ministry of Finance
- Ministry of Foreign Affairs
- Central Bank of Pakistan
- Chamber of Commerce
- Stock Exchange
- Board of Investment
- Pakistan airport
- Visiting Pakistan
- Investment in Pakistan – KPMG
- Banking Reforms 10 year Strategy
- Corporate & Business Law Pakistan – ACCA
- Moving To Pakistan, Your relocation guide