For over a decade, Healy Consultants Group 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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Pakistan business setup summary

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• Advantages and disadvantages

  Advantages of Pakistan company registration

  

  1. Easy to set up a business:
     • A limited liability company can be incorporated in Pakistan within 2 months, with a minimum of two shareholders and two directors 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;
  2. Low costs:
     • Annual business operating costs are low, with monthly average skilled salaries at US$315 and average monthly rental at US$ 25 per sq. ft.;
     • 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;
  3. Minimum withholding tax:
     • The Pakistani Government has concluded double taxation agreement with 63 countries. Consequently, funds can be remitted to foreign shareholders with minimum withholding tax;
  4. Access to trade:
     • Through rail, road, sea and air, a Pakistan registered company enjoys trading access to large economies such as China, Russia and the UAE;
     • The country has a variety of natural resources such as coal, gold, copper ore, uranium, oil, and gas;
  5. Special economic zones offered by the government:
     • 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. Islamic banking is massive
     • There is no restriction on repatriation of funds between international Sharia bank accounts.
  7. A resource-rich country:
     • In 2019, Pakistan has an enormous natural gas reserve of 14.19 trillion cubic feet. The nation has a daily gas production of around 19 million cubic meters;
     • There are numerous untouched oil and gas reserves in the mountainous areas of Balochistan and the deserts of Sindh. The nation is also gifted with massive coal reserves;
     • Pakistan has huge gold and copper ores. It has other mineral reserves of gypsum, iron ore, silver, and other precious stones.
  8. Like in India, English is the language most used by businesses. For example, all corporate documents will be in English. Likewise, bankers are usually fluent in English and online banking is also in this language.

  Disadvantages of Pakistan company registration

  • Although Healy Consultants Group makes it easy, Pakistan business set up is complex because:
    • The government requires all foreigners to complete a security check before approving them as shareholders or directors of a Pakistan company. On average, it takes three months to secure this approval but, depending on the nationality of our Clients and the nature of the business, this process can last to up to one year!
    • Some of our Clients cannot wait for a minimum of four months before starting business in Pakistan. In such cases, we recommend them to consider alternative fast business setup solutions.
    • The government also requires all companies to appoint a legal advisor within three months of their registration. Most of our Clients require Healy Consultants Group to supply them with a professional passive nominee to meet this legal requirement.
    • All directors of a company must also hold at least one of its shares.
  • While there are dozens of local banks in Pakistan, few international banks are present in the country. Most of our Clients request our team to secure corporate bank accounts numbers with i) DB ii) Standard Chartered iii) Citibank or iv) Bank of China.
  • While Pakistan is not a blacklisted jurisdiction by the Financial Action Task Force (FATF), transactions to or from Pakistan are negatively viewed by international banks. Consequently, trading from Pakistan will lead to corporate bank account challenges.

  Taxation

  Pakistan is a high tax jurisdiction which levies i) a punitive corporate tax rate of 29% 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 117 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. Starting a company in Pakistan is increasingly difficult because the government is inefficient, and employees are unproductive and move at a slow pace.

  Issues of human rights violation:

  1. Despite signing and implementing various international human rights legislation, many areas in Pakistan still witness violence and discrimination towards minorities, women and foreigners. Therefore, adaptation by foreigners and their families is difficult in this economy;
  2. A huge proportion of children still engage in child labour in Pakistan.

• 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.