he most common way of doing business in Pakistan is through the registration of a limited liability company (locally known as a private company (Pvt. Ltd.)). While a representative office can be used when there are no plans to conduct any productive or commercial operations from within the country, branch registration is usually not optimal. See the page below for further details.
Doing business in Pakistan with a local entity
The Pakistan Limited Liability Company (Private company or Pvt Ltd)
Pakistan LLCs, also referred as private companies (Pvt. Ltd.), can be registered with only i) two directors ii) two shareholders and a minimum capital requirement of US$1,000. While the directors and shareholders can be non-residents, they must individually register for tax (NTN number) in Pakistan with the local tax authority;
Additionally, the Pakistan Government requires a legal advisor ordinarily residing in Pakistan, if the entity has a share capital over US$5,000. Our Firm can assist to complete this appointment if needed;
Best uses for a Pakistan limited liability company: this legal structure is the business entity most widely used by foreigners and locals alike, due to the low share capital requirements and the simplicity of its corporate structure.
The Pakistan Free Zone Company (EPZ company)
- Foreigners planning to manufacture products in Pakistan and re-export them to foreign markets can register their business in an export processing zone. Requirements for the same will vary according to the preferred EPZ and the nature of business of our Client, but usually include i) higher paid up capital requirements and ii) manufacturing permits and licenses;
- Requirements applicable for the registration of a standard limited liability company also applies to the SEZ company, including the need to secure tax numbers for all directors and shareholders;
- Best uses for a Pakistan free zone company: import/export activities.
- The Pakistan Limited Liability Partnership (LLP)
- In 2017, Pakistan regulations provided for the registration of limited liability partnerships, which require the appointment of at least two limited partners, one of whom must be a Pakistani national;
- While there is no capital requirement to register such entity, at least 51% of the equity must be held by a Pakistani national;
- Unlike other in jurisdictions, LLPs in Pakistan are not tax transparent entities, meaning that earnings are taxed at the corporate level, although the Pakistan Government is currently considering to allow to opt for tax transparent status;
- Best uses for a Canadian limited liability partnership: formation of a joint venture with a majority Pakistani partner. The Pakistan Public Limited Company (joint stock company or JSC)
- JSCs are available, requiring a minimum of 3 and a maximum of 50 shareholders. A joint stock company can have a public subscription for shares and shareholders may freely dispose of their shares;
- Best uses for an Italy public limited company: this entity is attractive when the founders plan to seek significant capital amounts from third party investors or list the PLC on a stock exchange. Doing business in Pakistan with a foreign entity
The Pakistan Representative office (Liaison Office)
A foreign entity can also register a liaison office in the country, provided that the foreign entity is entitled to conduct business under the national laws of the home country;
Best uses for a Pakistani representative office: such an entity can only engage in limited activities such as research and advertising. A liaison office is not allowed to invoice Clients, import and export raw materials, and sign sales contracts with Pakistani Clients.
The Pakistan Branch of a Foreign Company (Branch office)
- A branch office in Pakistan can be setup if the parent company has an existing contract with a Pakistan company or government body. Hence, a branch office can engage in business activities which involve invoicing and signing contracts, but only within the confines set by the parent company;
- Branch offices may either be a stand-alone bureau in one of the designated Special Economic Zones (SEZs) in Pakistan or a company setup of a foreign manufacturing firm;
- Best uses for a Pakistani branch office:: our Firm recommends our Client to consider registering a subsidiary (LLC) instead of a branch, because the latter entity can only be registered and maintained during the period of validity of the contract signed with a Pakistani customer.
For More information regarding company formation in Pakistancontact hello@accheroes.com or call us 0320-891702