Pakistan is one of the largest emerging markets in South Asia, with a growing economy and an expanding consumer base. As a result, it has become an attractive destination for both local and foreign businesses seeking to expand or establish operations. Whether you’re a local entrepreneur or a foreign company looking to enter the Pakistani market, understanding the process of business registration is essential for legal compliance and smooth operations. This article provides a detailed guide on how to Register Business In Pakistan, including the steps for both local businesses and foreign companies.
Steps to Register a Business in Pakistan
The process of registering a business in Pakistan varies depending on the type of business entity. Below is a step-by-step guide to registering a business in Pakistan:
Choosing the Type of Business Entity
The first step in registering a business is to choose the type of entity you wish to form. The most common types of business entities in Pakistan are:
Sole Proprietorship: A business owned and run by a single individual. It’s the simplest form of business structure, where the owner is personally liable for the business’s debts and obligations.
Partnership: A business formed by two or more individuals who share profits, losses, and responsibilities. Partnerships are governed by the Partnership Act of 1932.
Private Limited Company: A legal entity separate from its owners, where liability is limited to the shareholders’ investment. Private limited companies are the most common form for small to medium-sized businesses.
Public Limited Company: A company that can issue shares to the public and is governed by the Companies Act of 2017.
Limited Liability Partnership (LLP): A hybrid structure combining elements of a partnership and a corporation, where partners have limited liabilities.
The most common choice for businesses in Pakistan is the Private Limited Company, as it offers limited liability and is considered a more formal structure for growth and expansion.
Registering with the Securities and Exchange Commission of Pakistan (SECP)
For most business entities, especially private limited companies, registration with the Securities and Exchange Commission of Pakistan (SECP) is required. The SECP is the regulatory authority overseeing the registration and regulation of companies in Pakistan.
Name Reservation: The first step is to reserve a name for your company. The name should be unique and should not conflict with any other registered company names. You can check the availability of the name on the SECP’s online portal and reserve it for a period of 90 days.
Incorporation Documents: After reserving a name, you will need to submit the following documents to the SECP:
Memorandum and Articles of Association
Copies of national identity cards of directors
Proof of the registered office address
Form 29 (Particulars of Directors)
Paid-up capital details
Other documents as required by the SECP
Filing the Application: Once the required documents are prepared, you can file the application for incorporation through the SECP’s online portal, SECP eServices. This process is straightforward and can be completed online without the need to visit the SECP office.
Certificate of Incorporation: If the application is approved, the SECP will issue a Certificate of Incorporation, which officially establishes your business entity in Pakistan. This certificate is essential for opening bank accounts, applying for licenses, and operating legally.
Registering for Taxes with the Federal Board of Revenue (FBR)
After incorporating the company, the next step is to register for taxes with the Federal Board of Revenue (FBR), which is responsible for managing and collecting taxes in Pakistan. The primary taxes you will need to register for include:
National Tax Number (NTN): All businesses, whether local or foreign, must apply for an NTN with the FBR. This number is required for filing taxes and other official purposes.
Sales Tax Registration: If your business is involved in the sale of goods or services, you must register for sales tax with the FBR. Sales tax registration is mandatory for businesses whose turnover exceeds a certain threshold.
Income Tax Registration: Businesses must also file income tax returns annually with the FBR. Income tax rates vary depending on the type and size of the business.
Social Security and Employees’ Old-Age Benefits (EOBI): If you plan to hire employees, you must register with the Employees’ Old-Age Benefits Institution (EOBI) and the Social Security department to ensure your employees receive social security benefits.
Opening a Business Bank Account
Once your company is registered, you will need to open a business bank account in the name of the company. To do this, you’ll need to present your Certificate of Incorporation, NTN certificate, and other required documents to a bank of your choice.
Having a business bank account is essential for handling business transactions, paying taxes, and separating personal finances from business finances.
Obtaining Required Licenses and Permits
Depending on the nature of your business, you may need to obtain specific licenses or permits. For instance:
Import/Export License: If you are planning to engage in international trade, you will need an import/export license from the Trade Development Authority of Pakistan (TDAP).
Sector-Specific Licenses: Certain sectors, such as healthcare, food, pharmaceuticals, and education, require specialized licenses from relevant government departments or regulatory bodies.
Make sure to research the licenses applicable to your business and acquire them before commencing operations.
Foreign Company Registration in Pakistan
Foreign companies looking to establish a presence in Pakistan must follow additional procedures compared to local businesses. The process for Foreign Company Registration In Pakistan generally includes the following steps:
Incorporating a Branch, Liaison, or Representative Office
Foreign companies can establish operations in Pakistan through different types of setups, including:
Branch Office: A branch office is an extension of the foreign parent company and can carry out business activities similar to the parent company. However, it cannot engage in direct sales in Pakistan.
Liaison Office: A liaison office is primarily for promoting the parent company’s business in Pakistan. It cannot engage in any profit-making activities.
Wholly Owned Subsidiary (Private Limited Company): This is a separate legal entity incorporated in Pakistan, but it is owned by the foreign company. It can engage in profit-making activities.
Registering with SECP
Similar to local companies, foreign companies must register with the SECP. The process involves submitting the necessary documents, including a certificate of incorporation from the home country, a power of attorney, details of directors, and the proposed business activities in Pakistan.
Tax Registration
Foreign companies must also register with the FBR to obtain an NTN and comply with Pakistan’s tax regulations. This includes registering for income tax and sales tax, depending on the type of business activities they will be involved in.
Foreign Exchange and Investment Approval
Foreign companies intending to bring in capital or transfer funds across borders will need to obtain approval from the State Bank of Pakistan (SBP) and the Board of Investment (BOI) for foreign investment.
Branch Office Licenses
If establishing a branch or representative office, foreign companies need to obtain approval from the SECP, which will assess the nature of the business and ensure that it complies with Pakistani laws and regulations.
Conclusion
Registering a business in Pakistan, whether a local entity or a foreign company, involves a well-defined process governed by the SECP and FBR. By understanding the registration steps and legal requirements, you can ensure that your business complies with local regulations and operates smoothly. The Pakistani market presents numerous opportunities for both local entrepreneurs and foreign investors looking to expand their operations in the region.
