Starting a business in Pakistan can be an exciting venture, but it’s crucial to understand the financial and legal requirements involved. This blog will guide you through the costs, tax obligations, and necessary documentation for setting up a company in Pakistan.

Starting a company in Pakistan has never been easier! If you’re looking to register your business, visit our Company Incorporation page to explore pricing and the required documents. We offer expert services to make the registration process smooth and efficient. If you’d like more information, feel free to contact us on WhatsApp, or book a paid Zoom consultation for personalized support. Let us help you take the first step toward your entrepreneurial journey!

1) Costs of Setting Up a Company in Pakistan:

Setting up a company in Pakistan involves several costs. Here’s a breakdown:

i. Name Reservation

This fee is required to reserve a unique name for your company with the Securities and Exchange Commission of Pakistan (SECP), ensuring that no other entity can register under the same name.

ii. Incorporation Fee:

This fee is based on the company’s paid-up capital and is payable to the SECP upon submitting the incorporation application.

a) For Private Limited Company:

Paid-up Capital up to PKR 100,000: PKR 1,000
Paid-up Capital PKR 100,001 – PKR 1 million: PKR 2,000
Paid-up Capital PKR 1 million – PKR 10 million: PKR 5,000
Paid-up Capital above PKR 10 million: PKR 10,000 (plus PKR 2,000 for every additional PKR 1 million).

b) For Public Limited Company:

Paid-up Capital up to PKR 100,000: PKR 1,500

Paid-up Capital PKR 100,001 – PKR 1 million: PKR 5,000

Paid-up Capital PKR 1 million – PKR 10 million: PKR 10,000

Paid-up Capital PKR 10 million – PKR 50 million: PKR 20,000

Paid-up Capital above PKR 50 million: PKR 40,000 (plus PKR 2,000 for every additional PKR 1 million).

Fast Track Registration Services (FTRS):

For processing under Fast Track Registration Services (FTRS), the FTRS fee shall be in addition to normal fee and charged as given be below:-

iii. Stamp Duty

Estimated: 0.1% of Authorized Share Capital. (PKR 1,000 against PKR 1 million capital). Stamp duty is a tax on legal documents, including company incorporation documents, and the amount varies based on the company’s capital structure.

iv. Articles of Association and Memorandum Preparation

Legal Fees: PKR 10,000 in case of legal assistance only otherwise covered in incorporation fee mentioned above if self prepared. These documents outline the company’s governance structure and rules. Legal assistance is often needed to ensure compliance with regulations.

Applicant can download the Memorandum of Association by clicking on the download MOA button while incorporating a company online on the following link:  LEAP (secp.gov.pk)

v. Business License

Cost: PKR 5,000. Depending on the nature of the business, a specific license may be required to operate legally. This fee covers the application and issuance process.

vi. Tax Registration (FBR)

Fee: Typically free, but estimated professional service cost: PKR 3,000. Registration with the Federal Board of Revenue (FBR) is essential for tax purposes. While the registration itself is free, hiring a professional for assistance incurs costs.

vii. Opening a Bank Account

Minimum Deposit: A corporate bank account is necessary for financial transactions. This deposit normally starts from Rs. 100 and varies bank by bank but is typically required to open an account in the company’s name.

viii. Additional Costs of registering a company:

i) Legal Fees: Hiring a lawyer for documentation and legal advice can cost between PKR 20,000 and PKR 50,000.

ii) Office Space: Rental costs vary widely depending on the location and size of the office.

iii) Miscellaneous: These include expenses for getting a company seal, business cards, and other administrative costs, which can add up to PKR 10,000 to PKR 20,000.

2) Taxes for Companies in Pakistan

Companies in Pakistan are subject to various taxes. Here’s a summary of the main tax obligations:

a. Corporate Income Tax:

Private Limited Companies: The corporate tax rate is generally 29% as per the Income Tax Ordinance, 2001 (Section 113).

Public Limited Companies: These are also subject to the 29% tax rate, but certain tax incentives might apply.

The federal corporate tax rates on taxable income are as follows:* The term ‘public company’ implies a company listed on any stock exchange in Pakistan or one in which not less than 50% of the shares are held by the federal government or a public trust.

The federal corporate tax rates on taxable income are as follows:

* The term ‘public company’ implies a company listed on any stock exchange in Pakistan or one in which not less than 50% of the shares are held by the federal government or a public trust. 

Super tax:

In addition to above, super tax is imposed at the following slab rates:

The concept of super tax was reintroduced by the government on high earning persons in tax year 2022. Slab-wise rates were prescribed for tax year 2022 with a maximum rate of 4%. With regard to certain specified sectors, an enhanced rate of 10% was prescribed for tax year 2022 only, and for banking companies, 10% super tax was applicable for tax year 2023.

Pakistan – Corporate – Taxes on corporate income (pwc.com)

If you’re ready to start your company in Pakistan, visit our Company Incorporation page for details on pricing and required documents. You can also contact us on WhatsApp for any questions or support. We’re here to help you every step of the way!

b. Sales Tax:

Companies involved in the sale of goods and services are required to register for sales tax. The standard rate is 17%, though this can vary depending on the sector (Sales Tax Act, 1990, Section 3).

c. Federal Excise Duty:

Certain industries, like tobacco and petroleum, are subject to federal excise duty (Federal Excise Act, 2005).

d. Other Taxes:

Withholding Taxes: Companies need to withhold tax on payments such as salaries, rent, and utilities (Income Tax Ordinance, 2001, Sections 147-165).

3. How to Create a Company in Pakistan

a. Choose a Company Name:

Ensure the name is unique and not already registered. You can check availability through the Securities and Exchange Commission of Pakistan (SECP) online portal.

b. Prepare Documents:

For Private Limited Companies: You’ll need to prepare the Memorandum and Articles of Association, proof of office address, and details of directors and shareholders.

c. Register with SECP:

Submit your documents to the SECP for registration. You can do this online via the SECP e-Services portal.

d. Obtain a National Tax Number (NTN):

Apply for NTN from the Federal Board of Revenue (FBR) to start your tax obligations.

e. Register for Sales Tax:

If your business activity requires, register for sales tax with FBR.

Depending on your industry, you might need additional licenses or permits from local authorities.

4. Required Documents to Open a Company in Pakistan

To open a company, you’ll need the following documents:

a. For Private Limited Companies:

– Memorandum and Articles of Association: Foundational documents outlining the company’s structure and operations.

• Form 1: Declaration of compliance with the Companies Act.
• Form 21: Notice of the registered office address.
• Form 29: Details of directors and secretary.
• National Identity Cards: Copies of the CNICs of all directors and shareholders.
• Office Address Proof: Utility bills or lease agreements.
• Bank Account Statement: Proof of initial capital deposit.

b. For Sole Proprietorship:

• CNIC Copy: Of the owner.
• Business Registration Form: Completed with relevant details.
• Office Address Proof: Utility bill or lease agreement.

c. For Partnership Firms:

Partnership Deed: Agreement between partners.

CNICs: Copies of all partners.

Office Address Proof: Utility bills or lease agreement

Conclusion

Setting up a company in Pakistan involves several steps and costs, but understanding these factors can make the process smoother. Make sure to adhere to the legal requirements and consult with professionals to navigate the regulatory landscape effectively. For detailed and updated information, refer to the Securities and Exchange Commission of Pakistan (SECP) and the Federal Board of Revenue (FBR) websites.

References:

• Income Tax Ordinance, 2001
• Sales Tax Act, 1990
• Federal Excise Act, 2005
• Securities and Exchange Commission of Pakistan (SECP) website
• Federal Board of Revenue (FBR) website