Doing Business in Pakistan - A Guidebook

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DOING BUSINESS IN PAKISTAN: A GUIDEBOOK JASB & Associates Chartered Accountants Business Structures Structure Sole Proprietorship Partnership Limited Company Attributes Sole proprietors are self-employed for tax purposes and do not need any formal constitution. They have to prepare annual accounts as the basis of profits to be included in the Annual Income Tax Return. If a partnership is formed, partners are individually considered self-employed for tax purposes with profits allocated in the agreed profit sharing ratios. In case of a limited company, liability of the owners is limited. Broadly, there are two possible forms of limited companies i.e. Public and Private. Limited Companies are incorporated under Companies Act 1984. It is a requirement for a company to maintain a register with Securities and Exchange Commission of Pakistan (SECP), including filing of annual returns for director(s) and shareholder(s). Public Limited Company: • Any three or more persons associated for lawful purpose may, by subscribing their names to the Memorandum of Association and complying with the requirements of the Companies Ordinance form a public company. • All public companies (including associations not for profit and companies Limited by guarantees) are required to file annual audited accounts with Registrar • Only Public Limited companies are eligible to get listed in the stock exchange. Private Limited Company: • Any two or more persons so associated may, in like manner, form a private company. If only one member forms a private company, it is called a single member private company. • Private companies having share capital of PKR 7.5 Million or more are required to file annual audited accounts with Registrar Branch office Liaison Office Branch Office is established by a foreign company to fulfill its contractual obligations with the public or private sector in Pakistan. Their activity will be restricted to the work mentioned in the agreement / contract signed. However they cannot indulge in commercial / trading activities. Liaison Office is established by a foreign company for promotion of products(s), provision of technical advice & assistance, exploring the possibility of Joint Collaboration and export promotion. However, they cannot undertake any commercial / trading activities. www.jasb-associates.com karachi-dha@jasb-associates.com
DOING BUSINESS IN PAKISTAN: A GUIDEBOOK JASB & Associates Chartered Accountants Labour and Personnel Employment Contracts: Constitution of Pakistan affords every one with the right to enter upon any lawful profession or occupation (Article 18). The Standing Orders Ordinance, promulgated in 1968, also requires every employer to provide every worker an employment contract, showing terms and conditions of his/her service. The employer is responsible to provide this contract at the time of appointment, transfer or promotion. The following types of employment contracts are normally found while working in Pakistan: Minimum Wage rate: PKR 14,000 per month Temporary contracts: This type of contract is good if you are in need of short-term workers; it provides flexibility and allows you to adjust for increases or decreases in staffing level requirements. You may choose to work with a recruitment agency, who will normally manage the payment of wages and all the administration procedures meaning you are recruiting agency workers not hiring yourself. Fixed term contracts: Fixed term contracts allow for you to hire employees for a specific time period, and can plan according to a fixed time and budget. This type of contract is good for a specific assignment/project or if you require someone for an agreed period of time. Permanent contracts: This requires commitment from both the employer and employee, and is the most common type of employment. This is an indefinite contract and can be terminated when the employee no longer wishes to work there, or (subject to certain protections) by the employer. International Mobility Work Visa: Pakistan Missions abroad are authorized to grant entry Work Visa to foreign expatriates on the recommendations of Board of Investment for one year (Multiple) validity, extendable on yearly basis in Pakistan. Board of Investment will process work visa applications expeditiously within four weeks and recommended to the Ministry of Interior for authorization of visa to concerned Mission. Visa Committee under the Chairmanship of Secretary Board of Investment approves the work visa cases received in BOI through the companies working in Pakistan. Visa advice is however issued by Ministry of Interior to Pakistan Mission abroad as per recommendation of BOI, in case of fresh entry visa and to Regional Passport Offices (RPOs) in case of visa extension. Extension of three months provisional work visa, on application, recommended by BOI would be endorsed by the RPOs instead of Ministry of Interior. Business Visa: Missions abroad are authorized to grant five years validity (Multiple) visa within 24 hours to businessmen of 67 countries of Business Visa List (BVL) on the production of any of the following documents. Duration of each stay is for three months. • Recommendation letter from CC&I of the respective country of the foreigner. • Invitation letter from Business organization duly recommended by the concerned Trade Organization/Association in Pakistan. www.jasb-associates.com karachi-dha@jasb-associates.com
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Doing Business in Pakistan - A Guidebook

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