Pakistan, located in South Asia with a population of more than 200 million people, is a great place to expand and build business relationships in Asia. However, before you expand, you need to consider all the steps you must take on top of expanding overseas, including establishing payroll, hiring employees, and giving out benefits and compensation.
Globalization Partners can help with Pakistan payroll outsourcing services. As a global PEO, we can use our Employer of Record solution to hire employees who work on your behalf and run your locally compliant payroll. When you choose us, you won’t have to worry about Pakistan employment compliance.
Taxation Rules for Payroll in Pakistan
Pakistan uses an income tax scale based on different slab rates. Salaried employees owe anywhere from 2 to 30%, while individuals making less than PKR 400,000 are exempt from any taxes. These figures can change each year, so it’s important to watch for any income tax changes that could impact your employees.
Employers have to contribute to Pakistan’s Social Security program on behalf of every employee, and it’s up to 7% of an employee’s wages for social security and 5% for an employee’s Old Age Benefit. You do not have to make contributions for employees who make more than PKR 400 a day or PKR 10,000 a month.
Different Pakistan Payroll Options
You have four Pakistan payroll options to choose from:
- Internal: Running an internal payroll is a great way for larger companies to demonstrate their commitment to Pakistan. However, you need the budget and time to build an HR team dedicated to setting up your Pakistan payroll.
- Remote: One way to streamline your payroll process is to use remote payroll with your parent company to pay the employees at your subsidiary. Although you can pay all employees through one funnel, keep in mind that employees in different countries have separate regulations.
- Pakistan payroll processing company: Outsourcing with a Pakistan payroll processing company will take care of having to set up your payroll, but you’ll still be held accountable for all laws and regulations.
- Pakistan payroll outsourcing: You can also outsource through Globalization Partners. We’ll take care of setting up your Pakistan payroll and ensure you’re compliant every step of the way.
What Is Required to Set up Pakistan Payroll?
Before you can choose a Pakistan payroll option, you need to establish a subsidiary in the country. Doing so will allow you to work in Pakistan legally and is required before you can begin operating. However, Globalization Partners can take this step out of the equation. You don’t need to incorporate to work with us, and you also won’t have to worry about compliance.
Necessary Entitlement and Termination Terms
We recommend outlining key entitlement and termination terms in a written employment contract before adding an employee to your payroll. In Pakistan, a permanent worker can only get terminated over matters of misconduct unless you give the employee one month’s notice or wages. If an employee is terminated for any reason besides misconduct, they are entitled to severance pay equivalent to 30 days’ wages for every year of service.
Don’t Wait to Contact Globalization Partners
If you’re planning an expansion to Pakistan, we can make the payroll process smooth. Contact us today to learn more about our services.