Growing your company in Pakistan can lead to profitable new business relationships, trade deals with other countries in the Middle East, and relationships with talented new employees. Although it’s an exciting time for your company, setting up a Pakistan subsidiary is not without challenges. Depending on where you incorporate and what type of entity you choose, the process can be lengthy and will require fees along the way.
Globalization Partners simplifies the Pakistan subsidiary setup process by using our existing subsidiary. We take on all matters of compliance as the Employer of Record, and we can hire employees on your behalf, add them to an existing payroll, and ensure that they’re receiving the right compensation and benefits.
How to Set up a Pakistan Subsidiary
Before learning how to set up a Pakistan subsidiary, you need to consider where your physical office will be in Pakistan. Much like different states have their own laws, separate regions may have different subsidiary laws as well as cultural factors that can impact how you run your company.
You also need to decide what business entity is best for your business goals. Pakistan allows companies to incorporate as a limited liability company (LLC), free zone company (EPZ company), limited liability partnership (LLP), public limited company (joint stock company), representative office, and more. The most common is an LLC, but each entity has its own steps for incorporation.
The steps to incorporate as an LLC include:
- Getting your company name approved by the Securities and Exchange Commission
- Paying all application fees through any designated Muslim Commercial Bank (MCB)
- Opening a bank account in the country
- Completing a declaration of compliance and company memorandum with signatures, then submitting a list of company leaders
- Obtaining a digital signature from the National Institutional Facilitation Technologies (NIFT)
- Registering with the Regional Tax Office of the Federal Board of Revenue
- Registering with a social security institution depending on your location in Pakistan
- Registering with the Labor Department
Pakistan Subsidiary Laws
Before you set up your subsidiary, you need to understand all of Pakistan’s subsidiary laws. These laws also vary by entity and location, so it’s important to learn the right ones for your physical location.
Typically LLCs need to register with two directors and two shareholders, and you also need a minimum capital requirement of $1,000. Your directors and shareholders can be non-residents, and they must register for an NTN number with the local tax authority. The Pakistani government requires every LLC to have a legal adviser who lives in Pakistan if you have share capital over $5,000.
Generally, it takes about six weeks to incorporate as an LLC in Pakistan. Your registration is also subject for approval from the Board of Investment, and you’ll need to get a clearance from the Ministry of Interior.
Benefits of Going Through the Pakistan Subsidiary Setup Process
The biggest benefit of setting up a Pakistan subsidiary is that you can legally start operating in the country. Once you incorporate, you can legally hire employees, add them to payroll, and form business relationships. Incorporating as an LLC also provides benefits to both the subsidiary and the parent company. The parent company does not have to worry about incurring liability from the subsidiary, and the subsidiary can create its own processes and company culture.
You can realize these benefits sooner through Pakistan subsidiary outsourcing with Globalization Partners. We’ll use our established subsidiary to help you start working in a few days instead of six weeks. When you work with us, you’ll find that we also take the stress of compliance off your shoulders so that you can stay focused on growing your company in a new location.
What Do You Need to Set up a Subsidiary?
We recommend setting realistic expectations about the amount of time and money it will take to set up a Pakistan subsidiary. You should work with your finance team to budget the right amount of money based on the location where you’re incorporating. Your company also needs to discuss the amount of time it will take to incorporate, and who from the company will fly back and forth to Pakistan during the process.
Globalization Partners’ Solution
Globalization Partners can help take the stress out of learning Pakistan subsidiary laws and incorporating. Contact us today for more information about our services.