Pakistan

Starting a Business in

Pakistan

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Pakistan. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2013.

Compare Pakistan to 188 other economies.

  • Standardized Company

  • Legal Form: Private Limited Liability Company
  • Paid in Minimum Capital Requirement: None
  • City: Karachi
No. Procedure Time to Complete Associated Costs
1 Reserve a company name online via the Securities and Exchange Commission of Pakistan (SECP) E-services website

The entrepreneur can check the availability of the desired company name online by searching the company name database on the website of the Securities and Exchange Commission of Pakistan (SECP). To reserve a company name, the applicant proposes one or more names in order of preference, and submits the application form to SECP either online or in person. The official confirmation (or rejection) of the chosen name and its availability is received by email or via courier upon payment of the name reservation fee of PKR 200 (online name reservation) or PKR 500 (offline name reservation) at the SECP-designated bank. The approved name is reserved for 90 days, during which the company must be incorporated.
As the adoption of electronic services is growing, SECP recently introduced the Fast Track Registration Services (FTRS), processing the company name reservation applications within 4 hours of submission for an expedited fee of PKR 500 online and PKR 1,000 in person payable in addition to the normal fees.


1 day PKR 200 (E-services online name reservation)
2 Pay the name reservation and company incorporation fees at the Muslim Commercial Bank (MCB)

The company must pay the name reservation and incorporation fees at the designated Muslim Commercial Bank Ltd. The fee challan form indicating the amount due is obtained from SECP either online (downloaded) or on-site, or from the bank.
1 day included in procedure 1 (name reservation fees) and procedure 3 (registration fees)
3 Obtain a digital signature from the National Institutional Facilitation Technologies (NIFT) system of SECP

The digital signature is obtained from the National Institutional Facilitation Technologies (NIFT) through e-Services or at the SECP offices. NIFT serves as the witness of all digitally signed documentation. To apply, the company must submit the Digital Signature Certificate Request Form, along with scanned copies of the Directors’ identity cards, the Name Availability Certificate and the proof of payment. For obtaining the Digital Signature within 1-2 hours under the Fast Track Registration Service (FTRS), an additional urgent fee of PKR 300 would apply.
1 day PKR 837 (certificate charges) + PKR 163 (sales tax at 19.5%) + PKR 500 (validation charges)
4 Complete online registration on the Securities & Exchange Commission of Pakistan (SECP) e-portal

Registration can either be completed online or in person at SECP. The following documents are required for submission:
a. Form 1: Declaration of compliance
b. Form 21: Identification of the location of the office
c. Form 29: Particulars of directors, secretary, chief accountant, auditors, and others
d. One copy of the Memorandum and Articles of Associations with the signature of each member (in presence of a witness)

According to the 6th Schedule of Fee effective October 2010, the fees for incorporation of a company depends on the authorized capital as:
- Online submission: PKR 2,500 for registration of a company whose nominal share capital does not exceed PKR 100,000 and an additional fee of PKR 500 for every PKR 100,000 of nominal share capital or part thereof, up to PKR 10,000,000. The online filing fee is PKR 600 per document.
- Physical submission: PKR 5,000 for registration of a company whose nominal share capital does not exceed PKR 100,000 and an additional fee of PKR 1,000 for every PKR 100,000 of nominal share capital or part thereof, up to PKR 10,000,000. The filing fee is PKR 1,500 per document.

A confirmation of the online or physical submission is received instantly, and the actual certificate a few days later via email or courier. The entrepreneur can register with any Company Registration Office, irrespective of the jurisdiction. All regional SECP offices are computerized. In February 2012, SECP launched the Fast Track Registration Services (FTRS), under which the incorporation of a company can take place within 4 hours for an expedited fee of PKR 20,000 for on-site incorporation and PKR 10,000 for online incorporation payable in addition to the normal fees above. To register a company online, the entrepreneur must first obtain a digital signature through the National Institutional Facilitation Technologies (NIFT) system. If the application is received with less than four hours remaining in the working day, the same shall be disposed of in the next working day.
2 days PKR 8500 registration fee + PKR 2400 filing fees of Form 1, Form 21, Form 29, and Copy of the memorandum and articles of association
5 Apply for a national tax number (NTN) and register for income tax

According to the Income Tax Ordinance 2001, every company must register for income tax and obtain a national tax number (NTN) that is generally required to register with different authorities such as the Chambers of Commerce, Import-Export Regulatory Authority, utility authorities, etc. The income tax is paid on filing the return, which is due within 6 months of the end of the company’s fiscal year (usually on June 30). Since 2002, after the introduction of the Income Tax Ordinance 2001, NTN is issued with a continuous valid term (without the need to renew the number).

To apply, the company must submit a simple one page form called the NTN Form as well as a proof of registration, the Memorandum and Articles of Association, bank account number, copies of the national identity cards of its directors, and an attestation of the registered business address at the nearest tax facilitation counter of the Regional Tax Office in Pakistan.
All applications are forwarded to the Central Registration Office (CRO) in Islamabad that allocates a uniform NTN number to each company. The center processes the application and issues the NTN at no charge. The certificate is then sent to the registered address of the applicant. The company can track the application online or through the RTO helpline. If undelivered, the NTN certification can be collected from the specified office at the Central Board of Revenue. Recently, the Federal Board of Revenue launched electronic services enabling online applications for NTN numbers to be made through its website: www.fbr.gov.pk.
2 days no charge
6 Apply for a Sales Tax Number (STN) at the tax facilitation center of the Regional Tax Office (RTO) of the Federal Board of Revenue (FBR) in Karachi

According to the Sections 14, 15 and 16 of the Sales Tax Act 1990 and Sales Tax Rules 2006, the company must register for sales tax by submitting the application Form STR-1 at any tax facilitation counter at the nearest Regional Tax Office (RTO). The local RTO forwards all applications to the Central Registration Office. After verification, the CRO issues a Registration Certificate bearing the registration number and mails the same to the registered company, on a prescribed From STR-5.

The Sales Tax General Order No. 4/2007 introduced electronic filing of the sales tax returns; and as of July 1st 2008, electronic filing was made mandatory for all categories of taxpayers.
1 day no charge
* 7 Register for Professional Tax with the Excise & Taxation Department of the District

Following the Devolution Plan 2001, professional tax is enforced at the district level by the Excise and Taxation Department of the relevant provincial district. According to the Punjab Finance Act 1977, the tax is levied upon businesses, professionals, trades, callings or companies employing such professionals. The responsible district Excise and Taxation Officer (ET officer) is empowered to enroll in survey register every person who carries on any such business or profession and thereafter, give notice to such enrolled person. In case of a new business, the company is required to make a request to the ET officer to get enrolled by submitting a simple assessment form. The ET officer issues a registration number that acts as the reference number for the registered company and is noted down on every Bank Challan when assessments are paid into the Bank.
7 days (simultaneous with the previous procedure) no charge
* 8 Register with the Sind Employees Social Security Institution (SESSI)

According to the Punjab Industrial Policy 2003, registration with the Sind Employees Social Security Institution is governed at the provincial level by an independent institution called the Punjab ESSI. Employers covered under the scheme contribute 6% of the wages to their insured workers. The wage ceiling should not exceed PKR 10,000 per month or PKR 400 per day. Registration is compulsory. The company has to complete a simple form to be allotted a registration number and to later receive an employee card.

11 days (simultaneous with the previous procedure) no charge
* 9 Register with Employees Old-Age Benefits Institution (EOBI)

According to the Amendment in EOBI Act 1976 effective as of July 2008, every industry or a commercial establishment with 5 or more employees must register with the federal Employees Old Age Benefits Institution. Under the Employees Old Age Benefit Scheme, insured persons are entitled to pension upon retirement, invalidity in the case of a disability, old-age grant in the case of a retiring elder lacking the minimum threshold for pension, and survivor’s pension. A contribution of 5% of minimum wage must be paid by the employer and 1% of minimum wage must be paid by the employee.

An employer shall before expiration of thirty days from the day on which the Act becomes applicable to the industry or establishment in respect of which he/she is the employer, communicate to the Institution the name and particulars of the industry or establishment in Form PR-01 and of every insured person employed therein in Form PE-01 and, in the case of Form PE-01, give the receipt appended to the Form to the insured persons. An insured person may also communicate his/her name and other particulars to the Institution in Form PE-02.
Upon receipt of the requisite particulars in Forms PR-01 and PE-01 from an employer, the Institution shall register the name of the industry or establishment in respect of which he/she is the employer and of the insured person and issue to the employer a Certificate of Registration in Form PI-02 and to each insured person a Registration Card in Form PI-03.
The institution may send the Registration Card in Form PI-03 to the employer for delivery to the insured person to whom it relates.
The minimum Pension has been increased from PKR 3000 per month to PKR 3600 per month.
11 days (simultaneous with the previous procedure) no charge
* 10 Register under the West Pakistan Shops and Establishment Ordinance 1969 with the Labor Department of the District

Pakistan Shops and Establishment Ordinance 1969 requires every establishment other than a one man shop to be registered with the Deputy Chief Inspector of the Labor Department in each district. This is to safeguard the labor standards of the workers.

To register, the employer must submit the application Form A accompanied by a bank challan. The application for a new establishment shall be made within 2 months of setting up the establishment. The fees for registration are as follows:
- 1-5 workers: PKR 2
- 6-10 workers: PKR 3
- 11-20 workers: PKR5
- More than 20 workers: PKR 10

Once the payment is settled, the Deputy Chief Inspection lists the establishment in the Register of Establishments maintained in Form B and issues a registration certificate in Form C. The registration certificate shall be prominently displayed by the employer at the establishment, and shall be renewed after every two years upon payment of fees.
7 days (simultaneous with the previous procedure) PKR 10
* Takes place simultaneously with another procedure.

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