Starting Business in Pakistan

Of all the decisions you make when Starting Business in Pakistan, probably the most important one relating to taxes is the type of legal structure you select for your company.

Not only will this decision have an impact on how much you pay in taxes, but it will affect the amount of paperwork your business is required to do, the personal liability you face and your ability to raise money.

Paying taxes might be easy but collecting on behalf of government and their compliance is complicated.

Even after you settle on a business structure, remember that the circumstances that make one type of business organization favorable are always subject to changes in the laws.

Types of business entities:

• Sole Proprietorship
• Partnership
• SMC Private Limited
• Private Limited Company
• Limited Company

The above legal entities plays very important role in getting yourself started with your business idea in Pakistan.

When you are going into a new venture in Pakistan and before starting business in Pakistan you should be very careful in deciding on a legal entity in Pakistan.

Comparison	Sole Proprietorship	AOP / PARTNERSHIP	SMC Company	Pvt. Ltd Company	Limited Company
Registration authority	FBR	Registrar Partnership Act, 1932	SECP Companies Act, 2017	SECP Companies Act, 2017	SECP Companies Act, 2017
Tax regulatory authority	FBR	FBR	FBR	FBR	FBR
NTN	Required	Required	Required	Required	Required
165 statement required	Not required unless sales more than 50m	Required if sales more than 50m	Required	Required	Required
Penalty of 165	If Sales more than 50m	u/s 182 of Income Tax Ordinance, 2001	u/s 182 of Income Tax Ordinance, 2001	u/s 182 of Income Tax Ordinance, 2001	u/s 182 of Income Tax Ordinance, 2001
165 frequency	Monthly 149 and 165	Monthly 149 and 165	Monthly 149 and 165	Monthly 149 and 165	Monthly 149 and 165
WHT Agent	Not required unless sales more than 50m	Acts as WHT Agent for Government	Acts as WHT Agent for Government	Acts as WHT Agent for Government	Acts as WHT Agent for Government
Annual Income Tax Return	Required	Required	Required	Required	Required
Audit	Not Required	Not Required	Required	Required if capital above 1 m	Required
FBR filing fee	No Fee	No Fee	No Fee	No Fee	No Fee
Wealth statement	Required	Not applicable	Not Applicable	Not applicable	Not applicable
Salary income	Yes	Not applicable	Not applicable	Not applicable	Not applicable

Comparison	Sole Proprietorship	AOP / PARTNERSHIP	SMC Company	Pvt. Ltd Company	Limited Company
Personal Liability	Owners have unlimited liability	Shareholders typically not liable for corporate debts.	Shareholders typically not liable for corporate debts	Shareholders typically not liable for corporate debts	Shareholders typically not liable for corporate debts
Requirements	Relatively few	Relatively few	WHT agent; annual reports required	Board meetings, WHT agent and minutes required; annual reports required	Board meetings, WHT agent and minutes required; annual reports required
Management	Sole proprietor has full control.	Partnerships have flexible management structure.	Sole Director has full control.	Managed by directors who are elected by shareholders	Managed by directors who are elected by shareholders
Taxation	Not a separate entity. Income/loss passed through to owners	Partners and partnership firm are separately taxed.	Director and partnership firm are separately taxed.	Director and partnership firm are separately taxed.	Director and partnership firm are separately taxed.
Recommended for:	Owners wanting minimal formalities, maximum flexibility.	Owners wanting liability protection of an entity with the simplicity of taxation.	Owners wanting liability protection and more trusted business form.	Owners wanting liability protection and more trusted business form.	Owners wanting liability protection and more trusted business form.
Accounting/ Bookkeeping	Mandatory	Mandatory	Mandatory	Mandatory	Mandatory

Call us for more information on how to Kick-Start Business in Pakistan with options available for type of entity to select and knowing the legal obligations, tax compliance requirements, corporate compliance requirements, filing of statements under section 165 and 149.

Write us at info@thebscon.com or call at +92 321 8408828.