How to register a foreign company in Pakistan?

Foreign investors seeking to establish their presence in Pakistan have the option to register a foreign company under the legal framework provided by the Companies Act, 2017. Pakistan allows foreign companies to operate as branch offices, liaison offices, or to incorporate a local subsidiary. The registration process is regulated by the Securities and Exchange Commission of Pakistan (SECP) and often requires prior approval from the Board of Investment (BOI). This comprehensive guide explains how to register a foreign company in Pakistan, including eligibility, documentation, steps, and post-registration compliance.

1. Legal Framework for Foreign Companies in Pakistan

Foreign companies operate under the following legal provisions:

• Companies Act, 2017 (Section 435–439) – SECP registration

• Foreign Exchange Regulation Act, 1947 – For capital remittance and repatriation

• Income Tax Ordinance, 2001 – For tax obligations

• BOI Regulatory Framework – For sectoral permissions

Foreign companies must comply with these laws to legally operate in Pakistan.

2. Types of Presence a Foreign Company Can Establish

Foreign companies in Pakistan can choose from the following legal structures:

a. Branch Office

• Allowed to undertake commercial activities

• Profits can be repatriated with approval

• Can generate revenue

b. Liaison Office

• Non-commercial setup (marketing, promotion, coordination)

• Cannot generate revenue in Pakistan

• Funded by foreign parent company

c. Locally Incorporated Subsidiary (Private Limited Company)

• A separate legal entity under Pakistani law

• Foreign shareholding allowed (100% in most sectors)

• Independent financial statements and taxation

The choice depends on the company’s operational goals, investment strategy, and tax planning needs.

3. Step-by-Step Guide to Registering a Branch or Liaison Office

To register a branch or liaison office in Pakistan, foreign companies must follow a two-step process:

Step 1: Apply for Permission from the Board of Investment (BOI)

a. Submit Application via BOI Portal
The application must be submitted online at www.boi.gov.pk, along with supporting documents.

b. Documents Required for BOI Approval

1. Application form duly signed and stamped

2. Profile of the parent company

3. Certificate of incorporation of the parent company (notarized)

4. Memorandum and Articles of Association of the parent company

5. Board resolution approving the Pakistan office setup

6. Power of attorney in favor of authorized representative in Pakistan

7. Audited financial statements of the parent company (last year)

8. Copy of passport of the authorized representative

9. Office lease agreement or letter of intent

10. Bank certificate showing availability of funds (for liaison offices)

All foreign documents must be:

• Notarized in the home country

• Attested by the Pakistani Embassy or Apostille

c. BOI Processing Time
BOI generally takes 4 to 6 weeks to approve or reject the application.

d. BOI Permission Validity

• Liaison Office: Valid for 3 years, renewable

• Branch Office: Valid for 5 years, renewable

Step 2: Register with SECP as a Foreign Company

Once BOI permission is granted, the company must register with the SECP.

a. SECP Filing Requirements

Documents to be submitted via SECP’s eServices portal:

1. Form 38 – Registration of Foreign Company

2. Certified copy of the charter, statutes, or memorandum & articles of the company

3. Address of principal office abroad and local place of business in Pakistan

4. List of directors/officers with CNIC/passport copies

5. Consent to act as authorized representative in Pakistan (Form 39)

6. Power of attorney granted to authorized representative

7. BOI permission letter

8. Details of business activities to be carried out in Pakistan

b. SECP Processing Time
Registration takes 5 to 7 working days after submission of complete documents and fee.

c. Certificate of Registration
SECP will issue a Certificate of Registration of Foreign Company, allowing legal operation in Pakistan.

4. How to Register a Foreign-Owned Local Subsidiary

Instead of setting up a branch or liaison office, foreign companies may register a Private Limited Company in Pakistan with foreign shareholders.

a. Advantages of a Foreign-Owned Subsidiary

• Independent legal entity under Pakistani law

• Full operational freedom

• Can acquire assets, sign contracts, and raise local capital

• Easier tax filing and commercial banking

b. Process of Registering a Foreign-Owned Company

1. Reserve company name via SECP’s eServices portal

2. Prepare incorporation documents:

   • Form-I (Compliance declaration)

   • Form-21 (Registered office)

   • Form-29 (Director details)

   • Memorandum & Articles of Association

3. Foreign shareholder submits:

   • Passport copy (notarized and attested)

   • Proof of address

   • Board resolution authorizing investment

   • Share subscription letter

4. Appoint at least one director (can be foreign or local)

5. Obtain Digital Signature for submission

6. Pay incorporation fee online

7. SECP issues Certificate of Incorporation

c. Post-Incorporation Steps

• Apply for NTN and STRN with FBR

• Open corporate bank account in Pakistan

• Report foreign equity investment to SBP via authorized bank

• File UBO (Ultimate Beneficial Owner) details

5. Taxation and Repatriation Rules for Foreign Companies

a. Branch Office Taxation

• Taxed at 29% corporate tax rate

• No separate legal identity; income attributed to parent company

• Eligible for tax credit on foreign taxes paid

b. Subsidiary Company Taxation

• Independent taxpayer

• Taxed under Income Tax Ordinance, 2001

• May benefit from tax treaties under DTAAs

c. Withholding and Repatriation

• Repatriation of profits/dividends allowed through SBP approval

• Withholding tax applies on dividends, royalties, and technical fees

• Must maintain tax compliance for smooth fund transfer

6. Sectors Restricted or Regulated for Foreign Investment

While most sectors are open to 100% foreign ownership, some are prohibited or require sectoral approvals, such as:

7. Compliance Requirements for Foreign Companies

Once registered, foreign companies must meet the following ongoing legal requirements:

• Maintain proper books of accounts

• File annual return with SECP

• Submit Form 44 (Balance Sheet and P&L) within 30 days of AGM

• Appoint auditor (where applicable)

• Report any changes in directors (Form 29)

• File withholding tax returns and sales tax returns (if applicable)

• Comply with BOI renewal procedures every 3–5 years

8. Banking and Financial Operations

Foreign companies must open a corporate bank account with a commercial bank in Pakistan. Requirements:

• Certificate of Incorporation

• NTN Certificate

• Board resolution authorizing signatories

• KYC documents of directors and authorized representative

Banks may request source of funds declaration and details of inward remittance from the parent company.

9. Foreign Currency and Repatriation Rules

As per SBP regulations, foreign investors can repatriate profits, dividends, and capital under the following conditions:

• All investments must be made through proper banking channels

• Tax liabilities must be cleared

• Auditor’s certificate and board resolution must be provided

• Banks file remittance requests with SBP’s Exchange Policy Department

10. Hiring and Visa Requirements for Foreign Staff

Foreign staff of foreign companies must obtain work visas from the Ministry of Interior and BOI endorsement. Key steps:

1. Apply for employment visa recommendation at BOI

2. Submit appointment letter, CV, passport copy

3. Ministry issues work visa valid for 1 year (renewable)

11. Advantages of Registering a Foreign Company in Pakistan

• Full repatriation of profits and capital

• Access to a market of 240+ million people

• Low incorporation costs

• 100% foreign ownership permitted in most sectors

• Tax treaties with over 60 countries

• Investment-friendly policies under Pakistan Investment Policy 2023

12. Role of Professional Advisors

Registering a foreign company involves legal, regulatory, and tax complexities. At Sterling.pk, we offer end-to-end support for:

• BOI approval filing

• SECP registration

• Foreign document attestation

• Bank account setup

• FBR and sales tax registration

• Annual compliance and tax filing

Conclusion

Pakistan offers an attractive environment for foreign investment, with liberal policies and a structured framework for foreign company registration. Whether setting up a branch, liaison office, or fully-owned subsidiary, foreign investors must comply with SECP, BOI, and FBR regulations.

With proper documentation and guidance from professional advisors, the process is smooth, transparent, and rewarding. At Sterling.pk, we specialize in helping international businesses establish and operate legally and profitably in Pakistan.