Introduction
In Pakistan, corporations are required by law to undergo regular auditing and adhere to specific compliance requirements set by regulatory authorities such as the Securities and Exchange Commission of Pakistan (SECP), Federal Board of Revenue (FBR), and provincial tax bodies. Whether you’re operating a private limited company, a public limited company, or a Section 42 non-profit entity, meeting these obligations is essential for maintaining legal status, financial transparency, and corporate credibility.
This article serves as a comprehensive guide to the auditing and compliance requirements for Pakistani corporations, covering statutory audit mandates, SECP filings, tax obligations, reporting standards, penalties, and best practices to stay compliant in 2025.
1. Regulatory Authorities Governing Corporate Compliance
| Authority | Responsibility |
|---|---|
| SECP | Company registration, filings, annual returns, inspections |
| FBR | Income tax, sales tax, withholding tax, audit selection |
| Provincial Revenue Authorities (PRA, SRB, KPRA, BRA) | Sales tax on services |
| SBP | Foreign exchange compliance, investment regulations |
| ICAP | Auditing and accounting standards |
2. Types of Corporate Entities Subject to Compliance
| Company Type | Audit Required | Annual SECP Filing | FBR Tax Return Required |
|---|---|---|---|
| Private Limited Company | ✅ If turnover > Rs. 3 million | ✅ Yes | ✅ Yes |
| Public Limited Company | ✅ Yes | ✅ Yes | ✅ Yes |
| Single Member Company (SMC) | ✅ If turnover > Rs. 3 million | ✅ Yes | ✅ Yes |
| Section 42 Company | ✅ Yes | ✅ Yes | ✅ Yes |
| Branch Office of Foreign Co | ✅ Yes | ✅ Yes | ✅ Yes |
3. Statutory Audit Requirements
A. Legal Basis
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Companies Act, 2017 (Sections 223–240)
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All companies (except very small private ones) must appoint a chartered accountant or audit firm to conduct an annual audit.
B. Mandatory Audit Criteria
| Company Type | Audit Requirement |
|---|---|
| Private Company (Turnover ≤ Rs. 3m) | ❌ Exempt from audit |
| Private Company (Turnover > Rs. 3m) | ✅ Must be audited by ICAP member |
| Public Company | ✅ Mandatory audit by a QCR-rated firm |
| Listed Company | ✅ Must rotate auditor every 5 years |
| Section 42 Company | ✅ Audit mandatory |
4. Appointment of Auditor
| Action | Timeline |
|---|---|
| First auditor by board | Within 90 days of incorporation |
| Subsequent auditor by AGM | Appointed every year at AGM |
| Removal of auditor | Requires special resolution |
| Filing of auditor details with SECP | Form 29 within 15 days |
5. SECP Compliance Requirements
A. Annual Corporate Filings
| Form Name | Purpose | Deadline |
|---|---|---|
| Form A | Annual return of the company | Within 30 days of AGM |
| Form B | For companies without share capital | Annually |
| Form 29 | Changes in directors, auditors, secretary | Within 15 days of change |
| Form 45 | Declaration of Ultimate Beneficial Owners | Within 15 days of change |
| Form C | Filing of special resolutions | Within 15 days |
B. Financial Statement Submission
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Companies with share capital must submit audited accounts annually to SECP.
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Listed companies must follow IFRS and Code of Corporate Governance.
6. Income Tax Compliance with FBR
A. Annual Income Tax Return
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Filed online via IRIS portal
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Deadline: September 30 (individuals), December 31 (companies)
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Must include:
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Balance sheet
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Income statement
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Wealth statement (if applicable)
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Tax computation
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B. Withholding Tax (WHT)
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Deduct tax on:
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Salaries (Section 149)
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Services, contracts, rent (Sections 153, 155)
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Foreign remittances (Section 152)
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Monthly WHT statements due on 15th of next month
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Annual WHT statement due by September 30
C. Minimum Tax and Super Tax
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Minimum tax @ 1.25% of turnover (for loss-making entities)
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Super tax applicable to high-income sectors
7. Sales Tax and Provincial Services Tax
A. Sales Tax on Goods (FBR)
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Applicable to manufacturers, importers, traders of taxable goods
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Must register on FBR eFBR system
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File monthly sales tax returns by 18th of the following month
B. Sales Tax on Services (PRA, SRB, KPRA, BRA)
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Applicable to service providers in respective provinces
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Requires separate registration with each authority
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File monthly returns (15th–18th depending on authority)
8. Payroll & Labor Compliance
| Compliance Item | Authority | Obligation |
|---|---|---|
| EOBI | EOBI Department | Register employees earning > Rs. 13,000/month |
| Social Security (PESSI) | Provincial Govt. | Mandatory for covered employers |
| WPPF/WWF | FBR/Prov. Govts | Mandatory for businesses with > Rs. 500,000 profits |
9. AML and UBO Compliance
A. UBO Declaration (Form 45)
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Mandatory under Section 123A of Companies Act
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Submit details of natural persons holding ≥25% shares or controlling interest
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Must be updated within 15 days of change
B. Anti-Money Laundering (AML)
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Companies in regulated sectors (e.g. real estate, accountants, dealers) must:
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Conduct customer due diligence (CDD)
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Maintain record of transactions
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Report suspicious transactions (STRs) to FMU
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10. Code of Corporate Governance (for Listed Companies)
Enforced by SECP for listed companies:
✅ Board composition and independence
✅ Audit and risk committees
✅ Director training and evaluation
✅ Internal control framework
✅ CFO and company secretary certification
✅ Mandatory quarterly financial disclosures
Non-compliance may result in penalties or delisting.
11. Consequences of Non-Compliance
| Violation | Penalty/Fine |
|---|---|
| Late SECP filings | Rs. 500 per day/form; up to Rs. 100,000 |
| Failure to appoint auditor | Up to Rs. 500,000 on company and directors |
| Inaccurate tax returns | Heavy penalties + prosecution under tax laws |
| Non-payment of EOBI or PESSI | Legal notices, fines, attachment of bank a/c |
| Not declaring UBOs | Rs. 1 million + possible disqualification |
12. Internal Compliance Best Practices
✅ Maintain statutory registers (members, directors, shares)
✅ Hold AGM and board meetings with recorded minutes
✅ Reconcile and update books of accounts monthly
✅ Establish internal audit function (mandatory for public companies)
✅ File forms and tax returns on time using compliance calendars
✅ Keep backup of all filings, challans, and correspondence
13. Audit Readiness Checklist
| Document | Required For |
|---|---|
| Audited Financial Statements | SECP, FBR |
| Trial Balance & Ledger | External Audit |
| Board Resolutions | SECP Filing Compliance |
| SECP Forms (A, 29, C, 45) | Corporate Governance |
| WHT Statements and Tax Returns | FBR Inspections |
| Payroll Records and Tax Challans | Labor Compliance |
| Sales Tax Invoices and Returns | Sales Tax Audit |
14. Technology for Compliance
✅ FBR IRIS portal – for income tax returns, WHT statements
✅ SECP eServices portal – for Form A, 29, auditor appointment
✅ ERP/accounting software – for ledger, reconciliation, inventory
✅ POS integration – for GST-compliant invoicing
✅ Payroll software – to manage salaries, tax, and PESSI/EOBI deductions
15. Frequently Asked Questions (FAQs)
Q1: Is audit mandatory for every company in Pakistan?
Audit is mandatory for all companies with turnover exceeding Rs. 3 million and all public, SMC, and Section 42 companies.
Q2: Can the same person be a director and auditor?
No. An auditor must be independent and not be a director, employee, or related party.
Q3: What happens if a company fails to file Form A?
SECP imposes daily penalties, and the company may be marked inactive or struck off.
Q4: Is digital signature required for SECP e-filing?
Yes. Filing through eServices requires a valid NIFT digital certificate.
Q5: Can a company file a revised income tax return?
Yes, within 5 years of the original filing, subject to conditions under the Income Tax Ordinance.
16. How Sterling.pk Can Help
At Sterling.pk, we specialize in:
✅ SECP filings (Form A, B, 29, 45, C)
✅ Statutory audit preparation and coordination
✅ Tax registration and return filing with FBR & PRA
✅ Withholding tax calculation and WHT statement filing
✅ Corporate governance advisory for listed and private firms
✅ Payroll compliance (EOBI, PESSI, WPPF/WWF)
✅ UBO, AML, and internal control implementation
We help you stay compliant, reduce risk, and focus on growth while we manage your regulatory obligations.
Conclusion
Auditing and compliance are not just legal formalities—they’re critical elements of a business’s credibility, continuity, and corporate governance. For Pakistani corporations, meeting the extensive requirements from SECP, FBR, and other authorities requires structured systems, timely filings, and expert support.
With the increasing digitization of regulatory systems, businesses must adopt a compliance-first approach. With Sterling.pk as your partner, you can meet these obligations efficiently, minimize penalties, and operate with confidence in the formal economy.
