Frequently Asked Questions

Businesses in Pakistan may be established through a number of structures. The appropriate structure depends on ownership, the number of participants, liability considerations and the intended scale of the business.

Both a Private Limited Company and a Single Member Company are incorporated with the SECP, have a separate legal identity from their owners, and provide limited liability, so that the liability of members is generally limited to the extent of their shareholding, subject to applicable law.

The principal difference lies in ownership. A Private Limited Company is owned by more than one member, which allows shareholding, control and profit participation to be divided between the participants. A Single Member Company is owned by one person, who holds the entire shareholding and retains full control of the company.

A Single Member Company is generally appropriate where an individual wishes to operate alone with the protection of a corporate structure, while a Private Limited Company is generally more suitable where two or more persons intend to invest, share control, or bring in further shareholders in future.

Incorporation is carried out through the SECP. The steps and documentation required will depend on the structure selected and the intended business activities.

Companies in Pakistan are required to identify, record and report their ultimate beneficial owners to the SECP and to maintain that information in their own records.

This information is filed with the regulator rather than published as a general public register. It is accessible to the SECP and may be shared with, or requested by, other competent authorities where the law permits or requires it.

The precise scope of disclosure, the categories of persons treated as beneficial owners and the extent of access by authorities are governed by the applicable statutory framework, which is subject to change. Advice should be taken on the position applicable at the relevant time.

A number of factors are commonly cited by businesses considering incorporation in Pakistan.

A business licence is an authorisation permitting a business to carry on a particular activity. Incorporation alone does not always entitle a company to commence operations.

Whether a licence is required, and which authority grants it, depends on the nature of the activity and the location in which it is carried on. Regulated sectors — such as financial services, insurance, telecommunications, healthcare and education, among others — typically require sector-specific licensing or approvals before operations begin.

We assess which requirements apply in the circumstances and assist with the applications, approvals and ongoing maintenance involved.

A permanent establishment is a fixed place of business through which the business of a non-resident person is wholly or partly carried on in Pakistan. It is the concept used to determine whether a non-resident has a sufficient taxable presence in Pakistan.

Depending on the circumstances, this can include a place of management, a branch or office, a factory or workshop, a place of extraction of natural resources, a building site or installation project continuing beyond a prescribed period, and the activities of a dependent agent who habitually concludes contracts on behalf of the non-resident.

Where a permanent establishment exists, the profits attributable to it may be subject to tax in Pakistan. The analysis is fact-specific and may also be affected by an applicable double taxation treaty.

A Tax Residency Certificate is a document issued by the tax authorities confirming that a person or company is a tax resident of Pakistan for a given tax year.

It is commonly required in order to claim relief or benefits available under a double taxation treaty between Pakistan and another jurisdiction, for example where income arising abroad would otherwise be taxed twice.

The certificate is obtained on application to the FBR, supported by documentation establishing residency for the relevant period.

A company is treated as resident in Pakistan for a tax year where it is incorporated or formed under the laws of Pakistan, or where the control and management of its affairs is situated wholly in Pakistan during that year. Certain bodies established by or under provincial or federal law are also treated as resident.

Residency matters because a resident company is generally taxable on its worldwide income, whereas a non-resident company is generally taxable only on income sourced in Pakistan, subject to applicable law and any relevant treaty.

Withholding tax is tax deducted or collected at source by a payer at the time of making certain payments, and deposited with the tax authorities on behalf of the recipient.

It applies to a range of payments, which may include salaries, payments for goods and services, contracts, rent, dividends, profit on debt, commission and payments to non-residents, among others.

The amount withheld is generally credited against the recipient's final tax liability, and may be adjustable or final depending on the category of payment. Withholding agents carry their own obligations to deduct correctly, deposit within the prescribed time and file the required statements. Applicable rates and categories are prescribed by law and change from time to time, so the current position should be confirmed.

Residency, in the immigration sense, concerns a person's legal right to enter, live or remain in Pakistan, and is governed by immigration law and the visa or permit held.

Tax residency is a separate concept determined under tax law, principally by reference to physical presence in Pakistan during a tax year or, for companies, by incorporation or the place of control and management.

The two do not necessarily coincide. A person may hold an immigration status in Pakistan without being a tax resident, and a person may become a tax resident by reason of presence in Pakistan without holding long-term immigration status. Each must be assessed on its own criteria.

A registered trademark in Pakistan is protected for an initial period of ten years from the date of filing of the application.

The registration may be renewed for further periods of ten years, on payment of the prescribed renewal fee within the permitted time. Provided renewals are made when due, protection can continue indefinitely; if renewal is not made, the registration may be removed from the register, subject to any restoration provisions available under the law.

Patents are granted through the Intellectual Property Organization of Pakistan (IPO-Pakistan). To be patentable, an invention must generally be new, involve an inventive step and be capable of industrial application.

The application is filed with a specification describing the invention, the claims defining the scope of protection sought, drawings where applicable, an abstract, and details of the applicant and inventor. The application is examined and, where objections are raised, a response is filed. Following publication and examination, a patent may be granted, after which renewal fees are payable to keep it in force.

Because drafting the specification and claims determines the protection obtained, professional assistance is advisable.

Unauthorised use of a registered trademark may amount to infringement, and the use of an unregistered mark may in some circumstances give rise to an action for passing off.

Depending on the circumstances, the available steps may include issuing a legal notice or cease-and-desist letter, filing opposition or rectification proceedings against a conflicting mark, initiating civil proceedings seeking injunctive relief, damages or an account of profits, and, in appropriate cases such as counterfeiting, pursuing criminal or customs remedies.

The appropriate course of action depends on the registration position, the nature of the use and the evidence available. We advise on the options and act on them where instructed.

Yes. Intellectual property rights are property rights and may generally be assigned, transmitted or licensed, subject to applicable law and to the terms of any existing agreements.

An assignment transfers ownership of the right, whereas a licence permits another party to use it on agreed terms, which may be exclusive or non-exclusive and limited by territory, field of use or duration.

Such arrangements should be recorded in writing and, where required, recorded with the relevant registry to be effective against third parties. We prepare and review assignments, licences and related commercial agreements.