How to Set Up an Entity in Pakistan

Setting up a legal entity in Pakistan can be an attractive option for companies looking to access South Asia’s fifth-largest population, a growing digital economy, and competitive labor costs. Pakistan offers a large English-speaking workforce, expanding fintech and IT sectors, and improving regulatory infrastructure aimed at encouraging foreign direct investment.

While entity setup in Pakistan is generally manageable, it can feel bureaucratic for first-time entrants. The process involves multiple registrations with corporate, tax, and labor authorities, as well as strict documentation and ongoing compliance requirements. However, once established, a local entity gives businesses greater operational autonomy, long-term cost efficiency, and the ability to hire employees directly under Pakistani law.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in Pakistan?

Opening an entity in Pakistan means registering a business with the national corporate registry to obtain legal personality, followed by tax, social security, and labor registrations that allow the company to operate and hire locally. Most businesses register either a locally incorporated company, a branch office, or a liaison office, depending on their commercial objectives.

Entity overview in Pakistan

Company incorporation in Pakistan is centralized and largely digitized, with post-registration steps required to become fully operational. While several structures are available, foreign investors most commonly establish a Private Limited Company due to its flexibility and limited liability protections.

Step-by-step guide: How to open an entity in Pakistan

Step 1: Choose the right structure

Foreign companies most commonly choose a Private Limited Company, which limits shareholder liability and allows full commercial activity. Branch offices may engage in revenue-generating activities but require approval from the Board of Investment, while liaison offices are restricted to non-commercial activities such as marketing and coordination.

Step 2: Verify business name availability

Business names are checked and reserved through SECP’s online portal. Names must not be identical or misleading and cannot include restricted terms without approval. The name availability search and reservation are completed through SECP’s eServices platform.

Step 3: Prepare incorporation documents

The following documents are required for incorporation and can be submitted electronically through SECP:

• Memorandum of Association
• Articles of Association
• Form 1 (Company incorporation details)
• Copies of passports and incorporation documents of foreign shareholders and directors

Standard templates for constitutional documents are available through SECP’s incorporation resources.

Step 4: Register with the Securities and Exchange Commission of Pakistan

Incorporation filings are submitted online through SECP’s eServices system. Once approved, the company receives a Certificate of Incorporation and a unique Corporate Registration Number, confirming its legal existence in Pakistan.

Step 5: Register for tax and social security

After incorporation, the company must register with the Federal Board of Revenue to obtain a National Tax Number and, if applicable, a sales tax registration. Employers must also register with provincial social security institutions and the Employees’ Old-Age Benefits Institution for pension contributions.

Step 6: Open a corporate bank account

Corporate bank accounts must be opened with a locally licensed bank. Banks conduct enhanced KYC checks, including verification of directors, shareholders, and the source of funds. Account opening typically takes one to three weeks and often requires in-person verification.

Step 7: Set up payroll and employment compliance

To hire employees, companies must issue compliant employment contracts, register employees for social security and pension schemes, and implement payroll reporting and withholding. Employers are responsible for monthly tax deductions and statutory contributions.

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Post-registration obligations

After incorporation, companies in Pakistan must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: File corporate income tax returns, sales tax returns, and annual financial statements according to the schedule set by the Federal Board of Revenue, generally on an annual and monthly basis, under IFRS as adopted in Pakistan
• Corporate registers: Maintain up-to-date records of directors, shareholders, and beneficial owners and report changes to SECP within the legally required timeframe
• Compliance tracking: Monitor all tax, licensing, and corporate filing deadlines through a structured compliance calendar or service provider to avoid penalties
• Licenses and renewals: Renew sector-specific licenses or approvals with relevant ministries or regulators where applicable
• Recordkeeping: Retain accounting, payroll, HR, and transaction records for at least six years, ensuring availability for audits
• Employment law compliance: Adhere to labor, benefits, social security, and data-protection regulations enforced by provincial labor departments

Taxes and financial considerations

Key obligations include:

• Corporate income tax: 29%, paid annually with advance tax installments; small companies benefit from a reduced rate of 20%
• VAT/GST: 18% sales tax, subject to registration thresholds
• Payroll/social contributions: Employer social security and pension contributions vary by province
• Accounting standards: IFRS as adopted in Pakistan

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into the United Kingdom—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Pakistan?
Typically 2–4 weeks. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
No minimum capital is required for a Private Limited Company.

Can foreign companies own 100 % of an entity in Pakistan?
Yes. Full foreign ownership is permitted in most sectors.

Do I need a local director or representative?
No local director is required, though local tax representation is recommended.

How much does it cost to register an entity?
Average setup costs range from PKR 150,000 to 400,000 (≈ USD 530–1,410), including government and professional fees. Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Typically, no. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in Pakistan?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.