Doing Business in Pakistan 2026 | Foreign Investment Legal Guide

Introduction

Pakistan offers foreign investors access to one of the world’s largest consumer markets, a substantial working-age population, strategically located transport and trade corridors, a developed corporate and banking sector, and commercial opportunities extending from manufacturing, energy and infrastructure to technology, agriculture, logistics, healthcare and financial services. Those advantages are real, but they must be approached with legal precision.

The central misconception encountered by foreign businesses is that a market described as being “open to foreign investment” is necessarily simple to enter. Pakistan permits foreign ownership in a wide range of commercial sectors, but the legal route by which capital enters the country, the vehicle through which the business operates, the registration of non-resident shareholdings, the treatment of foreign-currency remittances and the licences required for the proposed activity can materially affect whether profits and capital may later be repatriated without difficulty.

A sound market-entry strategy must therefore address five matters at the outset:

1. the legal form through which the investor will operate;
2. the regulatory approvals applicable to the business sector;
3. the banking and foreign-exchange pathway through which capital will enter Pakistan;
4. the federal and provincial taxes attaching to the proposed structure; and
5. the contractual, employment, compliance and dispute-resolution arrangements required to protect the investment.

This guide provides a legal and commercial overview of those matters as they stand in 2026. It is intended for foreign corporations, private investors, international contractors, technology companies, development organisations, professional-service providers and overseas entrepreneurs considering an establishment, acquisition, joint venture, branch, liaison office, distributorship or project presence in Pakistan.

It is not a substitute for an opinion addressed to a particular transaction. Pakistan’s regulatory framework is divided between federal, provincial and local authorities, and seemingly similar businesses may face markedly different requirements depending upon their sector, location, ownership, contractual structure and source of funding.

Is Pakistan Open to Foreign Investment in 2026?

As a general proposition, Pakistan continues to permit foreign investment across most sectors of the economy. However, foreign investment is not governed by a single approval or statute. It sits at the intersection of the Companies Act 2017, the Companies Regulations 2024, sector-specific licensing laws, the foreign-exchange regime administered by the State Bank of Pakistan, federal and provincial tax legislation, competition law and the investment-facilitation framework administered by the Board of Investment.

The Board of Investment acts as the principal federal investment-facilitation institution. It also administers permission processes for foreign branch and liaison offices and provides investor-facing services relating to special economic zones and work visas

Foreign ownership of a locally incorporated company may generally reach 100 per cent in sectors that are not subject to a specific statutory limitation. Nevertheless, regulated industries, including banking, insurance, non-banking finance, aviation, broadcasting, telecommunications, pharmaceuticals, energy, minerals, defence-related activities and certain agricultural or strategic undertakings, may require additional licences, fit-and-proper assessments, security clearances, minimum capital or local participation.

The phrase “100 per cent foreign ownership” should therefore never be treated as a complete legal answer. It describes possible equity ownership, not the totality of regulatory permission.

The Principal 2026 Developments Foreign Investors Should Know

The Finance Act 2026, enacted in June 2026 and generally operative from 1 July 2026, amended Pakistan’s federal tax legislation for the 2026–27 fiscal year. Accordingly, tax rates, withholding obligations, exemptions and transaction structures should now be checked against the Finance Act 2026 and the updated versions of the Income Tax Ordinance 2001, Sales Tax Act 1990, Federal Excise Act 2005 and Customs Act 1969 rather than against older investment brochures.

Corporate filing and incorporation are now substantially governed in procedural terms by the Companies Regulations 2024, with incorporation and name-reservation services available through the Securities and Exchange Commission of Pakistan’s eZfile system. The SECP also issued updated statutory forms on 8 July 2026, including forms relating to incorporation, allotment of shares, directors and officers, annual returns and foreign companies.

Beneficial-ownership compliance has become a particularly important corporate-governance issue. The Companies Regulations 2024 define an ultimate beneficial owner by reference to ownership or control, ordinarily including a direct or indirect threshold of at least 25 per cent, or the exercise of effective control, and prescribe disclosure through Form 19. In April 2026, the SECP expressly reminded companies of the requirement to file beneficial-ownership information with their annual returns and warned of statutory consequences for non-compliance.

The State Bank of Pakistan also introduced significant changes in 2026 concerning the registration of non-resident shareholdings, including greater delegation to authorised dealers and a new electronic Non-Resident Shareholding Registration System. These reforms are commercially important because the legality of foreign ownership and the eventual remittability of sale proceeds are related but distinct questions.

Understanding Pakistan’s Federal and Provincial Regulatory Structure

Pakistan is a federal parliamentary state. Its legal system is predominantly statutory and common-law influenced, operating under the Constitution of the Islamic Republic of Pakistan 1973 and subject to constitutional Islamic-law principles. English remains widely used in legislation, courts, contracts, banking, corporate records and government correspondence.

A foreign investor must understand that there is no single undifferentiated body of “Pakistani business law”. Legislative and regulatory authority is divided among the Federation, the provinces, local governments and specialised regulators.

The federal sphere principally includes:

• incorporation and corporate regulation;
• banking and foreign exchange;
• federal income tax;
• sales tax on goods;
• customs and federal excise;
• competition law;
• intellectual-property legislation;
• telecommunications regulation;
• immigration and federal security approvals;
• international trade policy; and
• federal public procurement.

The provinces exercise substantial authority over:

• sales tax on services;
• labour and industrial relations;
• social-security registration;
• minimum wages;
• environmental regulation;
• land and revenue administration;
• development and building control;
• provincial procurement;
• mines and minerals;
• shops and commercial establishments; and
• numerous sector-specific permissions.

This division has practical consequences. A company operating in Islamabad, Lahore, Karachi and Peshawar may require different service-tax registrations, labour compliance procedures, environmental approvals and local licences in each jurisdiction. The older tax compendium correctly recognised this fundamental division: income tax and sales tax on goods remain federal, whereas sales tax on services is principally administered through the respective provincial revenue authorities, with a separate regime applying in the Islamabad Capital Territory.

A commercially sound legal review must therefore identify not merely what the business will do, but where each activity, employee, establishment, supply and customer will be located.

Choosing the Appropriate Business Vehicle

The legal vehicle should be selected before contracts are signed, employees are hired or funds are remitted. Retrospective restructuring is often possible, but it may create tax leakage, regulatory delay, assignment difficulties or questions concerning the original remittability of capital.

The Pakistani Subsidiary

For many investors, a locally incorporated private limited company provides the clearest legal separation between the foreign parent and the Pakistani operation. The subsidiary can hold assets, employ personnel, enter contracts, open bank accounts, obtain licences and sue or be sued in its own name.

Limited liability is not, however, absolute immunity. Parent companies, directors and beneficial owners may face exposure where there has been fraud, sham structuring, wrongful trading, personal guarantees, statutory default, tax misconduct or circumstances justifying the disregard of corporate personality.

The subsidiary’s constitutional documents and shareholders’ agreement should address matters such as:

• board composition and reserved matters;
• funding obligations;
• restrictions on share transfers;
• pre-emption rights;
• deadlock resolution;
• dividend policy;
• intellectual-property ownership;
• confidentiality and non-competition;
• management control;
• exit rights; and
• the governing law and forum for shareholder disputes.

A foreign investor should not rely exclusively upon standard-form constitutional documents where the company is a joint venture or contains minority shareholders. A properly drafted shareholders’ agreement is often the principal instrument through which commercial expectations are translated into enforceable governance rights.

The Single-Member Company

A single-member company may be suitable where the Pakistani operation is to be wholly owned by one foreign corporate or individual shareholder. It offers separate legal personality without requiring a second economic shareholder merely to satisfy an incorporation formality.

However, the identity, nationality and status of the member, director, nominee and ultimate beneficial owner must be disclosed in accordance with the Companies Act, the Companies Regulations and applicable security-screening procedures.

The Limited Liability Partnership

An LLP combines separate legal personality with comparatively flexible internal management. It may suit professional practices, advisory businesses, investment collaborations and certain joint ventures.

Its appropriateness must nevertheless be assessed in tax and regulatory terms. A structure offering contractual flexibility is not necessarily the most efficient structure for repatriating dividends, raising equity, obtaining an industry licence or later selling the investment.

The Foreign-Company Branch

A branch is an extension of the foreign corporation rather than a separate Pakistani subsidiary. BOI materials describe branches as vehicles commonly used to perform contractual obligations or undertake an authorised project in Pakistan. The permission letter will ordinarily define the scope and duration of permitted activity, and the foreign company must also comply with the SECP’s foreign-company registration and filing requirements.

A branch may be attractive where:

• a foreign contractor has secured a specific Pakistani project;
• the foreign parent wishes to contract directly;
• the project has a defined duration;
• the client or procuring authority requires the foreign entity itself to remain liable; or
• incorporation of a subsidiary would be commercially artificial.

The disadvantage is that branch liabilities are ordinarily liabilities of the foreign corporation itself. Branch taxation, remittance of branch profits, permanent-establishment consequences and the terms of the underlying contract therefore require careful review.

The Liaison Office

A liaison office is intended for non-commercial representational and coordination functions. It should not ordinarily invoice customers, conclude revenue-generating local business in its own right or conduct activities beyond those permitted by the BOI.

A liaison office may be appropriate for:

• market research;
• communication with Pakistani stakeholders;
• coordination between a foreign head office and local suppliers;
• preliminary project development;
• promotion and relationship management; or
• oversight of non-commercial activities.

Where an office begins performing contracts, earning income or providing chargeable services, the authorities may question whether it has exceeded the terms of its permission or created a taxable permanent establishment.

Joint Ventures, Distributors and Agents

A foreign business need not always incorporate a Pakistani entity. It may enter through a local distributor, commercial agent, franchisee, contractual joint venture or tender consortium.

This model lowers establishment costs but transfers considerable operational dependence to the local counterparty. The agreement must therefore address:

• exclusivity and performance targets;
• territory and customer allocation;
• pricing and payment;
• responsibility for licences and taxes;
• compliance with anti-bribery and competition law;
• use and registration of intellectual property;
• ownership of customer information;
• warranties and product liability;
• audit and inspection rights;
• termination;
• post-termination stock and customer arrangements; and
• dispute resolution.

Incorporating a Foreign-Owned Company

The SECP’s contemporary incorporation process is principally conducted through eZfile. The first formal step is ordinarily name reservation, followed by submission of the incorporation application and supporting information in accordance with the Companies Act 2017 and Companies Regulations 2024.

Depending upon the ownership structure, the documentation may include:

• the proposed company name and principal line of business;
• memorandum and articles of association;
• particulars of subscribers, directors and chief executive;
• identity documents;
• board resolutions and corporate authorisations of foreign subscribers;
• constitutional documents of foreign corporate shareholders;
• the chain of ownership leading to natural-person beneficial owners;
• registered-office particulars;
• information concerning paid-up capital and share allocation;
• declarations of compliance; and
• authenticated or legalised foreign documents in the form required for the country of origin.

The SECP may refer foreign subscribers, directors or beneficial owners for security clearance. The time required for clearance cannot safely be estimated solely by reference to the ordinary electronic incorporation timetable.

Incorporation is also only the first stage. A newly incorporated company commonly requires:

• a National Tax Number;
• registration for applicable income and sales taxes;
• a corporate bank account;
• registration of foreign capital through the authorised banking channel;
• provincial sales-tax registration where services are supplied;
• social-security and employee-benefit registrations;
• local trade or establishment licences;
• sector-specific permissions; and
• intellectual-property registrations.

A certificate of incorporation therefore confirms corporate existence; it does not confirm that the company is authorised to undertake every activity mentioned in its objects.

Ultimate Beneficial Ownership and Corporate Transparency

Foreign investors must disclose not only the immediate shareholder but the natural persons who ultimately own or control the company.

The Companies Regulations 2024 generally treat a natural person as an ultimate beneficial owner where that person ultimately owns or controls the prescribed ownership interest, ordinarily at least 25 per cent, or exercises effective control through other means. Corporate groups should therefore prepare a complete and coherent ownership chart rather than submitting only the name of an intermediate holding company.

Companies are required to maintain beneficial-ownership information and make prescribed filings, including Form 19 in the circumstances specified by the regulations. The SECP’s April 2026 compliance direction emphasised that the relevant information should accompany annual returns and that failure to comply may attract penalties.

Particular difficulty may arise where ownership is held through:

• trusts or foundations;
• nominees;
• layered offshore companies;
• investment funds;
• bearer-like arrangements;
• family offices;
• voting agreements;
• convertible instruments; or
• contractual control without majority equity.

Such structures are not necessarily prohibited, but the investor must be able to explain the ownership and control chain transparently to the SECP, banks, tax authorities and any sector regulator conducting a fit-and-proper assessment.

Bringing Foreign Capital into Pakistan

Foreign investment should be introduced through a properly documented banking channel. It is unsafe to treat the mere receipt of money in a Pakistani account as sufficient evidence that the investment has been registered on a repatriable basis.

The State Bank of Pakistan regulates foreign-exchange transactions through the Foreign Exchange Regulation Act, the Foreign Exchange Manual, circulars and directions implemented through authorised dealer banks.

For an equity investment, the transaction record should ordinarily establish:

• the identity of the foreign remitter;
• the purpose of remittance;
• the recipient company;
• the amount and currency received;
• conversion into Pakistani rupees, where applicable;
• allotment or transfer of the corresponding shares;
• corporate approvals;
• statutory filings;
• valuation or pricing compliance where relevant; and
• registration of the non-resident shareholding through the prescribed system.

In 2026, the SBP introduced an electronic Non-Resident Shareholding Registration System and delegated additional functions relating to the registration of non-resident shareholding to authorised dealers. This should improve administration, but it also makes coordination with the company’s bank at the time of investment more, not less, important.

Foreign investors should retain the complete banking and corporate record for as long as the investment subsists. Documents that appear routine at the time capital is introduced may become decisive years later when the investor seeks to remit dividends, sell shares, reduce capital or liquidate the company.

Repatriation of Capital, Profits and Dividends

Pakistani investment law generally protects the right of a foreign investor to remit eligible profits and investment proceeds. The Foreign Private Investment (Promotion and Protection) Act 1976 and the Protection of Economic Reforms Act 1992 form part of that protective framework.

However, repatriation is not an unconditional movement of money. It is an authorised foreign-exchange transaction requiring documentary and tax compliance.

Depending upon the transaction, the authorised dealer bank may require evidence of:

• the original inward remittance;
• registration of the shares or investment;
• audited financial statements;
• valid declaration of dividend or branch profit;
• payment or withholding of applicable tax;
• corporate resolutions;
• sale and transfer documents;
• valuation;
• regulatory approval;
• proof that the remittance does not exceed the legally distributable or sale amount; and
• compliance with the Foreign Exchange Manual and relevant SBP circulars.

It is often liberally stated that Pakistan permits “100% repatriation” of profits, dividends and capital. The proposition is directionally correct but legally incomplete. The better formulation is that Pakistan generally permits repatriation of properly registered foreign investment, eligible income and disinvestment proceeds subject to taxation, banking documentation, regulatory conditions and the character in which the original capital entered the country.

That qualification is vital. A foreign investor who introduces funds informally, through an unrelated party, as an undocumented loan or without completing non-resident shareholding formalities may encounter avoidable difficulties when seeking to remit the proceeds.

Special Economic Zones and Investment Incentives

Pakistan’s Special Economic Zones framework offers specified fiscal and customs incentives to qualifying zone developers and zone enterprises.

Official BOI materials describe the principal incentives as including:

• a one-time exemption from customs duties and taxes on qualifying capital goods imported for installation within the zone; and
• an income-tax exemption for a period of ten years, subject to the applicable commencement rules and statutory conditions.

These incentives should not be treated as automatic merely because a business is geographically close to an SEZ. The investor must ordinarily obtain the relevant status as a zone enterprise or developer, undertake an eligible activity, comply with the zone approval process and satisfy the documentary requirements of the customs and tax authorities.

Before relying upon an incentive, counsel should verify:

• whether the relevant zone has been formally notified;
• whether the investor’s proposed activity is permitted;
• whether the plot or facility lies within the legally notified zone boundary;
• whether zone-enterprise status has been granted;
• the date from which the exemption period begins;
• whether the imported plant or machinery falls within the exemption;
• restrictions upon disposal or relocation of exempt capital goods;
• the interaction between the SEZ legislation and the Finance Act 2026;
• provincial taxes and levies not covered by the federal concession; and
• any employment, environmental, utility or infrastructure obligations imposed by the zone developer.

An incentive should be modelled as part of the project’s legal and tax structure, not accepted merely from a marketing brochure.

A Preliminary Market-Entry Checklist

Before remitting capital or signing a binding Pakistani contract, a foreign investor should have written answers to the following questions:

The discipline of answering these questions early is less costly than attempting to regularise an improvised structure after a regulatory objection, tax assessment, banking refusal or commercial dispute has arisen.

Taxation of Businesses and Foreign Investors in Pakistan in 2026

Pakistan’s tax system cannot safely be understood by looking only at the headline corporate income-tax rate. The effective tax burden of a business may be affected by turnover-based minimum taxation, withholding taxes, sales tax, customs duties, provincial taxes on services, federal excise duty, capital-gains treatment, super tax, employee-related deductions and sector-specific levies.

The legal form of the investment also matters. A Pakistani subsidiary, foreign-company branch, contractual joint venture, permanent establishment and non-resident service provider may each receive materially different treatment, even where they participate in the same underlying project.

Foreign investors should therefore obtain a transaction-specific tax model before deciding:

• whether to incorporate or establish a branch;
• whether to finance the enterprise through equity or debt;
• whether services will be supplied onshore or offshore;
• how intellectual-property, management and technical-service arrangements will be structured;
• whether equipment will be sold, leased or imported by the Pakistani entity;
• where contracts will be signed and performed;
• how expatriate personnel will be remunerated; and
• how profits or exit proceeds will ultimately be remitted.

The fiscal framework for the 2026–27 financial year is principally reflected in the Income Tax Ordinance 2001, Sales Tax Act 1990, Federal Excise Act 2005, Customs Act 1969, Finance Act 2026 and the corresponding provincial finance and sales-tax legislation. The FBR has published versions of both the Income Tax Ordinance and Sales Tax Act incorporating amendments up to 30 June 2026.

Corporate Income-Tax Rates

For Tax Year 2027 and onwards, the principal federal corporate income-tax rates are:

These rates appear in Division II of Part I of the First Schedule to the Income Tax Ordinance 2001 as amended up to 30 June 2026.

The 29 per cent rate should not be mistaken for a complete statement of the company’s tax exposure. Depending upon its income, sector, turnover and transactions, a company may additionally encounter:

• super tax;
• minimum tax based upon turnover;
• withholding tax on payments or receipts;
• capital-gains tax;
• tax on dividends;
• taxes upon profit on debt;
• provincial sales tax on services;
• federal sales tax on goods;
• customs and regulatory duties;
• federal excise duty; and
• employee payroll deductions and contributions.

A foreign investor should accordingly distinguish between the nominal corporate rate and the effective project tax rate.

Small-Company Status

The reduced 20 per cent rate applies only where the company satisfies the statutory definition of a “small company”. Incorporating with modest share capital does not by itself secure that treatment.

The definition is subject to conditions concerning incorporation, ownership, turnover, employment and other statutory criteria. A company that grows beyond the prescribed limits, belongs to a larger corporate group or otherwise ceases to satisfy the definition may lose the reduced rate.

Small-company status should therefore be confirmed annually rather than assumed permanently from the company’s original incorporation documents.

Super Tax and High-Income Companies

The Finance Act 2026 materially rationalised super tax. According to the FBR’s official salient features, super tax was abolished for persons with income up to PKR 500 million and reduced from 10 per cent to 8 per cent for persons earning more than that amount. The FBR has, however, identified separate treatment for banking, exploration and production, and fertiliser-sector businesses.

A group contemplating a large Pakistani project should not therefore calculate its tax exposure solely by applying 29 per cent to anticipated accounting profit. Super-tax exposure, minimum tax, withholding treatment and sectoral provisions may materially alter the result.

Minimum Tax on Turnover

Pakistan’s income-tax regime contains turnover-based minimum-tax provisions. These can create liability even where:

• the company records an accounting loss;
• taxable profit is low;
• substantial depreciation has been claimed;
• the project remains in its initial capital-intensive phase;
• receivables have not yet been collected; or
• the business operates on a low-margin, high-turnover model.

Different rates or concessions may apply to specified industries, distributors, dealers, wholesalers and other prescribed categories. The Finance Act 2026 increased the reduced minimum-tax rate applicable to distributors, dealers, sub-dealers and wholesalers in specified sectors from 0.25 per cent to 0.5 per cent, subject to the prescribed documentary requirements.

Minimum tax is especially significant for:

• construction and engineering contractors;
• distributors and wholesalers;
• commodity businesses;
• logistics operators;
• large retailers;
• low-margin manufacturers;
• importers;
• project companies during their early operating years; and
• enterprises with delayed or disputed receivables.

The tax model should therefore include both profit-based and turnover-based calculations.

Taxation of Non-Residents

A non-resident is generally taxable in Pakistan upon Pakistan-source income. The relevant enquiry is not confined to where the contract was signed or where the invoice was issued.

Pakistan-source income may arise from:

• services rendered in Pakistan;
• employment exercised in Pakistan;
• business carried on through a permanent establishment;
• royalties or technical fees connected with Pakistan;
• property situated in Pakistan;
• disposal of Pakistani shares or assets;
• contracts substantially performed in Pakistan;
• debt or financing connected with a Pakistani payer;
• shipping, air transport or other specially regulated activities; and
• other statutory source rules.

The domestic legislation must then be read together with any applicable double-taxation agreement. A treaty may alter the domestic position by restricting Pakistan’s taxing right, defining a permanent establishment differently, reducing withholding rates or allocating taxing jurisdiction between the two contracting states.

A treaty should not be cited merely because the foreign party is incorporated in a treaty country. The claimant must ordinarily establish residence, beneficial entitlement and satisfaction of the relevant treaty conditions.

Permanent Establishment Risk

A foreign company may become taxable in Pakistan even though it has not incorporated a subsidiary or registered a formal branch. This can occur where its Pakistani activities constitute a permanent establishment.

Potential permanent-establishment indicators include:

• a fixed place of business;
• an office, workshop, factory or project site;
• a construction, installation or assembly project;
• prolonged provision of services in Pakistan;
• personnel habitually working from Pakistani premises;
• an agent habitually concluding contracts or exercising material authority;
• inventory maintained and supplied from Pakistan;
• management or commercial decisions regularly made in Pakistan; or
• an interrelated series of projects whose combined duration crosses the relevant threshold.

The threshold under domestic law may differ from the threshold contained in an applicable double-taxation agreement. Contract splitting, artificial rotation of personnel and use of related Pakistani entities may be examined according to the commercial substance rather than the form of the arrangement.

A foreign contractor should therefore undertake a permanent-establishment assessment before mobilising personnel, opening a project office or beginning contractual performance.

Branch Taxation

A branch is ordinarily taxed upon the profits attributable to its Pakistani operations. The branch must maintain proper Pakistani accounts, comply with tax and corporate filing requirements and distinguish its local income and expenditure from the wider accounts of the foreign head office.

Issues commonly arising include:

• allocation of head-office expenditure;
• deductibility of management and administrative charges;
• attribution of project revenue;
• withholding taxes suffered by the branch;
• depreciation of imported equipment;
• treatment of head-office-funded assets;
• foreign-exchange gains and losses;
• remittance of branch profits;
• permanent-establishment attribution; and
• interaction with the applicable tax treaty.

A branch should not treat every charge imposed by its head office as automatically deductible. The nature, benefit, supporting evidence and arm’s-length character of the expense may be examined by the tax authorities.

Withholding Tax: A Central Feature of Pakistani Taxation

Pakistan employs an extensive withholding-tax regime. Tax may be deducted or collected at source from payments involving:

• contracts;
• supplies of goods;
• services;
• imports;
• exports;
• dividends;
• profit on debt;
• royalties;
• technical-service fees;
• commissions;
• rent;
• property transfers;
• salaries;
• payments to non-residents;
• cash withdrawals or specified banking transactions;
• card-based foreign payments; and
• digital and e-commerce receipts.

The legal character of withholding tax varies. Depending upon the relevant section, it may be:

• adjustable against the recipient’s eventual tax liability;
• minimum tax;
• final tax;
• advance tax; or
• a collection mechanism carrying a higher rate for persons not appearing on the Active Taxpayers List.

The treatment must be determined section by section. A business should not assume that every amount withheld will be fully refundable or creditable.

The Finance Act 2026 revised withholding-tax treatment in several areas, including specified and unspecified services, export proceeds, e-commerce transactions, foreign card payments and revenues received by digital-content creators. It also introduced stronger electronic reporting and cross-matching of banking and tax information.

Foreign service providers should require the Pakistani customer to state in the contract:

• the statutory basis for deduction;
• whether the quoted fee is gross or net of Pakistani tax;
• responsibility for obtaining any exemption or reduced-rate certificate;
• the duty to provide a withholding certificate;
• treatment of treaty relief;
• the procedure for grossing up;
• responsibility for provincial sales tax; and
• the consequences of a later tax reassessment.

A poorly drafted tax clause can transform an apparently profitable contract into a materially underpriced one.

Active Taxpayers List Status

Pakistan applies materially higher withholding or collection rates in numerous circumstances where the taxpayer is not included in the Active Taxpayers List.

A company may have an NTN and still encounter non-ATL treatment if its return-filing and statutory compliance are not current. Foreign-owned companies should therefore maintain continuing oversight of:

• annual income-tax returns;
• withholding statements;
• sales-tax returns;
• payment reconciliations;
• audit notices;
• changes in registered particulars;
• authorised representative information; and
• ATL status.

The distinction is commercially important because suppliers, banks, customers and property registries may automatically apply the higher statutory rate where the taxpayer’s status is not reflected correctly.

Taxation of IT and IT-Enabled Services Exports

Older descriptions of Pakistan’s technology tax regime frequently refer to a complete exemption ending in June 2025. That is no longer an adequate formulation.

The current regime uses a concessionary tax mechanism for qualifying export proceeds. The Finance Act 2026 extended the reduced 0.25 per cent rate applicable to qualifying exporters of IT and IT-enabled services through Tax Year 2029.

The concession should not be described as a universal tax holiday for every technology company. Eligibility may depend upon:

• the nature of the exported service;
• registration or certification requirements;
• receipt of export proceeds through the prescribed banking channel;
• proper classification of the remittance;
• filing of tax returns and statements;
• compliance with applicable conditions;
• distinction between export and domestic income; and
• the company’s participation in any required regulatory or export-registration system.

A software company receiving overseas income through personal accounts, informal payment channels, cryptocurrency conversion or incorrectly coded home remittances may be unable to establish that the receipts constitute qualifying export proceeds.

The State Bank has continued to issue specific foreign-exchange instructions for IT companies and freelancers, including measures concerning export receipts and outward payments.

Exports Outside the IT Sector

The Finance Act 2026 reduced the combined tax collection on export proceeds from 2 per cent to 1.25 per cent. The legal effect and adjustability of the collection must nevertheless be examined according to the applicable statutory provision and the exporter’s category.

Exporters must also maintain proper evidence of:

• shipment or provision of the exported service;
• customs or export declaration;
• commercial invoice;
• contract or purchase order;
• certificate of origin where required;
• foreign-exchange realisation;
• banking classification of the receipt;
• export proceeds received within the permissible period; and
• any claim for rebate, drawback, exemption or concession.

Sales Tax on Goods

The Sales Tax Act 1990 governs federal sales tax on goods. The general statutory rate is 18 per cent, but the effective treatment may differ because of:

• exemptions;
• reduced rates;
• zero-rating;
• retail-price taxation;
• fixed or special regimes;
• import-stage tax;
• minimum value-addition tax;
• restrictions on input adjustment;
• sectoral schedules;
• withholding by the customer; and
• documentation or electronic-invoicing requirements.

The FBR’s consolidated Sales Tax Act incorporates the Finance Act 2026 amendments and should be consulted together with the applicable schedules, rules and SROs.

Registration should be determined before taxable supplies commence. A registered person will ordinarily be required to:

• issue compliant tax invoices;
• maintain purchase and sales records;
• file periodic returns;
• reconcile input and output tax;
• retain evidence supporting input credits;
• comply with electronic invoicing or integration requirements where applicable;
• deduct or collect tax where designated as a withholding agent; and
• respond to discrepancy, audit and recovery proceedings.

Input tax is not automatically recoverable merely because it appears on an invoice. Claims may be denied where the supplier is non-compliant, the transaction is not adequately evidenced, payment-channel requirements have not been met or the input relates to a restricted category.

Provincial Sales Tax on Services

Sales tax on services is principally administered by the provinces through:

• the Punjab Revenue Authority;
• the Sindh Revenue Board;
• the Khyber Pakhtunkhwa Revenue Authority; and
• the Balochistan Revenue Authority.

Services supplied in the Islamabad Capital Territory remain subject to the federal regime administered by the FBR.

The provincial authorities maintain separate legislation, schedules, registration systems, rates, exemptions, withholding rules and filing procedures. Punjab’s general rate is presently stated by the PRA as 16 per cent, while Sindh and Balochistan publish general rates of 15 per cent, subject in each jurisdiction to numerous sector-specific variations. Khyber Pakhtunkhwa similarly maintains its own service schedules, place-of-provision rules and amendments.

The applicable authority cannot always be identified simply from the supplier’s registered office. Relevant considerations may include:

• where the service is performed;
• where it is received or consumed;
• the location of the customer;
• the place from which the service is provided;
• the location of immovable property;
• the situs of a project;
• billing arrangements;
• the applicable place-of-provision rules; and
• whether a reverse-charge or withholding mechanism applies.

A service provider operating nationally may therefore require multiple registrations.

This issue frequently affects:

• consultants;
• contractors;
• software and digital-service providers;
• advertising and media businesses;
• logistics and freight operators;
• hotels and restaurants;
• insurance and financial services;
• property developers;
• franchise and royalty arrangements;
• professional firms;
• security companies; and
• telecommunications businesses.

The contract should identify whether the fee is inclusive or exclusive of provincial sales tax and which party bears any liability arising from a different place-of-provision interpretation.

Reverse Charge and Imported Services

A Pakistani recipient of services from a foreign provider may incur a reverse-charge or withholding obligation even where the foreign supplier has no registered establishment in Pakistan.

Imported services commonly include:

• cloud computing;
• software subscriptions;
• technical advice;
• management services;
• advertising;
• licensing;
• database access;
• consulting;
• digital platforms;
• engineering and design; and
• offshore support services.

The taxpayer must examine both the relevant provincial or ICT sales-tax legislation and the SBP rules governing outward commercial remittances. A bank’s willingness to process an outward payment does not determine the tax treatment of that payment.

Federal Excise Duty

Federal excise duty applies to specified goods and services under the Federal Excise Act 2005. Its application is sector-specific rather than universal.

Businesses dealing in products or services potentially falling within the federal excise schedules should confirm:

• whether duty is imposed on manufacture, import, supply or service;
• the applicable rate or fixed amount;
• whether sales tax also applies;
• the valuation mechanism;
• registration requirements;
• input or adjustment treatment;
• invoicing obligations; and
• any exemption, concession or special procedure.

The Finance Act 2026 amended a number of federal excise measures, including relief and revised treatment for certain travel, vehicle, beverage and other specified categories.

Customs Duties and Import-Stage Taxes

Imports may attract several separate imposts, including:

• customs duty;
• additional customs duty;
• regulatory duty;
• sales tax at import stage;
• minimum value-addition tax;
• advance income tax;
• federal excise duty where applicable;
• anti-dumping or countervailing duty; and
• port, terminal, demurrage and clearance charges.

The customs classification of goods is therefore financially decisive. An incorrect HS code may affect:

• the duty rate;
• exemption eligibility;
• importability;
• regulatory approval;
• valuation;
• sales-tax treatment;
• product-standard requirements; and
• liability for penalties or confiscation.

Importers should obtain a written tariff and regulatory review before shipment where the goods are high-value, technically complex or subject to sector regulation.

Double-Taxation Agreements

Pakistan has entered into double-taxation agreements with numerous jurisdictions. Depending upon the treaty, relief may be available concerning:

• business profits;
• permanent establishments;
• dividends;
• interest or profit on debt;
• royalties;
• technical or management fees;
• capital gains;
• shipping and air transport;
• employment income; and
• elimination of double taxation.

Treaty relief is not self-executing in every practical sense. The claimant may need to provide:

• a tax residence certificate;
• evidence of beneficial ownership;
• incorporation and ownership documents;
• a copy of the relevant agreement;
• invoices and contracts;
• an application for exemption or reduced deduction;
• evidence that the arrangement is not treaty-shopping or abusive; and
• any documents required by the payer, bank or Commissioner.

Tax clauses should anticipate the possibility that an exemption certificate is delayed or refused.

Transfer Pricing

Transactions between a Pakistani company and its foreign parent, affiliates or commonly controlled entities must be conducted on an arm’s-length basis.

Common related-party transactions include:

• purchase or sale of goods;
• management charges;
• technical-service fees;
• software and intellectual-property licences;
• shared services;
• secondment of personnel;
• intra-group loans;
• guarantees;
• cost allocations;
• contract manufacturing;
• procurement support; and
• regional marketing services.

The legal agreement is only one component of the defence. The taxpayer should also maintain evidence showing:

• what service or asset was actually provided;
• why the Pakistani business needed it;
• how the price was determined;
• what benefit was received;
• whether comparable independent arrangements exist;
• how shared costs were allocated;
• that no duplicate charge has been imposed; and
• that the transaction is consistent with the conduct of the parties.

A management-fee invoice stating only “group support” is unlikely to provide a satisfactory evidential record.

Thin Capitalisation and Foreign Debt

Foreign shareholder loans may appear more flexible than equity, but they introduce tax and foreign-exchange considerations.

The structure may engage:

• thin-capitalisation restrictions;
• transfer-pricing rules;
• deductibility of interest or profit;
• withholding tax;
• debt-to-equity limitations;
• SBP registration or approval;
• permissible maturity and pricing;
• conversion into equity;
• security or guarantee arrangements; and
• remittance of principal and return.

The loan should be documented and routed through the prescribed banking channel before funds are received. Recharacterising an informal remittance as a shareholder loan after the event may create difficulty.

Tax Administration and the 2026 Digital Compliance Direction

The Finance Act 2026 demonstrates a marked movement towards automated and data-driven tax administration.

The announced measures include:

• algorithmic comparison of banking and tax information;
• electronic provision of information by banks and electronic-money institutions;
• compulsory integration of specified business systems;
• machine-readable financial statements;
• faceless audits, assessments and appeals;
• an algorithmic settlement mechanism;
• increased penalties for filing and integration failures; and
• a tax credit for qualifying investment in electronic resources used for FBR integration.

The practical implication is that inconsistencies previously buried in separate databases may be identified electronically. Businesses should expect comparison of:

• declared turnover;
• bank deposits;
• customs imports;
• sales-tax invoices;
• withholding statements;
• utility consumption;
• property transactions;
• payroll;
• foreign remittances; and
• corporate filings.

The appropriate response is not merely reactive litigation. A well-governed company should conduct periodic internal reconciliations before statutory returns are filed.

A Tax Compliance Calendar for Foreign-Owned Companies

A foreign-owned company should maintain a consolidated compliance calendar covering:

The tax and corporate calendars should be coordinated. A change of director, shareholder, bank mandate, registered office or business activity may require corresponding updates before more than one authority.

Banking and Financial Arrangements

Opening a Pakistani Corporate Bank Account

A Pakistani company may open accounts with banks authorised and regulated by the State Bank of Pakistan. In practice, foreign-owned companies are subject to detailed customer-due-diligence procedures.

The bank may require:

• certificate of incorporation;
• memorandum and articles of association;
• NTN and tax-registration particulars;
• registered-office evidence;
• board resolution authorising the account;
• account-operating mandate;
• identity documents of directors and authorised signatories;
• corporate documents of foreign shareholders;
• ultimate-beneficial-ownership information;
• ownership chart;
• source-of-funds and source-of-wealth information;
• explanation of the proposed business;
• contracts or expected transaction profile;
• regulatory licences;
• Pakistani contact particulars; and
• verification of foreign documents.

SBP-regulated institutions are required to identify and verify customers and beneficial owners and to conduct continuing risk-based due diligence. Personal accounts should not ordinarily be used for corporate business merely for convenience.

Foreign shareholders should expect banks to enquire beyond the immediate corporate subscriber. A bank may ask for the natural persons standing behind several layers of companies and may seek clarification where ownership, control and funding do not correspond.

Selecting the Bank Early

The authorised dealer should be selected early in the investment process because the bank will participate in:

• receipt and classification of foreign equity;
• registration of non-resident shareholding;
• payment for imports;
• receipt of export proceeds;
• outward commercial remittances;
• payment of royalties and technical fees;
• servicing of foreign loans;
• dividend remittance;
• branch-profit remittance; and
• eventual disinvestment.

The State Bank’s 2026 reforms delegated further responsibility for registration of non-resident shares to authorised dealers and introduced the Non-Resident Shareholding Registration System.

Changing banks midway through a transaction is possible, but missing historical records or unclear designation of the responsible authorised dealer may delay later remittances.

Foreign-Currency Accounts

Pakistani and foreign firms may maintain eligible foreign-currency accounts subject to the Foreign Exchange Manual and applicable SBP directions. Chapter 6 of the Manual deals with private foreign-currency accounts, including accounts of foreign firms and companies in Pakistan.

A foreign-currency account does not remove the obligation to:

• classify incoming and outgoing payments correctly;
• comply with tax laws;
• produce underlying contracts and invoices;
• observe export-proceeds rules;
• obtain approval where required; or
• distinguish capital, loan, revenue and personal remittances.

The SBP issued further instructions in March 2026 concerning foreign-currency accounts and non-resident rupee accounts.

Outward Commercial Remittances

Payments to foreign suppliers, licensors, consultants, parent companies and service providers are processed through authorised dealer banks under the Foreign Exchange Manual.

The bank may require:

• executed agreement;
• commercial invoice;
• evidence of service or delivery;
• tax deduction or exemption certificate;
• regulatory approval;
• transfer-pricing support;
• proof that the payment is contractually due;
• confirmation that the transaction is not prohibited;
• information concerning the recipient and beneficial owner; and
• prescribed forms or declarations.

Particular scrutiny may arise in relation to:

• royalty and franchise fees;
• technical-service payments;
• management charges;
• software subscriptions;
• cloud and digital services;
• advertising platforms;
• related-party payments;
• advance payments;
• guarantees;
• imported services; and
• remittances to higher-risk jurisdictions.

The State Bank’s Foreign Exchange Manual separately addresses imports, commercial remittances, loans and guarantees, securities, and repatriation of invisible earnings.

Foreign Loans and Shareholder Funding

Foreign borrowing by a Pakistani company must be structured within the relevant SBP framework.

Before accepting funds, the borrower should determine:

• whether the proposed facility falls within an automatic or approval route;
• permitted lender category;
• currency;
• minimum maturity;
• interest or benchmark;
• fees;
• repayment terms;
• end use;
• security;
• guarantee;
• reporting;
• tax withholding;
• registration with the authorised dealer; and
• whether conversion into equity is permitted.

Pakistan has previously introduced specific routes for convertible foreign debt raised by qualifying start-up companies. Even where such a route is available, conversion must comply with both corporate and foreign-exchange requirements.

An investor should not remit money first and document it later. The legal character of the remittance must be settled before the funds enter Pakistan.

Local Financing

Foreign-owned Pakistani companies may seek local bank financing, but availability depends upon:

• creditworthiness;
• regulatory sector;
• security;
• sponsor support;
• cash flow;
• project viability;
• debt-service capacity;
• foreign-exchange exposure;
• SBP prudential regulations; and
• the lender’s internal risk criteria.

Security may include:

• mortgage of immovable property;
• hypothecation of inventory and receivables;
• charge over plant and machinery;
• assignment of project proceeds;
• pledge of shares;
• sponsor guarantees;
• corporate guarantees; and
• controlled or escrow accounts.

Charges created by companies must be registered with the SECP within the prescribed statutory period. Failure to register may prejudice the security’s effectiveness against the liquidator and other creditors.

Anti-Money Laundering and Sanctions Compliance

Pakistan’s AML and counter-terrorist-financing framework applies not only to banks but to a range of regulated businesses and designated non-financial professions.

A foreign investor should maintain procedures concerning:

• customer identification;
• ultimate-beneficial-ownership verification;
• source of funds;
• source of wealth;
• sanctions and watch-list screening;
• politically exposed persons;
• suspicious transaction escalation;
• unusual cash transactions;
• trade-based money-laundering indicators;
• retention of records; and
• employee training.

In 2025, the SBP introduced a consolidated customer-onboarding framework and enhanced trade-based money-laundering controls, underlining the increasingly data-driven and risk-sensitive approach of Pakistani banks.

Importing and Exporting Goods

Pakistan Single Window

Pakistan Single Window is the principal integrated digital platform through which traders submit standardised information and documents for import, export and transit-related regulatory requirements.

PSW describes itself as a single-entry platform connecting traders, Customs, banks and other government agencies. Subscription and business registration ordinarily require verified identity and business information, including the company’s SECP registration or CUIN where the subscriber is a company. (Pakistan Single Window)

The platform facilitates:

• trader subscription;
• registration with Customs and participating agencies;
• single declarations for imports and exports;
• association of bank profiles;
• import and export permits;
• product-specific approvals;
• customs clearance information; and
• electronic exchange of financial-instrument data.

The single-declaration system does not abolish regulatory requirements. It digitises the pathway through which those requirements are fulfilled.

Import Policy Order 2022 and Its 2026 Amendments

The Import Policy Order 2022 remains a central instrument governing importability. It must be read with subsequent SROs and amendments issued by the Ministry of Commerce.

The Order generally distinguishes among:

• freely importable goods;
• prohibited goods;
• restricted goods;
• goods requiring prescribed conditions or approvals;
• used or second-hand goods;
• goods subject to health, safety or environmental controls; and
• goods restricted by origin, sector or end use.

The Ministry of Commerce continued to amend the Import Policy Order during 2026, including through SROs issued in April and July 2026.

An importer must therefore check the current consolidated position immediately before shipment. An earlier customs clearance of similar goods does not guarantee that a later consignment remains importable on identical terms.

Product-Specific Regulatory Approvals

Depending upon the goods, additional approval may be required from bodies such as:

• Drug Regulatory Authority of Pakistan;
• Pakistan Standards and Quality Control Authority;
• Plant Protection Department;
• Animal Quarantine Department;
• Pakistan Telecommunication Authority;
• provincial food authorities;
• Alternative Energy Development Board or successor energy institutions;
• explosives, petroleum or mineral authorities;
• environmental protection agencies; and
• sector-specific ministries.

PSQCA states that imported goods subject to national quality standards must comply with the same standards applicable to similar domestically produced goods. It also maintains a list of compulsory products subject to conformity assessment. (PSQCA)

Product compliance should be examined before goods are manufactured or shipped. Relabelling, testing, certification or obtaining permission after arrival may be expensive or impossible.

Customs Valuation

Customs duty is generally calculated upon the customs value determined under the Customs Act and applicable valuation rules.

The declared invoice value may be challenged where Customs considers that:

• the buyer and seller are related;
• the price has been influenced by the relationship;
• assists, royalties or licence fees should be added;
• freight, insurance or packing has been omitted;
• the declaration conflicts with valuation rulings;
• comparable imports indicate a higher value; or
• the transaction is otherwise not accepted as representing the proper customs value.

Related-party supply contracts should therefore identify separately:

• goods;
• freight;
• insurance;
• tooling;
• design;
• software;
• royalties;
• installation;
• training; and
• post-import services.

An imprecise bundled invoice may result in services or intellectual-property charges being included in the customs value of the goods.

Customs Record-Keeping and Audit

Importers should retain:

• purchase contract;
• purchase order;
• invoice;
• packing list;
• bill of lading or airway bill;
• insurance documents;
• letter of credit or payment evidence;
• certificate of origin;
• product approvals;
• technical literature;
• valuation correspondence;
• customs declaration;
• assessment;
• examination report; and
• evidence of final delivery.

Customs proceedings can arise after clearance. A business should therefore preserve the complete file rather than retaining only the assessed declaration.

Export Regulation

Exports are governed by the Export Policy Order 2022, foreign-exchange rules and product-specific regulation. The Order generally permits exports subject to listed prohibitions, restrictions, documentation and sector conditions.

Exporters should confirm:

• whether the product is exportable;
• whether quotas or certificates apply;
• export-quality or health requirements;
• destination-country standards;
• certificate-of-origin rules;
• foreign-exchange realisation requirements;
• export declaration;
• tax treatment;
• intellectual-property rights; and
• sanctions or restricted-party concerns.

Employment and Expatriate Personnel

A Provincial Labour-Law System

Following constitutional devolution, labour regulation is substantially provincial. The federal labour statutes have, in many areas, been replaced, adapted or supplemented by provincial legislation.

An employer must therefore identify the province or territory in which each establishment and employee is located.

Relevant laws may address:

• appointment letters;
• classification of workers;
• standing orders;
• hours of work;
• overtime;
• weekly and public holidays;
• annual, casual, sick and maternity leave;
• minimum wages;
• wage payment;
• workplace safety;
• social security;
• old-age benefits;
• workers’ compensation;
• industrial relations;
• trade unions;
• termination;
• misconduct;
• retrenchment;
• gratuity or provident fund;
• employment of adolescents;
• apprenticeships;
• disability employment quotas; and
• workplace harassment.

There is no single employment template suitable for every Pakistani workforce.

Employment Contracts

Written contracts are strongly advisable for all employees and essential for managerial, technical, expatriate and confidential positions.

The contract should address:

• title and duties;
• place of work;
• probation;
• remuneration;
• allowances and benefits;
• working hours;
• leave;
• confidentiality;
• intellectual-property ownership;
• data and information security;
• conflicts of interest;
• disciplinary obligations;
• relocation and travel;
• notice;
• termination;
• return of company property;
• post-termination assistance; and
• governing policies.

The contract cannot lawfully contract out of mandatory statutory rights. A clause permitting immediate termination “at the employer’s sole discretion” may not defeat procedural or substantive protections available under the applicable labour law.

Worker and Managerial Classification

Pakistani labour legislation often distinguishes between workers or workmen and employees occupying managerial, administrative or supervisory positions.

The employee’s title is not conclusive. A court or labour forum may examine:

• actual duties;
• authority to hire or dismiss;
• control over staff;
• decision-making power;
• independence;
• supervisory responsibility;
• nature of work; and
• place within the organisational hierarchy.

This classification affects the forum, remedies, disciplinary process and applicability of standing-orders or industrial-relations legislation.

Termination and Misconduct

There is no universally correct proposition that every Pakistani employee may be dismissed upon 30 days’ notice.

The lawful process depends upon:

• the employee’s classification;
• province;
• applicable statute;
• appointment letter;
• standing orders;
• nature of termination;
• length of service;
• misconduct allegations;
• retrenchment or redundancy;
• probationary status; and
• collective arrangements.

Where misconduct is alleged, the employer may need to issue a charge sheet, provide an opportunity to respond, conduct a fair enquiry and record a reasoned decision.

Where employment is terminated without misconduct, contractual and statutory notice, accrued benefits, gratuity, leave encashment or other payments may become due.

A foreign employer should resist the temptation to import an overseas termination letter without adapting it to Pakistani law. Fair process is not merely benevolent administration; it is often the strongest defence to subsequent litigation.

Minimum Wages

Minimum wages are prescribed through provincial or territorial notifications and may differ by location, skill level, category and industry.

Rates are amended periodically. Punjab, for example, maintains a dedicated official repository for minimum-wage notifications and has introduced the Punjab Labour Code 2026. (Labour Punjab)

An authority page should not hard-code a single wage figure as though it applies nationally and indefinitely. Employers should verify the current notification in force for the relevant province and occupational category at the time the employment begins.

Social Security, EOBI and Employee Benefits

Depending upon the nature and size of the establishment, employers may require registration with:

• Employees’ Old-Age Benefits Institution;
• the relevant provincial social-security institution;
• workers’ welfare authorities;
• labour welfare departments;
• professional or sectoral regulators; and
• tax authorities for payroll withholding.

The threshold and contribution basis must be checked under the legislation currently applicable to the establishment.

A foreign-owned company should budget for the total statutory employment cost rather than treating the employee’s cash salary as the complete labour expense.

Workplace Harassment

Employers must maintain a workplace-harassment framework consistent with the Protection Against Harassment of Women at the Workplace Act 2010, as amended, and any applicable provincial arrangements.

The compliance structure should include:

• adoption and display of the statutory code;
• constitution of a properly composed inquiry committee;
• confidential complaint channels;
• protection against retaliation;
• fair inquiry procedure;
• maintenance of records; and
• implementation of recommendations.

The law extends beyond traditional office premises and may engage conduct occurring through electronic communication, work travel or other employment-related settings.

Intellectual Property Created by Employees and Contractors

Technology, media, pharmaceutical, research and engineering businesses should state expressly:

• ownership of inventions;
• software and source code;
• designs;
• databases;
• reports;
• research;
• confidential information;
• improvements;
• moral-rights treatment where legally possible;
• obligation to sign assignments; and
• ownership of pre-existing materials.

A payment to a contractor does not invariably resolve ownership of every intellectual-property right. The agreement should distinguish commissioned work from pre-existing tools, libraries, methodologies and third-party material.

Expatriate Work Visas

Foreign nationals employed in Pakistan require an appropriate work visa and must comply with the conditions of that visa.

Pakistan’s online visa system identifies categories including:

• General Work Visa;
• Work Visa for CPEC projects;
• journalist visa;
• domestic aide visa; and
• transit or transport-related work categories.

A general work-visa applicant must ordinarily have a valid job offer and provide the prescribed employer and personal documentation.

The immigration process may involve:

• online application;
• passport and photograph;
• employment or secondment letter;
• sponsoring-company particulars;
• SECP and tax documents;
• educational or professional credentials;
• security clearance;
• proof of accommodation;
• medical or other specified records; and
• extension applications.

Visa validity, entry permission and permission to work should not be conflated. The individual must hold the category appropriate to the activity actually undertaken.

Business Visas

A business visa is intended for commercial visits rather than ordinary local employment. The online system provides for multiple-entry business visas for eligible applicants and requires specified invitation or business-supporting documentation.

A visitor attending meetings, negotiations or due-diligence sessions may qualify for a business visa. A person who is stationed in Pakistan, manages local staff or performs continuing operational duties should be assessed for a work visa.

Expatriate Taxation

An expatriate may become taxable in Pakistan by reason of residence, Pakistan-source employment income or the performance of employment duties within Pakistan.

The tax analysis should consider:

• days spent in Pakistan;
• place where duties are performed;
• identity of the economic employer;
• local recharge of salary cost;
• allowances and benefits;
• housing and transport;
• stock options;
• pension contributions;
• tax equalisation;
• applicable double-taxation agreement; and
• payroll-withholding obligations.

Payment of salary offshore does not necessarily prevent Pakistani taxation where the employment is exercised in Pakistan.

Property, Premises and Construction

Foreign Ownership of Land

The earlier draft’s unqualified statement that foreign investors may own land requires refinement.

The Board of Investment states that foreign nationals may own land after incorporation of a company in Pakistan, but land is a provincial subject and acquisition rules vary between provinces. Individual foreign nationals may require permission from the Federal Government and the relevant provincial government.

Pakistan’s Investment Policy 2023 further recognises the ability of foreign companies to acquire leasehold rights subject to the rules of the relevant authority.

The practical position depends upon:

• whether the purchaser is a Pakistani incorporated company or an individual foreign national;
• province and district;
• freehold or leasehold title;
• agricultural, residential, industrial or commercial classification;
• development-authority conditions;
• cantonment or strategic-area restrictions;
• industrial-estate or SEZ rules;
• permitted land use;
• foreign or security approval;
• title restrictions; and
• the terms of the original allotment or lease.

Foreign investors should commonly prefer acquisition through the Pakistani project company rather than an individual nominee.

Title Due Diligence

A title investigation should examine more than the seller’s possession of a deed.

Depending upon the location and property type, counsel should review:

• root and chain of title;
• registered conveyances;
• mutation and revenue entries;
• allotment and transfer letters;
• lease conditions;
• development-authority records;
• approved layout and land use;
• encumbrances and mortgages;
• court proceedings;
• acquisition notifications;
• inheritance or succession;
• property tax;
• ground rent and authority dues;
• possession;
• access and easements;
• utility rights;
• environmental restrictions; and
• authority permission for transfer.

Revenue records may evidence fiscal or possessory entries without conclusively curing a defective underlying title.

A purchaser should also verify the identity and authority of the person signing for a company, trust, partnership, estate or overseas owner.

Leasing Commercial Premises

A commercial lease should address:

• precise description of the premises;
• permitted use;
• term and renewal;
• rent and escalation;
• security deposit;
• withholding and sales taxes;
• maintenance;
• utilities;
• fit-out rights;
• signage;
• subletting;
• assignment;
• insurance;
• building compliance;
• landlord representations;
• repair and reinstatement;
• termination;
• registration and stamp duty; and
• dispute resolution.

A lease should be checked against the title documents and land-use permission. The landlord’s promise that “commercial activity is common in the area” is not equivalent to lawful commercial use.

Construction and Development Permissions

Construction regulation is administered by local governments, development authorities, cantonment boards, industrial estates and other bodies depending upon the location.

A project may require:

• title or leasehold approval;
• land-use conversion;
• planning permission;
• building-plan sanction;
• height or aviation clearance;
• fire-safety approval;
• structural certification;
• utility connections;
• environmental approval;
• traffic-impact review;
• completion certificate;
• occupation permission; and
• sector-specific licences.

A building-plan approval does not necessarily authorise the business proposed to be conducted in the completed premises.

Environmental Approval

Section 12 of the Pakistan Environmental Protection Act 1997 and the IEE/EIA regulatory framework require qualifying public and private development projects to obtain environmental approval before commencement.

Pak-EPA states that projects falling within the relevant regulatory schedules must obtain approval through an Initial Environmental Examination or Environmental Impact Assessment, and that post-approval monitoring may be undertaken to verify compliance with the Environmental Management Plan.

Following devolution, provincial environmental protection agencies exercise extensive authority within their respective jurisdictions. Pak-EPA retains direct responsibility in the Islamabad Capital Territory and performs federal functions prescribed by law.

The level of assessment depends upon the project’s size, location, sector and environmental impact.

Projects likely to require careful review include:

• power generation;
• oil and gas;
• mines and minerals;
• industrial plants;
• housing and commercial developments;
• roads and transport infrastructure;
• hospitals and waste facilities;
• food-processing facilities;
• chemical and pharmaceutical plants;
• tourism projects in sensitive areas;
• large agricultural projects;
• dams and water infrastructure; and
• projects involving hazardous substances.

The IEE and EIA Process

The process may involve:

• project screening;
• scoping;
• baseline environmental study;
• impact assessment;
• mitigation plan;
• environmental-management plan;
• public consultation;
• public hearing for qualifying projects;
• submission to the competent EPA;
• technical review;
• approval subject to conditions;
• monitoring; and
• renewal or amendment where the project changes.

Pak-EPA’s regulations and published guidance distinguish between proposals requiring an IEE and those requiring a more detailed EIA.

A company should not begin earthworks or construction merely because the environmental application has been filed. Where prior approval is legally required, commencement before approval may expose the project to enforcement, closure, penalties and reputational harm.

Environmental Compliance After Approval

Environmental approval is not the end of the process.

Operational obligations may include:

• compliance with National or Provincial Environmental Quality Standards;
• emissions and effluent monitoring;
• waste-management procedures;
• hazardous-material controls;
• noise limits;
• groundwater or discharge approvals;
• environmental laboratory testing;
• self-monitoring reports;
• incident reporting;
• maintenance of treatment facilities; and
• implementation of the approved Environmental Management Plan.

Pak-EPA maintains rules and standards concerning industrial effluent, gaseous emissions, ambient air, drinking water, noise, laboratories, hazardous substances and self-monitoring by industries.

Environmental due diligence should also form part of property and corporate acquisitions. A buyer may acquire not only land and machinery, but the commercial consequences of historical contamination or non-compliant operations.

Preliminary Operational Risk Review

Before a foreign-owned business begins operations, it should be able to demonstrate that the following matters have been addressed:

The purpose of this review is not bureaucratic perfection for its own sake. It is to ensure that the business can withstand the ordinary pressures of audit, customer dispute, regulatory inspection, management change, financing and eventual exit.

Commercial Contracts in Pakistan

Commercial activity in Pakistan is founded principally upon the law of contract, supplemented by company law, sale-of-goods principles, agency law, intellectual-property legislation, competition law, tax law and the regulatory rules applicable to the relevant sector.

The Contract Act 1872 remains the principal general statute governing agreements, contractual capacity, consent, consideration, performance, breach, indemnity, guarantee, bailment and agency. Its age should not be mistaken for irrelevance. The statute continues to provide the legal foundation upon which modern technology contracts, distribution arrangements, infrastructure agreements, professional appointments, shareholder obligations and cross-border supply contracts are enforced.

A valid agreement should ordinarily demonstrate:

• legally competent parties;
• free and informed consent;
• lawful consideration;
• a lawful object;
• sufficiently certain obligations;
• an intention to create legal relations;
• compliance with any mandatory formality; and
• terms capable of performance and enforcement.

Foreign companies should not rely upon purchase orders, email chains or informal memoranda where the transaction involves substantial value, regulatory risk, intellectual property, exclusivity, long-term performance or cross-border payment. Informality may be commercially convenient at the beginning of a relationship, but it often becomes evidentially expensive when that relationship deteriorates.

Essential Clauses in a Pakistan-Facing Commercial Agreement

A carefully drafted Pakistan-facing contract should ordinarily address the following matters.

The drafting exercise should reflect the transaction’s actual operational structure. A contract may be legally elegant yet commercially useless where it assumes approvals, payment methods or delivery arrangements that the parties cannot lawfully implement.

Governing Law and Mandatory Pakistani Rules

Foreign parties may select foreign law for certain cross-border agreements, but a choice-of-law clause does not necessarily displace mandatory Pakistani legislation.

Matters that may continue to be governed or affected by Pakistani law include:

• incorporation and corporate authority;
• Pakistani immovable property;
• employment performed in Pakistan;
• taxation and withholding;
• foreign exchange;
• customs and import regulation;
• competition law;
• consumer protection;
• environmental obligations;
• insolvency;
• public procurement;
• licences and regulatory approvals;
• sanctions, criminal law and public policy; and
• enforcement before Pakistani courts.

The question is therefore not merely, “Which law governs the agreement?” It is also, “Which Pakistani laws will apply notwithstanding the agreement?”

A foreign-law clause can govern contractual interpretation while Pakistani mandatory law continues to determine whether the contemplated payment, licence, property transaction or regulatory arrangement is permissible.

Contractual Authority and Corporate Approvals

Before signature, each party should verify that:

• the counterparty legally exists;
• the signatory is duly authorised;
• the transaction falls within the company’s lawful business;
• necessary board or shareholder approvals have been obtained;
• any power of attorney is valid and sufficiently specific;
• regulatory consent has been secured where required;
• no charge, injunction or internal restriction prevents the transaction; and
• the execution formalities comply with the applicable law.

A company officer’s senior title does not invariably prove authority to bind the company to an extraordinary transaction. For acquisitions, guarantees, borrowing, asset sales, long-term leases and related-party arrangements, the underlying corporate approvals should be inspected rather than presumed.

Stamp Duty, Registration and Notarisation

Certain instruments may attract stamp duty or require registration, depending upon their subject matter and the province or territory concerned.

Particular care is required for:

• transfers of immovable property;
• long-term leases;
• mortgages and security documents;
• powers of attorney;
• share-transfer instruments;
• deeds of assignment;
• guarantees;
• settlements;
• construction and development agreements; and
• instruments presented in judicial proceedings.

An inadequately stamped document may encounter difficulties in evidence until the applicable duty and penalty are addressed. An instrument required by law to be registered may not obtain its intended legal effect merely because the parties have signed and notarised it.

Notarisation, apostille, consular attestation and registration serve different legal purposes and should not be treated as interchangeable.

Foreign Documents and Apostille

Pakistan enacted the Apostille Act 2024 as part of its implementation arrangements under the Hague Apostille Convention. The National Assembly’s current register of Acts records the legislation as Act XXI of 2024.

For foreign investors, this may simplify the authentication of qualifying public documents originating from Convention states. However, the precise requirements of the receiving authority should still be checked.

Apostille does not establish:

• the substantive truth of every statement in the document;
• the commercial authority of a signatory beyond what the document shows;
• compliance with SECP or banking requirements;
• legal validity of the transaction under Pakistani law; or
• acceptance of an untranslated document.

Certified translations may remain necessary, and some regulatory bodies may prescribe additional corporate declarations or formats.

Electronic Contracts and Digital Transactions

Legal Recognition of Electronic Records

Pakistan’s Electronic Transactions Ordinance 2002 provides the central legal foundation for electronic records, electronic communications and electronic signatures. The Ministry of Information Technology continues to list the Ordinance as approved federal legislation.

Commercial agreements may therefore be formed through electronic communications where the ordinary requirements of contract are satisfied and no special law requires another form.

Nevertheless, businesses should distinguish among:

• a typed name in an email;
• a scanned handwritten signature;
• an electronically applied signature;
• a digital signature supported by certification;
• click-wrap acceptance;
• website terms;
• an automated order;
• an electronic corporate approval; and
• an unsigned exchange from which agreement is inferred.

Each may carry evidential value, but not necessarily identical evidential strength.

Electronic Execution Protocols

For valuable transactions, the parties should adopt an execution protocol specifying:

• the approved signing platform;
• authorised email addresses;
• identity-verification method;
• whether counterparts are permitted;
• when the agreement becomes effective;
• whether a wet-ink original must follow;
• where the final record will be stored;
• who controls the audit trail;
• how amendments may be authorised; and
• which documents cannot be executed electronically.

The protocol is particularly important where the agreement will be shown to:

• a bank;
• the SECP;
• the Board of Investment;
• Customs;
• a tax authority;
• a land or registration authority;
• an arbitral tribunal; or
• a Pakistani court.

The fact that an electronic signature is valid between the parties does not guarantee that every administrative authority will accept the document in the same form for every statutory purpose.

Electronic Evidence

Businesses should retain more than a PDF copy of the final agreement.

The evidential file should preserve:

• the complete email chain;
• transmission metadata;
• platform-generated authentication;
• date and time records;
• IP or access information where lawfully available;
• approval history;
• earlier drafts showing negotiation;
• purchase orders and acknowledgements;
• delivery and acceptance records;
• payment confirmations;
• system logs; and
• subsequent conduct demonstrating performance.

Electronic evidence is fragile when employees depart, accounts are deleted or systems are migrated. A formal document-retention policy is therefore an essential litigation-control measure.

E-Commerce and Online Business

The former draft correctly recognised that Pakistan’s e-commerce market was developing through a combination of general commercial legislation and policy rather than through one comprehensive e-commerce code. It referred to the E-Commerce Policy 2019 and identified consumer protection, taxation, digital payments, logistics, data protection and cross-border trade as central concerns.

That basic legal characterisation remains useful, but it now requires substantial 2026 qualification.

The Ministry of Commerce has published material for E-Commerce Policy 2.0 for 2025–2030, adopting a wider lifecycle approach to businesses and consumers. Yet an economic policy is not itself a substitute for enforceable legislation. E-commerce remains regulated through a composite framework including the Contract Act 1872, Electronic Transactions Ordinance 2002, tax legislation, provincial consumer laws, payment-system rules, competition law, intellectual-property legislation, the Prevention of Electronic Crimes Act and sector-specific regulation.

Legal Requirements for an Online Business

An online operator should address:

• incorporation or business registration;
• tax registration;
• merchant and payment arrangements;
• website or application terms;
• privacy notice;
• consumer cancellation and refund arrangements;
• product descriptions;
• pricing and tax disclosure;
• complaint-handling mechanisms;
• delivery and risk;
• intellectual-property ownership;
• vendor and marketplace contracts;
• advertising compliance;
• age restrictions;
• cyber-security;
• electronic evidence;
• cross-border payments; and
• import or product approvals where goods enter Pakistan.

The operator must also determine whether it acts as:

• the seller;
• an intermediary;
• a marketplace;
• a payment facilitator;
• an advertising platform;
• a logistics provider;
• a software service;
• an agent for third-party sellers; or
• a combination of these roles.

Calling a business a “platform” does not, by itself, remove responsibility for the product, representation, payment or data processing over which the business exercises control.

Website and Application Terms

Online terms should be presented in a manner that permits a genuine inference of assent.

They should address:

• eligibility and user accounts;
• product or service descriptions;
• order acceptance;
• pricing errors;
• payment;
• cancellation;
• refunds;
• delivery;
• prohibited conduct;
• user-generated content;
• intellectual-property licences;
• warranty limitations;
• account suspension;
• dispute handling;
• governing law;
• privacy; and
• notices.

Terms hidden at the bottom of a webpage and never drawn to the customer’s attention may be more difficult to enforce, particularly where they contain unusual exclusions or arbitration provisions.

Online Marketplaces

A marketplace agreement with vendors should regulate:

• identity verification;
• product authenticity;
• regulatory approval;
• pricing;
• commissions;
• tax collection;
• fulfilment;
• returns;
• consumer complaints;
• counterfeit goods;
• unsafe products;
• use of customer data;
• advertising claims;
• suspension and delisting;
• indemnities; and
• cooperation with authorities.

The marketplace should retain sufficient records to identify the vendor and trace the product. Commercial convenience should not become a veil behind which an unknown seller supplies counterfeit, unregistered or unsafe goods.

Digital Payments and Fintech

Digital-payment services may fall within the regulatory jurisdiction of the State Bank of Pakistan. Businesses offering wallets, payment processing, electronic-money services, remittance products, credit, lending, investment or virtual-asset services should not assume that registration as an ordinary technology company authorises regulated financial activity.

The product should be examined according to function rather than branding. A “technology platform” may, in substance, be:

• receiving repayable funds;
• operating a payment system;
• issuing stored value;
• facilitating remittances;
• extending credit;
• arranging investments;
• providing insurance;
• handling securities; or
• conducting another regulated financial service.

Data Protection, Privacy and Data Governance

Status of Pakistan’s General Data-Protection Legislation in 2026

Pakistan has worked on omnibus personal-data-protection legislation for several years. As at 5 August 2026, the Ministry of Information Technology’s official legislation page continues to identify the May 2023 Personal Data Protection Bill as a draft, rather than listing an enacted general federal personal-data-protection Act.

That absence should not be interpreted as an absence of legal responsibility.

Private-sector data processing may still engage:

• constitutional privacy principles;
• contractual duties;
• confidentiality;
• banking and financial regulations;
• telecommunications rules;
• employment obligations;
• sectoral secrecy requirements;
• the Electronic Transactions Ordinance;
• the Prevention of Electronic Crimes Act;
• consumer protection;
• intellectual-property and database rights; and
• foreign privacy legislation with extra-territorial application.

A Pakistani business processing data belonging to customers in the United Kingdom, European Union, Gulf, China or another jurisdiction may also incur obligations under the law of that market.

National Data Governance Policy 2026

Pakistan adopted the National Data Governance Policy in June 2026. The Policy establishes a binding direction for governance of public-sector data, including data processed by or for public bodies and their contractors, processors and partners. It expressly states that it does not generally govern personal data held outside the public sector.

This distinction is important.

A private company performing a government technology, cloud, identity, health, education, tax or digital-infrastructure contract may fall within public-sector data-governance requirements even though an ordinary private retailer does not.

The Policy addresses matters including:

• public-sector data stewardship;
• data classification;
• data sharing;
• cross-border transfer;
• privacy;
• security;
• artificial intelligence;
• government data registers;
• compliance assessments;
• audit; and
• the institutional role of the Pakistan Digital Authority.

Government contractors should therefore examine data obligations at the tender stage rather than after contract award.

Practical Privacy Controls for Private Businesses

Even before a comprehensive private-sector data statute is enacted, a responsible business should maintain:

• a data inventory;
• identified purposes for collection;
• proportionate collection practices;
• privacy notices;
• access controls;
• role-based permissions;
• retention and deletion rules;
• employee confidentiality;
• vendor due diligence;
• encryption where appropriate;
• secure backups;
• incident-response procedures;
• cross-border transfer controls;
• customer-access and correction arrangements;
• marketing consent controls; and
• special protection for children, health information and financial data.

These controls are not merely aspirational. They reduce exposure arising under contract, negligence, cybercrime, employment and sectoral regulation.

Cross-Border Data Transfers

A foreign-owned company may wish to store Pakistani information on regional or global cloud infrastructure. Before doing so, it should identify:

• whether the data belongs to a public authority;
• whether a sector regulator imposes localisation or approval requirements;
• whether the contract prohibits offshore processing;
• the jurisdictions in which primary and backup data will reside;
• whether foreign government access laws may apply;
• subprocessor locations;
• breach-notification procedures;
• encryption and key control;
• disaster-recovery arrangements; and
• termination and data-return obligations.

The National Data Governance Policy applies specific cross-border principles to government data and recognises that personal-data transfers must also comply with future or applicable personal-data-protection law.

Cloud Services

Cloud contracts should regulate:

• data location;
• availability;
• service levels;
• security standards;
• subcontractors;
• access logging;
• regulatory audit;
• incident reporting;
• backup and recovery;
• portability;
• deletion;
• intellectual-property ownership;
• confidentiality;
• government access requests;
• business continuity; and
• transition assistance.

A cloud-service disclaimer drafted for an unregulated overseas consumer service may be unsuitable for a Pakistani bank, healthcare provider, public authority or telecommunications operator.

Cybersecurity and Electronic Crime

The Prevention of Electronic Crimes Act 2016 remains Pakistan’s principal federal cybercrime statute and has extra-territorial aspects where conduct outside Pakistan affects a person, property, information system or data located in Pakistan.

The Prevention of Electronic Crimes (Amendment) Act 2025 further amended the framework and appears in the National Assembly’s official register as Act II of 2025.

Businesses should maintain controls against:

• unauthorised access;
• interference with systems or data;
• fraudulent electronic communications;
• identity misuse;
• malicious software;
• phishing;
• unlawful interception;
• online harassment;
• misuse of employee credentials;
• theft of databases;
• manipulation of payment instructions; and
• publication or transmission of unlawful content.

Cyber-Incident Response

A cyber-response plan should state:

1. who receives the initial report;
2. who has authority to isolate systems;
3. how evidence will be preserved;
4. when external forensic specialists will be engaged;
5. which customers, banks, insurers and regulators must be notified;
6. how privilege and confidentiality will be protected;
7. whether law-enforcement reporting is required;
8. how business continuity will be maintained; and
9. how lessons from the incident will be implemented.

Employees should be instructed not to “clean up” compromised devices before forensic preservation. Well-intentioned deletion may destroy the evidence needed to identify the intrusion, recover funds or support criminal and civil proceedings.

Business Email Compromise and Payment Fraud

Cross-border businesses are particularly vulnerable to fraudulent changes in banking instructions.

Contracts and internal procedures should require:

• independent verification of altered account details;
• dual approval for material payments;
• communication through pre-agreed channels;
• callback verification using previously held contact details;
• restricted authority to change vendor master data;
• transaction alerts; and
• immediate escalation of suspicious instructions.

Where fraud occurs, speed is decisive. The business may need simultaneous action involving the originating bank, recipient bank, cybercrime authorities, civil courts and foreign counsel.

Consumer Protection and Product Liability

Pakistan does not operate through one uniform national consumer statute. Consumer protection is principally regulated through provincial and territorial legislation.

Sindh’s Consumer Protection Act 2014 expressly covers goods, services and advertising through traditional and electronic media, including the internet, SMS and telecommunications. Khyber Pakhtunkhwa maintains its Consumers Protection Act 1997, which applies to goods and services and establishes mechanisms for protecting consumer interests. Parallel legislation applies in Punjab, Balochistan and the Islamabad Capital Territory.

A business operating nationwide must therefore determine which consumer regime governs each transaction and forum.

Consumer-Facing Obligations

Consumer businesses should avoid:

• false or misleading descriptions;
• concealed charges;
• fictitious discounts;
• misleading comparisons;
• unsubstantiated health or performance claims;
• sale of expired or unsafe goods;
• refusal to honour express warranties;
• misleading refund policies;
• counterfeit branding;
• undisclosed limitations;
• misuse of customer information; and
• unreasonable obstruction of complaints.

The safest commercial approach is to ensure that the actual product, advertisement, invoice, warranty and refund policy all tell the same story.

Product Liability

Potential liability may arise from:

• defective manufacture;
• defective design;
• inadequate warnings;
• contamination;
• breach of statutory standards;
• misrepresentation;
• negligence;
• breach of warranty;
• improper storage;
• unauthorised import;
• absence of product registration; or
• misleading advertising.

The contractual allocation of liability among manufacturer, importer, distributor and retailer may determine rights of indemnity between those businesses, but it does not necessarily eliminate rights held by the consumer or regulatory authority.

Product Recall Planning

Businesses supplying food, medicines, medical devices, cosmetics, vehicles, electrical goods, chemicals and children’s products should maintain a recall procedure covering:

• batch and serial traceability;
• regulator notification;
• distributor communication;
• consumer warning;
• quarantine;
• retrieval;
• disposal;
• root-cause analysis;
• insurance notification; and
• documentary closure.

A business that cannot trace its supply chain may be forced to recall a much wider product population than the actual defect requires.

Advertising and Marketing Law

Advertising in Pakistan may engage:

• provincial consumer-protection legislation;
• competition law;
• sector-specific rules;
• intellectual-property law;
• broadcasting and telecommunications regulation;
• pharmaceutical advertising restrictions;
• food labelling;
• religious and public-morality standards; and
• contractual obligations owed to platforms and endorsers.

The Competition Act 2010 prohibits deceptive marketing practices, and the Competition Commission treats deceptive marketing as a core area of enforcement.

Claims should be supported before publication, particularly where they concern:

• price;
• quality;
• origin;
• market leadership;
• environmental benefit;
• health;
• medical efficacy;
• safety;
• comparative performance;
• professional endorsement;
• awards;
• scarcity; or
• guaranteed results.

Influencer and Endorsement Arrangements

An influencer or brand-ambassador agreement should address:

• content approval;
• truthful disclosure;
• intellectual-property rights;
• exclusivity;
• prohibited conduct;
• compliance with platform rules;
• use of image and likeness;
• campaign duration;
• takedown rights;
• morality provisions;
• confidentiality;
• payment;
• analytics; and
• consequences of misleading claims.

The brand should not assume that liability rests solely with the person delivering the advertisement. A misleading claim may expose the business that created, approved or benefited from the campaign.

Advertising Therapeutic Goods

DRAP regulates advertising of therapeutic goods. Its official guidance states that registered pharmaceutical and biological drugs and enlisted health and over-the-counter products require prior approval before direct advertising to consumers.

Medical, pharmaceutical, nutritional and health businesses should therefore obtain specialist review before launching consumer-facing claims.

Competition Law

Pakistan’s competition regime is principally governed by the Competition Act 2010 and administered by the Competition Commission of Pakistan.

The regime addresses:

• abuse of dominant position;
• prohibited agreements;
• deceptive marketing;
• mergers, acquisitions and joint ventures; and
• other conduct capable of preventing, restricting or reducing competition.

Prohibited Agreements

Agreements between competitors may attract scrutiny where they concern:

• price fixing;
• bid rigging;
• output restriction;
• customer allocation;
• geographic division;
• collective refusal to deal;
• exchange of competitively sensitive information; or
• coordination of commercial strategy.

Vertical agreements between businesses at different levels of the supply chain may also be problematic where they impose:

• resale-price maintenance;
• excessive exclusivity;
• territorial restrictions;
• tying;
• discriminatory access;
• non-compete obligations;
• restrictions upon online sales; or
• other restraints capable of harming market competition.

Not every commercial restriction is unlawful. The assessment depends upon market power, purpose, competitive effect and any applicable exemption. However, a clause should not be copied from a foreign distribution template without examining the Pakistani market.

Abuse of Dominance

A successful business is not prohibited from holding a dominant position. The legal concern is abuse of that position.

Potentially problematic conduct may include:

• predatory pricing;
• refusal to deal;
• discriminatory terms;
• tying unrelated products;
• exclusionary rebates;
• unfair conditions;
• market foreclosure;
• denial of essential access; and
• conduct intended to eliminate or discipline competitors rather than compete upon merit.

Market definition is central. A company’s share of the national economy may be small while its position in a narrowly defined product and geographic market is substantial.

Merger Control

Pakistan operates a mandatory pre-merger clearance regime.

The Competition Commission’s current published thresholds require notification where either:

• one party has assets of PKR 300 million or the parties have combined assets of PKR 1 billion; or
• one party has annual revenue of PKR 500 million or the parties have combined revenue of PKR 1 billion;

and either:

• the transaction value is at least PKR 100 million; or
• one party acquires at least 10 per cent of the voting rights in another party,

provided one or both parties do business in Pakistan.

These thresholds should be checked against the regulations and current CCP guidance at the time of transaction.

Foreign-to-Foreign Transactions

A transaction between two overseas businesses may require Pakistani competition clearance where the parties do business in Pakistan and the statutory thresholds and nexus are satisfied.

The CCP’s Merger Control Regulations apply to undertakings party to a merger whether incorporated in Pakistan or elsewhere.

Global transaction teams should therefore include Pakistan in their jurisdictional assessment at an early stage. Closing a foreign transaction before required Pakistani clearance may create avoidable enforcement risk.

Joint Ventures

A joint venture may be treated as a merger where it entails lasting joint control, shared ownership and operation as an autonomous business. The CCP expressly recognises that qualifying joint ventures may fall within merger review.

The parties should also examine whether the joint-venture agreement contains restrictions extending beyond what is necessary for the collaboration.

Competition Compliance Programme

An effective programme should include:

• approval of distributor and exclusivity arrangements;
• controls upon contact with competitors;
• procurement and tender protocols;
• review of trade-association activity;
• merger-screening procedures;
• marketing substantiation;
• dawn-raid procedures;
• document-retention guidance; and
• periodic training of sales, procurement and senior management.

Competition breaches commonly arise not from a formal board strategy but from informal conversations, sales incentives or procurement shortcuts.

Intellectual Property

Pakistan’s principal intellectual-property framework includes the Patents Ordinance 2000, Trade Marks Ordinance 2001 and Copyright Ordinance 1962.

The Intellectual Property Organization of Pakistan coordinates the federal administration of patents, trademarks, copyright, designs and related rights under the IPO-Pakistan Act 2012.

Register Before Entering the Market

Foreign businesses should register important trade marks in Pakistan before:

• appointing a distributor;
• exhibiting at a trade fair;
• sharing product packaging;
• licensing a local manufacturer;
• opening a franchise;
• announcing a market entry;
• supplying samples; or
• disclosing a brand to a potential partner.

A trade mark registered elsewhere does not automatically create a Pakistani registration.

Early filing reduces the risk of:

• distributor appropriation;
• blocking applications;
• counterfeit registration;
• customs difficulties;
• inability to franchise or license cleanly; and
• expensive cancellation proceedings.

Trade Marks

A trade-mark strategy should cover:

• word marks;
• logos;
• Urdu renderings;
• transliterations;
• slogans;
• product shapes;
• packaging;
• house marks;
• service marks;
• defensive classes; and
• local-language variations likely to be used by consumers.

Foreign businesses should also secure relevant domain names and social-media identifiers.

Patents and Confidential Technology

Patent filing should be considered before public disclosure. Distribution of technical materials, publication, exhibition or commercial use may prejudice patent rights depending upon the applicable legal circumstances.

Confidential inventions and know-how should be protected through:

• non-disclosure agreements;
• controlled access;
• employee invention provisions;
• contractor assignments;
• laboratory and development records;
• restricted copying;
• cyber-security; and
• carefully structured technology-transfer agreements.

A confidentiality clause cannot revive information that has already entered the public domain.

Copyright and Software

Copyright may subsist in:

• software;
• source code;
• documentation;
• databases;
• photographs;
• drawings;
• architectural works;
• marketing material;
• films;
• music;
• research;
• manuals; and
• other original works.

Ownership should be addressed expressly in employment, contractor, development and outsourcing agreements. The mere fact that a business paid for software does not necessarily mean that every underlying component, reusable tool or third-party library belongs to that business.

Software agreements should distinguish:

• source code;
• object code;
• background technology;
• bespoke development;
• open-source components;
• data;
• documentation;
• improvements;
• support tools; and
• third-party material.

Designs

Industrial designs may be particularly important for:

• consumer products;
• packaging;
• furniture;
• textiles;
• jewellery;
• vehicle components;
• medical devices; and
• manufactured articles.

Trade-mark, copyright, design and passing-off protection may overlap, but each protects a different legal interest.

Licensing and Technology Transfer

An IP licence should address:

• ownership;
• licensed rights;
• territory;
• field of use;
• exclusivity;
• sublicensing;
• royalties;
• tax and withholding;
• quality control;
• improvements;
• infringement;
• enforcement;
• audit;
• confidentiality;
• registration where required;
• foreign-exchange remittance;
• termination; and
• post-termination use.

Royalty clauses should be aligned with SBP remittance requirements and tax treatment. A contractually due royalty is not automatically remittable without the supporting banking and regulatory record.

Franchising, Distribution and Agency

Pakistan does not operate through a single comprehensive franchise statute. Franchise, agency and distribution arrangements are principally governed through contract, agency, intellectual-property, competition, tax and foreign-exchange law.

The earlier article correctly identified the Contract Act and Powers-of-Attorney Act as relevant, but its suggestion that every franchise, distribution or agency agreement must invariably be registered with the CCP is too categorical.

CCP approval or exemption depends upon the competition implications of the agreement rather than the mere label “franchise” or “distribution”.

Distributor Due Diligence

Before granting exclusivity, the foreign supplier should verify:

• incorporation and ownership;
• ultimate beneficial owners;
• financial standing;
• litigation;
• regulatory licences;
• warehouses;
• tax registration;
• sales network;
• politically exposed connections;
• sanctions and criminal issues;
• competing products;
• sub-distributors;
• reputation;
• ability to provide after-sales support; and
• authority to import and sell the product.

Exclusivity should be earned through measurable obligations, not awarded merely because a local contact claims access or influence.

Protecting the Foreign Principal

The agreement should ensure that:

• the foreign principal owns the brand;
• local trade-mark applications cannot be filed without consent;
• customer records remain accessible;
• regulatory registrations are held in the agreed name;
• sub-distributors require approval;
• anti-bribery rules are binding;
• records may be audited;
• inventory is traceable;
• termination consequences are defined;
• online sales are addressed;
• confidential materials are returned; and
• the distributor cannot represent itself as the foreign company’s legal branch or partner.

Agency Risk

An agent’s acts may bind the principal where actual or apparent authority exists. Commercial communications should therefore make clear:

• what the agent may negotiate;
• what the agent may sign;
• whether the agent may collect money;
• whether the agent may appoint sub-agents;
• the extent of authority before public bodies;
• whether the agent may make representations;
• expenditure limits; and
• the circumstances in which authority ends.

A broadly worded power of attorney may create exposure far beyond the commercial intention of the foreign principal.

Public Procurement and Government Contracts

Pakistan’s public-procurement framework is divided between federal and provincial regimes.

At federal level, the Public Procurement Regulatory Authority regulates procurement by federal procuring agencies. PPRA’s current reform programme records amendments to its governing framework, new Public Procurement Rules 2025, expansion of electronic procurement and 2026 regulations relating to public assets and other procurement matters.

A bidder must identify:

• whether the procuring agency is federal, provincial or public-sector corporate;
• which procurement statute and rules apply;
• whether donor procurement guidelines govern;
• the bidding method;
• qualification requirements;
• security instruments;
• mandatory forms;
• tax and registration requirements;
• local-content conditions;
• conflict-of-interest provisions;
• evaluation methodology;
• complaint deadlines; and
• the applicable review or challenge mechanism.

Electronic Procurement

Federal procurement has increasingly moved towards the EPADS electronic-procurement environment. PPRA records mandatory e-procurement and grievance-redress mechanisms within its current reform framework.

Bidders should not wait until the submission date to resolve registration, digital access or document-upload issues.

A compliant tender file should preserve:

• the advertisement;
• complete bidding documents;
• clarifications;
• pre-bid minutes;
• addenda;
• uploaded submission;
• system receipts;
• bid security;
• technical proposal;
• financial proposal;
• evaluation report;
• intention-to-award notice;
• grievance;
• hearing record; and
• final decision.

Material Responsiveness

Public procurement is formal. A bid may be rejected for failure to comply with a mandatory requirement even where the bidder is commercially capable.

Common risks include:

• expired registration;
• defective bid security;
• absence of required authorisation;
• unsigned form;
• inconsistent price schedule;
• undisclosed conflict;
• non-compliant joint-venture arrangement;
• failure to provide beneficial-ownership information;
• conditional bid;
• late submission;
• inadequate experience evidence; and
• failure to challenge an ambiguous requirement before bidding.

Bid Challenges

A procurement challenge should be based upon the applicable statutory procedure and filed within the prescribed time.

Potential grounds may include:

• departure from published criteria;
• undisclosed evaluation method;
• unequal treatment;
• factual error;
• conflict of interest;
• arbitrary disqualification;
• failure to consider responsive evidence;
• improper negotiation;
• non-transparent modification;
• acceptance of a materially non-responsive bid; and
• breach of donor procurement rules.

A protest should be precise, documentary and legally grounded. Accusing an authority of corruption without evidence may weaken an otherwise strong procedural challenge.

Donor-Funded Procurement

World Bank, Asian Development Bank and other development-partner projects may be governed by the financier’s procurement rules in addition to Pakistani law.

The bidder should examine:

• financing agreement;
• bidding document;
• anti-corruption provisions;
• eligibility rules;
• prohibited practices;
• sanctions;
• complaint procedure;
• standstill period;
• procurement review authority; and
• interaction with Pakistani judicial remedies.

The correct forum may differ from that applicable to an ordinary domestically funded tender.

Blacklisting and Debarment

Federal procurement rules require procuring agencies to maintain mechanisms for blacklisting and debarment, including procedural safeguards. PPRA maintains official records relating to blacklisted and debarred firms.

Before blacklisting, the affected bidder should ordinarily be given notice and an opportunity to respond in accordance with the governing rules and regulations.

Because debarment may affect future public contracts, the response should address:

• jurisdiction;
• procedural fairness;
• attribution of conduct;
• materiality;
• proportionality;
• duration;
• mitigating factors;
• remedial measures; and
• impact upon affiliates or joint-venture partners.

Anti-Bribery, Integrity and Corporate Compliance

A foreign investor should operate on the assumption that any payment, gift, commission or favour connected with a public decision may later be examined.

Risks arise in relation to:

• customs clearance;
• tax assessment;
• procurement;
• land allotment;
• utility connection;
• licence approval;
• regulatory inspection;
• police or enforcement contact;
• government contracting;
• judicial or administrative proceedings; and
• engagement of consultants claiming special access.

The fact that a payment is described as “facilitation”, “liaison”, “success fee” or “local support” does not determine its legality.

Third-Party Intermediaries

Consultants, agents, customs representatives, distributors and project partners create substantial compliance risk.

Due diligence should establish:

• identity and ownership;
• competence;
• government relationships;
• scope of work;
• commercial necessity;
• reasonableness of remuneration;
• banking details;
• conflicts of interest;
• sanctions and criminal history;
• use of subcontractors; and
• ability to produce records.

Warning signs include:

• cash requests;
• payment to an unrelated person;
• offshore payment without commercial explanation;
• disproportionate commission;
• vague services;
• refusal to disclose owners;
• guarantees of government approval;
• urgency designed to bypass controls; and
• invoices unsupported by work product.

Compliance Contracting

Contracts with intermediaries should contain:

• anti-bribery representations;
• prohibition on unofficial payments;
• accurate books and records;
• audit rights;
• disclosure of government connections;
• prohibition on undisclosed subcontracting;
• continuing due diligence;
• reporting of requests for improper payment;
• suspension rights;
• termination for breach;
• cooperation with investigation; and
• indemnity where appropriate.

Compliance clauses should be implemented, not merely inserted. A company that ignores obvious warning signs cannot expect the existence of a boilerplate clause to cure the underlying conduct.

Gifts and Hospitality

A gifts and hospitality policy should identify:

• permissible value;
• prohibited recipients;
• public-official restrictions;
• approval thresholds;
• record-keeping;
• charitable contributions;
• sponsorships;
• travel;
• political activity;
• conflict disclosures; and
• treatment of religious or cultural occasions.

Cultural courtesy does not require commercial impropriety. Respectful hospitality can coexist with firm ethical boundaries.

Sector-Specific Regulatory Review

A general company incorporation does not authorise regulated activity. The business must identify its substantive regulator before committing capital.

Pharmaceuticals, Medical Devices and Health Products

DRAP regulates therapeutic goods, including pharmaceuticals, biological products, medical devices, medical cosmetics, alternative medicines, health products and specified over-the-counter products. Its functions include product registration, marketing authorisation, establishment licensing, inspection, clinical-trial oversight, pharmacovigilance and market surveillance

A healthcare investor may require:

• manufacturing licence;
• product registration;
• import authorisation;
• establishment licence;
• medical-device approval;
• clinical-trial permission;
• advertisement approval;
• provincial drug-sale licence;
• qualified technical personnel;
• storage compliance;
• pharmacovigilance systems; and
• price or labelling compliance.

Product registration and manufacturing licensing are distinct. A factory licence does not automatically authorise every product made within it.

Banking, Payments, Fintech and Financial Services

The State Bank regulates banks, payment systems, electronic-money institutions, exchange companies and other activities falling within its statutory jurisdiction. The SECP regulates non-banking finance companies, insurance, securities, capital markets, asset management, private equity, venture capital, pensions, leasing and other prescribed financial businesses. The SECP’s current licensing architecture separately lists these regulated services.

A fintech analysis should determine whether the product involves:

• payment;
• deposit taking;
• electronic money;
• lending;
• investment;
• securities;
• insurance;
• foreign exchange;
• remittance;
• credit scoring;
• crowdfunding;
• virtual assets; or
• mere software supplied to a licensed institution.

The business model should be mapped before the application is described to the regulator.

Telecommunications

The Pakistan Telecommunication Authority regulates telecommunications services and maintains sectoral cyber-security functions through NT-CERT. PTA describes its regulatory purpose as promoting investment and competition, protecting consumers and ensuring the quality of ICT services.

Telecommunications activity may require:

• licence;
• class licence;
• spectrum allocation;
• equipment approval;
• lawful-interception compliance;
• consumer-protection measures;
• number allocation;
• quality-of-service compliance;
• data and cyber controls; and
• security clearance.

Electric Power

NEPRA regulates Pakistan’s electric-power sector and maintains licensing and regulatory frameworks for generation, transmission, distribution, supply, trading, market operation and related activities.

Power projects may require coordination involving:

• NEPRA;
• federal and provincial energy departments;
• environmental authorities;
• land authorities;
• grid and system operators;
• distribution companies;
• lenders;
• public procurement bodies; and
• tax and customs authorities.

A project’s tariff, licence, interconnection, land rights, environmental approval and power-purchase arrangements must be legally coherent.

Oil, Gas, LNG and Petroleum

OGRA regulates Pakistan’s midstream and downstream oil and gas sectors and administers licences for activities including LPG, LNG, natural gas, oil marketing, storage, filling and testing facilities. (OGRA)

The regulatory review may include:

• licence category;
• technical standards;
• storage;
• safety;
• environmental approval;
• land-use permission;
• pricing;
• transportation;
• quality control;
• third-party access;
• public hearing; and
• security requirements.

Food and Agriculture

Food regulation is substantially provincial, while imports, exports, plant quarantine, animal health, standards and inter-provincial matters may engage federal bodies.

A food business should examine:

• manufacturing licence;
• product registration;
• labelling;
• nutritional and health claims;
• halal requirements;
• fortification;
• food-safety standards;
• inspection;
• cold-chain compliance;
• import permits;
• phytosanitary controls; and
• recall procedures.

Mining and Minerals

Mining rights are primarily administered at provincial level. The legal framework may distinguish among reconnaissance, exploration, retention, mining leases and small-scale rights.

A mining project requires examination of:

• mineral title;
• land access;
• community and surface rights;
• environmental approval;
• water;
• explosives;
• foreign investment;
• royalties;
• provincial taxes;
• export;
• infrastructure;
• security; and
• closure obligations.

A mineral licence does not necessarily confer title to the surface land needed to exercise it.

Insurance and Non-Banking Finance

The SECP’s licensing framework separately regulates insurers, insurance brokers, surveyors, third-party administrators, takaful operations and numerous non-banking financial services.

A foreign financial-services investor should undertake a fit-and-proper, capital, ownership, governance and business-plan assessment before incorporation, because licensing may determine the permissible ownership and management structure.

Commercial Litigation in Pakistan

Commercial disputes may be heard by ordinary civil courts, High Courts, specialised statutory tribunals, banking courts, tax forums, competition authorities, company benches, intellectual-property tribunals, consumer courts and commercial courts established under applicable provincial arrangements.

The correct forum depends upon:

• nature of the claim;
• subject matter;
• territorial nexus;
• value;
• contractual forum clause;
• statutory regulator;
• arbitration agreement;
• identity of the defendant;
• public-law element; and
• relief sought.

A claim filed in the wrong forum may consume substantial time without resolving the merits.

Contract Enforcement

A claimant may seek remedies including:

• recovery of debt;
• damages;
• declaration;
• injunction;
• specific performance;
• rescission;
• accounts;
• possession;
• appointment of receiver;
• preservation of property;
• attachment;
• enforcement of security; and
• other statutory relief.

The choice of remedy should be made at the beginning. A pleading framed only as a debt claim may not secure the urgent protective relief needed to prevent disposal of assets or disclosure of confidential information.

Interim Relief

Interim relief may be commercially decisive where the defendant may:

• dispose of assets;
• invoke a guarantee;
• transfer shares;
• terminate a licence;
• disclose confidential information;
• remove machinery;
• encash security;
• destroy evidence;
• continue infringement; or
• frustrate the eventual judgment.

An application should demonstrate a legally recognisable right, urgency, balance of convenience and potential irreparable harm.

Documentary Evidence

Pakistan-facing businesses should retain:

• signed agreement;
• corporate approvals;
• invoices;
• delivery records;
• acceptance certificates;
• correspondence;
• payment evidence;
• notices;
• meeting minutes;
• variation orders;
• project records;
• tax documents;
• system logs; and
• proof of loss.

A case should not depend upon the later recollection of an employee who may no longer be available.

Limitation

Limitation periods vary according to the cause of action and relief. Contractual discussions, acknowledgements and part payments may affect the analysis, but settlement negotiations do not invariably suspend limitation.

Legal advice should therefore be sought before the apparent deadline, not after negotiations finally collapse.

Arbitration

Domestic Arbitration

The Arbitration Act 1940 continues to govern much domestic arbitration in Pakistan. It appears in the Ministry of Law’s current Pakistan Code as an operative federal law.

Because the legislation is court-connected and procedurally older than many modern international regimes, the arbitration clause must be drafted with particular care.

Foreign Arbitration and Awards

Pakistan’s Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011 gives effect to the New York Convention framework for qualifying foreign arbitration agreements and awards.

A properly framed international arbitration clause can provide:

• a neutral seat;
• specialist arbitrators;
• procedural flexibility;
• confidentiality;
• enforceability across Convention states; and
• reduced dependence upon the home courts of either party.

It does not, however, eliminate all court involvement. Courts may become involved in referral, interim protection, appointment issues, challenges and enforcement.

Drafting the Arbitration Clause

The clause should specify:

• scope of disputes;
• seat of arbitration;
• institutional or ad hoc rules;
• appointing authority;
• number of arbitrators;
• language;
• governing law of the contract;
• governing law of the arbitration agreement where appropriate;
• confidentiality;
• interim measures;
• consolidation or joinder;
• service of notices;
• allocation of costs; and
• finality of the award.

“Arbitration in an mutually agreed country” is not a sufficient clause. It postpones the essential decision until the parties are already in dispute.

Seat and Venue

The seat determines the juridical home of the arbitration and the supervisory court. The venue is merely the physical or virtual location of hearings.

The clause should not use these concepts inconsistently.

Institutional Arbitration

Parties may choose a recognised international or regional institution where suitable. Institutional rules can provide assistance concerning:

• commencement;
• appointment;
• challenges;
• emergency relief;
• fees;
• scrutiny of awards;
• timetable; and
• administrative continuity.

The cost should be assessed against the value and complexity of the transaction.

Multi-Tier Clauses

A contract may require negotiation, mediation or a dispute board before arbitration.

Such clauses should specify:

• who must negotiate;
• the time allowed;
• whether the step is mandatory;
• how the process begins;
• whether urgent relief remains available; and
• when arbitration may commence.

An indefinite obligation to “amicably settle” may generate a procedural dispute without producing settlement.

Public-Sector Arbitration

Arbitration clauses involving government bodies, state-owned enterprises and statutory authorities require scrutiny of:

• statutory power to arbitrate;
• approval;
• governing procurement rules;
• public-policy limits;
• sovereign or statutory immunities;
• budgetary authority;
• signatory competence; and
• enforceability of the relief sought.

Corporate Distress, Rehabilitation and Insolvency

Pakistan’s corporate-distress framework includes:

• the Companies Act 2017;
• the Corporate Rehabilitation Act 2018;
• the Corporate Restructuring Companies Act 2016;
• secured-transactions legislation;
• financial-institution recovery law; and
• sector-specific insolvency regimes.

The SECP’s current statutory catalogue lists the Corporate Rehabilitation Act 2018, Corporate Restructuring Companies Act 2016, Companies Act 2017 and Financial Institutions (Secured Transactions) Act 2016.

Early Warning Signs

Businesses should seek advice when encountering:

• repeated payment default;
• unpaid taxes;
• inability to meet payroll;
• covenant breach;
• threatened enforcement;
• cancelled credit lines;
• related-party extraction of value;
• loss of essential licence;
• continuing losses;
• management deadlock;
• material litigation; or
• adverse auditor qualification.

The law offers more options before the business has exhausted cash and goodwill.

Corporate Rehabilitation

The Corporate Rehabilitation Act 2018 provides a statutory framework intended to support rehabilitation of distressed companies. The SECP maintains the Act and a panel of insolvency experts appointed under its framework.

A rehabilitation strategy may involve:

• restructuring debt;
• moratorium or protection;
• rescheduling;
• new investment;
• conversion of debt;
• disposal of non-core assets;
• compromise with creditors;
• operational reform;
• change of management; and
• court-approved rehabilitation arrangements.

The feasibility depends upon the company’s underlying business, creditor composition, security structure and availability of fresh funding.

Corporate Restructuring Companies

The Corporate Restructuring Companies Act 2016 provides a framework for licensed restructuring companies dealing with distressed assets and non-performing exposures. The SECP publishes the statute and its updated amendments.

Winding Up and Liquidation

Winding up is the process through which the company’s affairs are concluded, assets realised, debts addressed and any surplus distributed before dissolution. The SECP identifies both court-ordered and voluntary winding-up routes under the Companies Act framework.

The legal consequences may include:

• cessation or restriction of ordinary business;
• appointment of liquidator;
• collection and sale of assets;
• adjudication of claims;
• treatment of secured creditors;
• investigation of prior transactions;
• recovery from contributories where applicable;
• distribution according to statutory priority; and
• eventual dissolution.

Directors should avoid preferring connected parties, dissipating assets or incurring liabilities where there is no reasonable prospect of payment.

Easy Exit

A dormant or inactive company without outstanding liabilities may qualify for a simplified easy-exit procedure, subject to the Companies Act and SECP regulations. The SECP separately maintains easy-exit and winding-up procedures.

Easy exit is not an appropriate mechanism for concealing liabilities, avoiding creditors or abandoning an unresolved regulatory record.

Exiting an Investment

Exit planning should begin when the investment is structured, not when the investor decides to leave.

Possible exit routes include:

• sale of shares;
• sale of the business or assets;
• transfer to another group company;
• merger;
• buy-back;
• capital reduction;
• initial public offering;
• joint-venture buyout;
• closure of branch;
• voluntary winding up; and
• easy exit for a qualifying inactive company.

Share Sale

A share sale may require:

• corporate approvals;
• compliance with transfer restrictions;
• pre-emption process;
• competition clearance;
• sector-regulator approval;
• security clearance;
• valuation;
• tax analysis;
• SECP filings;
• beneficial-ownership update;
• bank coordination;
• release of security;
• payment through the approved channel; and
• repatriation evidence.

The seller should verify early whether the original investment was properly registered on a repatriable basis.

Asset Sale

An asset transaction may involve:

• individual transfer of contracts;
• employee arrangements;
• tax upon assets and gains;
• sales tax;
• stamp duty;
• land registration;
• assignment of licences;
• creditor consent;
• transfer of intellectual property;
• regulatory approvals; and
• treatment of liabilities.

A business sale cannot always be accomplished through a single general assignment.

Joint-Venture Exit

A shareholders’ agreement should contain a workable exit framework including:

• transfer restrictions;
• valuation method;
• right of first refusal;
• tag-along;
• drag-along;
• put and call rights;
• deadlock procedure;
• material-default exit;
• change-of-control provisions;
• regulatory conditions;
• payment currency;
• security for deferred payment; and
• dispute resolution.

An exit mechanism requiring agreement upon price after relations have collapsed is not a complete exit mechanism.

Branch Closure

Closure of a foreign-company branch may require:

• completion or termination of the authorised project;
• settlement of liabilities;
• tax clearance;
• employee settlement;
• banking closure;
• BOI and SECP filings;
• remittance of eligible balance;
• cancellation of registrations; and
• retention of records.

A branch does not cease to exist legally in Pakistan merely because its staff have left the office.

The Foreign Investor’s First 90 Days

A disciplined implementation plan can materially reduce later disputes.

Days 1–15: Legal Feasibility

During the first stage, the investor should:

• define the proposed activity;
• identify the correct ownership and operating structure;
• map federal, provincial and local regulators;
• assess foreign-ownership restrictions;
• undertake tax and permanent-establishment analysis;
• identify land and environmental requirements;
• review proposed funding;
• screen partners and intermediaries;
• protect intellectual property; and
• identify material legal red flags.

Primary output: a written market-entry and legal-feasibility memorandum.

Days 16–30: Formation and Approvals

The investor should then:

• reserve the company name;
• prepare constitutional documents;
• incorporate the entity or obtain branch or liaison permission;
• compile beneficial-ownership records;
• apply for tax registrations;
• choose the authorised dealer bank;
• begin sector-licensing applications;
• prepare visa documentation;
• commence premises due diligence; and
• put core shareholder and funding agreements into executable form.

Primary output: legally constituted vehicle with a documented regulatory pathway.

Days 31–60: Operational Infrastructure

The company should:

• open bank accounts;
• introduce and register capital;
• execute premises documents;
• obtain local registrations;
• implement payroll;
• adopt employment contracts and policies;
• put customer and supplier agreements in place;
• establish tax and invoicing systems;
• register trade marks;
• arrange insurance;
• implement cyber-security and privacy controls; and
• complete customs or PSW registration where required.

Primary output: operational readiness without premature trading.

Days 61–90: Compliance and Controlled Launch

The company should:

• verify all licence conditions;
• complete regulatory inspections;
• approve the delegation-of-authority matrix;
• train staff;
• test payment and invoicing systems;
• implement compliance registers;
• establish document retention;
• review related-party agreements;
• finalise product and advertising approval;
• perform a pre-launch legal audit; and
• create the annual compliance calendar.

Primary output: documented permission to commence business and a system for maintaining compliance.

Foreign Investor Red Flags

The following circumstances warrant immediate legal review:

How Josh and Mak International Assists Foreign Investors

Josh and Mak International advises foreign companies, overseas investors, international counsel, development organisations, contractors, technology businesses and entrepreneurs upon the legal establishment and operation of business in Pakistan.

Our assistance may include:

• market-entry and legal-feasibility opinions;
• incorporation of foreign-owned companies;
• branch and liaison-office permissions;
• shareholder and joint-venture structuring;
• beneficial-ownership compliance;
• foreign-investment and banking documentation;
• shareholder loans and funding arrangements;
• tax and regulatory coordination;
• sector licensing;
• commercial contracts;
• distribution, agency and franchise agreements;
• employment and expatriate matters;
• land and premises due diligence;
• environmental approvals;
• public procurement and bid challenges;
• competition and merger review;
• intellectual-property protection;
• technology, data and e-commerce advice;
• dispute prevention;
• litigation and arbitration;
• debt recovery;
• corporate restructuring; and
• closure or exit.

Our approach is not to present foreign investors with a collection of statutes and forms. The central task is to construct a lawful route from commercial intention to practical operation.

A company may be incorporated in a matter of days yet remain unable to open its bank account, import its machinery, employ its expatriates, invoice its customers or repatriate its profits. Legal advice has value when it identifies those dependencies before capital is exposed.

Closing Perspective

Pakistan is neither a market to be approached with naïve optimism nor one to be dismissed through inherited pessimism.

It is a substantial and commercially diverse jurisdiction in which opportunity coexists with regulatory fragmentation, procedural formality, institutional variation and material enforcement risk. The most successful foreign investors are not necessarily those with the greatest appetite for risk. They are those who distinguish risk that can be priced and managed from risk that should never have been accepted.

Proper structuring respects both commercial ambition and legal reality. It ensures that the investor’s capital enters lawfully, the business is licensed to operate, its contracts can be enforced, its intellectual property remains protected, its employees are properly engaged, its taxes are understood, and its eventual profits or exit proceeds can be traced and remitted.

That is not needless bureaucracy. It is the architecture of a durable investment.