Starting a Business in
Below is a detailed summary of the bureaucratic and legal hurdles an entrepreneur must overcome in order to incorporate and register a new firm, It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
The information appearing on this page was collected as part of the Doing Business subnational project in Pakistan.
Obtain approval of company name through the Securities and Exchange Commission of Pakistan (SECP)'s e-Service website
According to the Companies Ordinance, 1984, and its amendments in 2002 and update in February 2009, the company proposes one or more names in order of preference and submits them for approval via e-Services or in person (offline) to the Securities and Exchange Commission of Pakistan (SECP). The availability of the suggested names can first be checked online by searching existing company names.
The official confirmation (or denial) of the chosen name and its availability is received by email or via courier upon payment of the name search fee (online name reservation) or (offline name reservation) at the bank designated by the SECP. A timely disposal of cases within 24 working hours is mandated by Regulation 9 of the CRO Regulation Act, 2003. The approved name is reserved for 90 days, by which time the company must be incorporated. The e-Services were successfully launched in August 2008 to improve the efficiency and effectiveness of the SECP’s business processes. The use of online submissions is growing, but in some cities a majority of entrepreneurs still prefer to apply in person.
Pay the fees for name registration and company incorporation using bank challans at the designated Muslim Commercial Bank (MCB)
The company must pay the fees for name search availability and incorporation according to the Sixth Schedule of the Companies Ordinance, 1984. The challans must be deposited with the Muslim Commercial Bank, Ltd. They can be downloaded from the SECP website or obtained at the SECP offices or at the bank.
Register the company for incorporation with the Securities and Exchange Commission of Pakistan (SECP) through online e-Services
The company can complete the registration online through e-Services or in person at the SECP. It must submit the following company incorporation documents online or in person:
a. Form 1: declaration of compliance;
b. Form 21: identification of the office’s location;
c. Form 29: particulars of directors, secretary, chief accountant, auditors, and others;
d. Four copies of the memorandum and articles of association with each member’s signature (in the presence of a witness).
According to the Sixth Schedule of Fees, effective June 2009, the fees for incorporation of a company with authorized capital.
1. Online submission: registration fee and filing fee ;
2. Physical (offline) submission: registration fee and filing fee.
Confirmation of either the online or in-person submission is received instantly and the actual certificate a few days later via email and courier. The company can register with any Company Registration Office, irrespective of the jurisdiction. All regional SECP offices are computerized.
Obtain digital signatures from the National Institutional Facilitation Technologies (NIFT) through the SECP e-Services
The digital signature is obtained from National Institutional Facilitation Technologies (NIFT) through e-Services or at SECP offices. NIFT serves as the witness of all digitally signed documentation. To apply, the company must submit the Digital Signature Certificate Request Form along with scanned copies of the directors’ identity cards, Name Availability Certificate, and proof of payment.
Register for income tax by applying for a National Tax Number (NTN) at the tax facilitation center of the Regional Tax Office (RTO) of the Federal Board of Revenue (FBR)
According to the Income Tax Ordinance, 2001, every company must register for income tax and obtain the National Tax Number (NTN) that is generally required by other registering authorities such as Chambers of Commerce, the Import-Export Regulatory Authority, utility authorities, etc. Since 2002, after the introduction of the Income Tax Ordinance, 2001, an NTN is issued with a continuous valid term (without the need to renew the number).
To apply, the company must submit a simple one-page form (the NTN Form) as well as proof of registration, the memorandum and articles of association, bank account number, copies of the national identity cards of its directors, and an attestation of the registered business address at the nearest tax facilitation counter of the Regional Tax Office in Pakistan.
All applications are forwarded to the Central Registration Office (CRO) in Islamabad, which allots a uniform NTN to each company. The center processes the application and issues the NTN at no cost. The certificate is sent to the registered address of the applicant. The company can track the
application online or through the RTO helpline. If undelivered, the NTN certification can be collected from the specified office at the Central Board of Revenue. The income tax is paid on filing the return, which is due within 6 months of the end of the company’s financial year (usually on June 30). Reform has been introduced to make the tax registration fully electronic.
Register for sales tax by applying for a Sales Tax Number (STN) at the tax facilitation center of the Regional Tax Office (RTO) of the Federal Board of Revenue (FBR)
According to Sections 14, 15, and 16 of the Sales Tax Act, 1990, and Sales Tax Rules, 2006, the company must register for sales tax by submitting an application using Form STR-1 at any tax facilitation counter at the nearest Regional Tax Office (RTO). The local RTO forwards all applications to the Central Registration Office. After verification, the CRO issues a Registration
Certificate bearing the registration number and mails the same to the registered company, on prescribed Form STR-5.
Register for Professional Tax with the Excise and Taxation Department of the District
Following the Devolution Plan, 2001, a professional tax is enforced at the district level by the Excise and Taxation Department of the relevant provincial district. This tax is levied upon businesses, professionals, trades, callings, or companies employing such professionals. The district Excise and Taxation Officer (ET officer) is empowered to enroll in a survey register every
person engaged in any such business or profession and thereafter, give notice to said enrolled person. In the case of a new business, the company is required to ask the ET officer to enroll it by submitting a simple assessment form. The ET officer issues a demand number (registration
number) that acts as the reference number for the registered company and is noted down on every bank challan when assessments are paid into the bank.
Register with the Sindh Employees Social Security Institution (SESSI)
According to the Provincial Employees Social Security Ordinance, 1965, registration with the Employees Social Security Institution is governed at the provincial level by an independent self-generating institution called the Sindh ESSI. Employers covered under the scheme contribute 6% of the wages they pay to insurable workers. The company must submit a simple form in order to be allotted a registration number and to receive an employee card.
Register with the Employees Old Age Benefits Institution (EOBI)
According to the amendment to EOBI Act, 1976, effective July 2008, every industry or commercial establishment with 5 or more employees must be registered with the federal EOBI. Under the EOBI, insured employees are entitled to a pension (upon retirement), disability (if permanently disabled), old-age grant (upon retirement if they do not have the minimum threshold for a pension), and survivor’s pension. A contribution equal to 5% of minimum wages is paid by the employer and 1% by the employee.
For initial registration, the company must submit a simple form that is uploaded into the database. The allotment requests are sent to a center in Karachi that issues the registration numbers along with certificates and cards and sends them to the company. Computerization of records is underway.
Register under the West Pakistan Shops and Establishment Ordinance 1969 with the Labor epartment of the District
Pakistan Shops and Establishment Ordinance, 1969, requires every establishment other than a one-man shop to be registered with the Deputy Chief Inspector of the Labor Department in each district. This is to safeguard the labor standards of the workers.
To register, the employer must submit an application using Form A, accompanied by a bank challan. The application for a new establishment must be made within 2 months of setting it up. Registration fees are the following: 1–5 workers: 6–10 workers: 11–20 workers: more than 20 workers: Once the fee has been paid, the Deputy Chief Inspector registers the establishment in the register of Establishments using Form B and issues a registration certificate using Form C. The certificate must be prominently displayed at the establishment.