Pk Formation

Pakistan — Business Formation & Entity Selection — Skill v1.0

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

Section 1 — Quick Reference

Section 2 — Entity Types Comparison

Recommended defaults:

• Solo Pakistani-resident founder, micro turnover, domestic clients, low-risk activity, comfortable with unlimited liability: Sole Proprietorship (NTN-based).
• Solo founder selling IT / IT-enabled services exports wanting limited liability + the PSEB 0.25% final-tax regime: SMC-Pvt with PSEB registration.
• 2+ founders wanting limited liability and access to the 20% small-company CIT band: Private Limited (Pvt Ltd).
• Professional services partnership (law, accounting, consulting) where partners want simplicity and provincial bar / ICAP rules permit: AOP (Partnership) registered with the Registrar of Firms.
• Plans to raise public capital, list on the Pakistan Stock Exchange (PSX), or undertake regulated banking / insurance / NBFC activity: Public Limited Company (PLC).
• Non-profit / NGO / religious / charitable / research: Section 42 Company (Companies Act 2017), Trust (Trusts Act 1882), or Society (Societies Registration Act 1860).

Section 3 — Required Inputs and Refusal Catalogue

Required intake before recommending an entity

1. Nationality, CNIC / NICOP / passport, and tax residence of each founder.
2. Number of founders / promoters and intended directorships.
3. Intended business activity (objects) and FBR business code / principal activity.
4. Expected annual turnover and paid-up capital (drives small-company CIT classification and audit thresholds).
5. Whether any foreign shareholder or director is involved (triggers SBP / BOI permissions and possibly work visa).
6. Whether the business will earn IT / IT-enabled services export revenue (drives PSEB registration recommendation — critical).
7. Capital available for paid-up share capital and any sectoral minimum.
8. Whether the business will hire employees (EOBI, social security, withholding tax on salary).
9. Province of principal place of business (drives provincial sales tax on services).
10. Whether the business handles personal data or operates in a regulated sector (banking, telecom, power, capital markets, pharma, food).

Refusal catalogue

R-PK-F1 — Benami / nominee structures. "Using a Pakistani nominee director or shareholder to disguise foreign control where prohibited, or to disguise true beneficial ownership, contravenes the Benami Transactions (Prohibition) Act 2017 and SECP Beneficial Ownership Regulations 2020. The skill will not draft or advise on benami arrangements. Escalate to a Pakistani legal practitioner."

R-PK-F2 — Sectors closed or restricted to foreign investment. "Sectors on the Negative List under the Investment Policy 2013 (as amended) — including arms and ammunition, high explosives, radioactive substances, security printing and currency, and consumable alcohol — are closed to foreign investment. Agriculture, services, infrastructure, and social sectors have varying restrictions. The skill flags requirements but does not handle BOI / SBP approvals for restricted sectors."

R-PK-F3 — Work visa, POC, NICOP, and expatriate matters. "Work visas, Pakistan Origin Cards (POC), National Identity Cards for Overseas Pakistanis (NICOP), and expatriate employment are processed by the Ministry of Interior, NADRA, and the Board of Investment. The skill flags requirements but does not handle immigration filings; engage an immigration consultant."

R-PK-F4 — Bank account opening for foreigners or non-resident directors. "Pakistani banks require directors to attend in person or appoint a properly notarised attorney for KYC under SBP's AML / CFT Regulations and CDD requirements. Special Convertible Rupee Accounts (SCRA) for foreign portfolio investment have separate SBP rules. The skill flags the requirement but does not guarantee any specific bank's onboarding."

R-PK-F5 — Regulated sectors: banking, insurance, NBFCs, capital markets, fintech, telecom, power, pharma. "These require sector licences (SBP for banking and microfinance; SECP for NBFCs, insurance, asset management, brokers; PTA for telecom and ISPs; NEPRA for power generation / transmission / distribution; DRAP for pharma; PEMRA for broadcasting) in addition to SECP incorporation. Capital floors are much higher than the Companies Act minimums. Formation alone is insufficient — the skill refuses to provide a green-light recommendation without mapping the sectoral licence."

R-PK-F6 — PSEB registration without genuine IT/ITeS export substance. "Claiming the 0.25% / 1% final tax on IT or IT-enabled services exports under PSEB registration when the underlying activity is not genuine IT/ITeS or where the export remittance is round-tripped through related parties is refused. The 0.25% concession requires actual export of qualifying services as defined in the relevant SRO and FBR's IT/ITeS list, with proceeds repatriated through normal banking channels and reported on the appropriate PRC / E-Form."

R-PK-F7 — Tax avoidance via sole-prop vs Pvt Ltd switching. "Recommending a sole proprietorship purely to access lower individual-income progressive rates while operating de facto as a corporate entity, when substance points to a company, is refused. Document substance and apply the General Anti-Avoidance Rule (GAAR) in the Income Tax Ordinance 2001 and SRB / PRA anti-avoidance provisions."

R-PK-F8 — NPO used as a tax shield. "Section 42 Company / Trust / Society status does not by itself confer tax-exempt status on trading income. The NPO must qualify for and renew its Commissioner's approval under section 2(36) and the Second Schedule clause 58 / 66 ITO 2001, and trading income unrelated to charitable objects remains taxable. The skill refuses to advise on structuring trading activities through an NPO to evade tax."

Section 4 — Sole Proprietorship

Nature

A Sole Proprietorship in Pakistan is not a registered "entity" per se — it is simply an individual person carrying on business under a trade name, identified for tax by the proprietor's National Tax Number (NTN), which for individuals is the CNIC. There is no separate legal personality; the proprietor trades in their personal capacity with unlimited liability.

Key features

• Single proprietor (1 owner only); for 2+ owners, the structure becomes an AOP / partnership.
• Proprietor must be at least 18 (mental capacity rules under contract law apply).
• Proprietor must hold a valid CNIC (or NICOP for overseas Pakistanis) and be tax-resident in Pakistan in practice.
• No SECP filing; no audited accounts; no MEMART.
• Trade name may be used informally; registration with the relevant Chamber of Commerce is common (and required by some clients for verification) but not statutory.
• Cannot use suffixes "Limited", "Pvt Ltd", "SMC-Pvt", "PLC", "LLP", "(Guarantee) Limited", "Foundation", or any other restricted designation.

Formation steps

1. Obtain NTN from FBR. Register on FBR IRIS portal (iris.fbr.gov.pk) using CNIC, mobile number, email, and biometric verification at NADRA e-Sahulat or via the FBR Tax Asaan mobile app. NTN issuance is typically same-day to 3 working days.
2. Choose business name (informally) and prepare a business letterhead / invoice template showing NTN.
3. Register for STRN (Sales Tax Registration Number) with FBR if dealing in taxable goods (federal), or with the provincial revenue authority (SRB / PRA / KPRA / BRA / ICT) if providing taxable services — only required above the relevant threshold or for voluntary registration.
4. Provincial professional tax / shop registration: register with the relevant Excise & Taxation Department for shop signage / trade licence as applicable (varies by province and municipality).
5. Chamber of Commerce membership (optional but useful for trade verification).
6. EOBI (Employees' Old-Age Benefits Institution) registration if hiring 5+ employees.
7. Provincial social security (Punjab Social Security, Sindh ESSI, etc.) registration if hiring employees.
8. PSEB registration if exporting IT / IT-enabled services (see Section 8 — strongly recommended).

Tax

• Profits taxed in the hands of the proprietor under the Income Tax Ordinance 2001 at individual progressive slab rates (the slabs for business individuals and salaried individuals differ — Finance Act 2025 updated slab rates).
• 2025–26 indicative slabs for business individuals / AOPs (verify against Finance Act 2025 schedule):
  • Up to Rs 600,000 — 0%
  • Rs 600,001 – Rs 1,200,000 — 15%
  • Rs 1,200,001 – Rs 1,600,000 — 20%
  • Rs 1,600,001 – Rs 3,200,000 — 30%
  • Rs 3,200,001 – Rs 5,600,000 — 40%
  • Above Rs 5,600,000 — 45%
• Super tax under section 4C of ITO 2001 — up to 10% on high-income persons (above Rs 500M) graduated.
• Sales tax / GST: federal sales tax 18% on goods; provincial sales tax on services 13% (PRA), 13–15% (SRB), 15% (KPRA), 15% (BRA), 16% (ICT) — rates vary by service category and province.
• Withholding tax on services received from the sole proprietor: 10% / 11% (filers) / 22% (non-filers) under section 153 ITO 2001 — relevant for B2B billing.
• PSEB-registered IT/ITeS export proceeds: 0.25% final tax under the IT export regime (verify against current Finance Act and SRO 1359(I)/2022 as amended).

When to use

• Single Pakistani-resident founder with micro to small turnover and low liability risk.
• Family business, retail, personal services, freelance creative or technical work where simplicity dominates.
• Freelance software developer with low export volumes (< Rs 5M annually) where the administrative cost of a company is disproportionate — provided PSEB registration is still obtained for the 0.25% concession.

When to avoid

• Liability-sensitive activities (any work with significant counterparty risk).
• Foreign shareholder participation desired.
• Plans to raise external equity or onboard institutional clients who require a corporate counterparty.
• Anything signalling corporate substance — Pakistani enterprise clients overwhelmingly prefer "Pvt Ltd".
• IT/ITeS exporters with turnover > Rs 50M — the SMC-Pvt + PSEB combination becomes materially more efficient and credible.

Section 5 — AOP (Association of Persons / Partnership)

Nature

An AOP (Association of Persons) in Pakistan is the tax-law term for any association of two or more persons that does not constitute a company. The most common AOP is a general partnership registered under the Partnership Act 1932 by filing Form C with the Registrar of Firms of the relevant province. The partnership is not a separate legal person under the Partnership Act, but is treated as a separate taxable entity under the Income Tax Ordinance 2001.

Key features

• Minimum 2 partners; maximum 20 partners under the Partnership Act 1932 (s.4).
• Partners may be individuals or bodies corporate (but corporate partners create complexities — typically all-individual).
• Partners' liability is joint and several and unlimited in a general partnership.
• Partnership deed (written agreement) is essential; oral partnerships are recognised but unsafe.
• Registration with the Registrar of Firms is not mandatory for the partnership to exist, but unregistered partnerships cannot sue to enforce contractual rights (s.69 Partnership Act 1932) — registration is therefore strongly recommended.
• LLP under the Limited Liability Partnership Act 2017 is a separate regime — see Section 5A.

Formation steps

1. Draft the partnership deed covering partners, capital contributions, profit-sharing ratios, management, admission / retirement of partners, and dispute resolution. Stamp the deed with the appropriate provincial stamp duty.
2. Apply to the Registrar of Firms of the relevant province (Punjab, Sindh, KPK, Balochistan, ICT) using Form C / Form I with partners' details and partnership deed.
3. Pay the prescribed registration fee.
4. Receive the Certificate of Registration of Firm.
5. Obtain NTN for the firm from FBR IRIS portal (separate NTN from individual partners' NTNs).
6. STRN registration with FBR (goods) or relevant provincial authority (services) if applicable.
7. EOBI / provincial social security as applicable.
8. Chamber of Commerce membership (optional).
9. PSEB registration if exporting IT/ITeS services.

Tax

• AOPs are taxed at the same business individual / AOP slabs noted in Section 4. The AOP files its own return; the partners' share of taxed AOP profit is exempt in their personal returns to avoid double tax (clause 4 Part III First Schedule ITO 2001).
• Sales tax / GST applies as for any business above threshold.
• PSEB 0.25% final tax regime is available to AOPs that are registered exporters of IT/ITeS.

When to use

• 2+ professional partners (law firm, accounting firm, consulting practice, architecture practice) where ICAP / Pakistan Bar Council rules or local practice favour partnerships.
• Family businesses where the partners are content with joint and several unlimited liability and want to avoid SECP corporate compliance.
• Small joint ventures where the parties expect to dissolve within a short horizon.

When to avoid

• Liability-sensitive activities — convert to LLP or Pvt Ltd.
• Where partners want clean exit through share transfer — partnerships restructure messily.
• Where external equity is contemplated — partnerships do not have shares.
• Banking, insurance, NBFC, telecom, listed-company activity — must be Ltd or PLC.

Section 5A — Limited Liability Partnership (LLP)

The Limited Liability Partnership Act 2017 introduced LLPs into Pakistan, registered with SECP (not the Registrar of Firms). An LLP is a separate legal person; partners' liability is limited to their capital contribution except for their own wrongful acts. Designated partners are responsible for compliance. LLPs are taxed as AOPs under ITO 2001 (pending further clarification). LLPs are uncommon in practice because Pvt Ltd remains the dominant SECP vehicle, but LLPs suit professional services where partnership culture matters and limited liability is desired.

Section 6 — Single Member Company (SMC-Pvt)

Nature

A Single Member Company (SMC-Pvt) is a private limited company with exactly one shareholder and a mandatory nominee director (who steps in on the shareholder's death or incapacity). Introduced by SECP and codified in the Companies Act 2017, the SMC-Pvt is the closest Pakistani analogue to a one-person LLC.

Founders and directors

• Exactly 1 shareholder (by definition — if a second shareholder is admitted, the company must convert to Pvt Ltd within 30 days).
• Minimum 1 director (commonly the sole shareholder).
• Mandatory nominee director who becomes director on the shareholder's death; nominee details filed with SECP.
• Company Secretary: not mandatory for SMC-Pvt below the threshold (was previously mandatory; SECP relaxed for small SMCs — verify current SECP Single Member Companies Rules 2003 as amended).
• Foreign shareholder permitted; if working in Pakistan, work visa and SBP / BOI permissions may apply.

Capital

• Minimum paid-up share capital: flexible under Companies Act 2017 — no statutory floor for ordinary cases; commonly Rs 100,000 in practice. Sectoral minimums override.
• Companies with foreign shareholders are subject to BOI registration under the Foreign Private Investment (Promotion and Protection) Act 1976 and may face higher capital expectations in practice for visa and SBP repatriation purposes (no fixed statutory floor, but BOI guidelines recommend USD 150,000 for some sectors).

Governance

• Single director or board (at director's discretion).
• Annual general meeting (AGM) requirements are relaxed for SMCs — single-member resolutions in writing suffice for most decisions.
• Statutory books: register of members (one entry), register of directors, register of charges, register of nominee director.

Formation steps

1. Reserve the company name via the SECP eServices portal (eservices.secp.gov.pk) — name must end with "(SMC-Private) Limited" or "(SMC-Pvt) Ltd". Reservation valid 60 days.
2. Pay name reservation fee via 1Link / online banking.
3. File incorporation documents electronically through eServices:
   • Memorandum and Articles of Association (MEMART) — SECP provides standard templates for SMCs.
   • Form 1 — Declaration of compliance.
   • Form 21 — Notice of registered office address.
   • Form 29 — Particulars of directors, CEO, and nominee director.
   • Form INC.8 — Single Member Company nomination form (nominee director details).
   • CNIC copies for shareholder, director(s), and nominee director.
   • Proof of registered office address.
4. Pay incorporation fee (sliding scale by authorised capital).
5. SECP issues Certificate of Incorporation with Corporate Universal Identification Number (CUIN) typically within 4–10 working days for eServices submissions.
6. NTN issued by FBR — automatic linkage in many cases via FBR–SECP integration; otherwise apply on IRIS portal.
7. Open corporate bank account using Certificate of Incorporation, MEMART, NTN, CNIC of director, and SECP's CUIN.
8. STRN registration with FBR (goods) or provincial revenue authority (services) if applicable.
9. PSEB registration — critical for IT/ITeS exporters (Section 8).
10. EOBI / provincial social security as triggered.
11. Sector licences where applicable.

Tax

• Companies Income Tax under ITO 2001:
  • Standard company rate: 29% of taxable income (2025–26; verify against Finance Act 2025).
  • Small company rate: 20% of taxable income, where the company satisfies all of: turnover ≤ Rs 250,000,000; paid-up capital plus undistributed reserves ≤ Rs 50,000,000; employees ≤ 250; not formed by splitting an existing entity; no associated undertakings.
• Super tax under section 4C ITO 2001 — graduated up to 10% for very high-income companies.
• Minimum tax under section 113 ITO 2001 — 1.25% of turnover (general rate; lower for specified sectors) if the company would otherwise pay less than this amount.
• Alternative Corporate Tax (ACT) under section 113C — 17% of accounting profit if higher than regular tax.
• PSEB-registered IT/ITeS exporters — 0.25% final tax on export remittances under the concessional regime (verify against Finance Act 2025 and SRO 1359(I)/2022 as amended). This is the central reason most freelance software developers incorporate as SMC-Pvt rather than continue as sole proprietors.
• Sales tax / GST: federal sales tax 18% on goods; provincial sales tax on services as applicable.
• Withholding tax obligations on supplier payments, salaries, rent, and dividends under sections 152 / 153 / 155 / 158 ITO 2001.
• Dividend tax: 15% withholding on dividends paid to resident individuals (10% for filers in some categories); 25% for non-filers. PSEB-registered IT/ITeS exporters benefit from a reduced 7.5% dividend rate (verify under current Finance Act).
• Annual filings: Form A (annual return) within 30 days of AGM; audited financial statements if turnover or paid-up capital exceeds the SECP audit threshold (currently Rs 1 million paid-up for company audit requirement under Companies Act 2017 — confirm against SECP Audit Oversight Rules); annual income tax return by 31 December for companies with June year-end (corporate returns 31 December annually for tax-year-ending-June companies).

When to use

• Freelance software developer or other solo IT/ITeS exporter seeking limited liability, corporate substance for clients, and the PSEB 0.25% final-tax regime — the canonical default for this profile.
• Solo professional consultant or trader wanting limited liability without the complexity of a multi-member Pvt Ltd.
• Founder planning to bring in co-founders later — easy conversion to Pvt Ltd.

When to avoid

• Multi-founder ventures from inception — start as Pvt Ltd directly.
• Pure micro / informal activity where a sole proprietorship suffices and PSEB does not apply.
• Activities where sectoral licence requires Pvt Ltd or PLC (banking, insurance).

Section 7 — Private Limited Company (Pvt Ltd)

Nature

A Private Limited Company ("Pvt Ltd") is a separate legal person incorporated under Companies Act 2017 with 2–50 members. The Pvt Ltd is the dominant corporate vehicle for SMEs in Pakistan above the single-founder threshold.

Founders, members, and directors

• Minimum 2 members and 2 directors.
• Maximum 50 members (excluding employees and former employees who hold shares).
• Director must be 18 or older; foreign directors permitted with work visa / BOI clearance where required.
• Company Secretary mandatory for public-interest companies and certain Pvt Ltds above turnover threshold (SECP rules; small Pvt Ltds often exempt).
• Chief Executive Officer (CEO) mandatory — one of the directors or a separate person appointed by the board.

Capital

• Minimum paid-up share capital: flexible — no statutory floor for ordinary cases; commonly Rs 100,000 in practice. Sectoral floors override.
• All issued shares must be paid up at allotment (SECP practice).
• Sectoral minimums: scheduled commercial bank Rs 10 billion (SBP), microfinance bank Rs 300M–Rs 1B (tiered), life insurer Rs 700M, non-life insurer Rs 500M, asset management company Rs 230M, brokerage Rs 250M (Trading Right Entitlement Certificate holder), NBFC varying by category.
• Companies with foreign shareholding must comply with BOI Foreign Investment Policy thresholds (no fixed minimum in Companies Act, but BOI guidance applies for visa and repatriation).

Governance

• Board of directors (2 or more); elections every 3 years.
• Annual General Meeting (AGM) mandatory; first AGM within 16 months of incorporation, thereafter within 15 months of previous AGM and within 4 months of FY end.
• Statutory books: register of members, register of directors, register of charges, minute books, register of debenture-holders (if any).
• Beneficial Ownership Register mandatory under SECP Beneficial Ownership Regulations 2020 — disclosure of ultimate beneficial owners (UBOs).

Formation steps

1. Reserve the company name via SECP eServices — name must end with "(Private) Limited" or "(Pvt) Ltd".
2. Pay name reservation fee.
3. Prepare MEMART (SECP model articles acceptable for most small Pvt Ltds; bespoke MEMART for complex ownership / sectoral needs).
4. File incorporation documents electronically through eServices:
   • MEMART.
   • Form 1 — Declaration of compliance.
   • Form 21 — Notice of registered office.
   • Form 29 — Particulars of directors and CEO.
   • Beneficial Ownership Form (BO declaration).
   • CNIC copies for all shareholders and directors; passport copies for foreign shareholders / directors.
   • Proof of registered office address.
5. Pay incorporation fee (sliding scale by authorised capital).
6. SECP issues Certificate of Incorporation with CUIN within 4–10 working days.
7. NTN issued by FBR — automatic via FBR–SECP integration or apply on IRIS portal.
8. Open corporate bank account.
9. STRN registration with FBR or provincial revenue authority.
10. PSEB registration if exporting IT/ITeS.
11. EOBI / provincial social security as triggered.
12. Sector licences where applicable.

Tax

• Companies Income Tax at 29% standard or 20% small-company rate (same conditions as SMC-Pvt — Section 6).
• Super tax under section 4C up to 10% for high-income companies.
• Minimum tax 1.25% of turnover under section 113.
• Alternative Corporate Tax (ACT) 17% under section 113C.
• PSEB-registered IT/ITeS exporters: 0.25% final tax on export remittances.
• Sales tax / GST: federal 18% goods; provincial services rates.
• Dividend tax: 15% standard withholding (reduced rates for filers in some categories; 25% non-filers; 7.5% for PSEB-registered IT/ITeS dividends — verify under current Finance Act).
• Annual filings: Form A annual return within 30 days of AGM; audited financial statements (audit mandatory under Companies Act 2017 for almost all Pvt Ltds above the small-company audit exemption — confirm against SECP rules); income tax return.

When to use

• Most SMEs above the single-founder threshold: consultancies, e-commerce, light manufacturing, services, family businesses with multiple owners.
• IT/ITeS firms with 2+ founders wanting PSEB benefits + limited liability + corporate substance for clients.
• Founders planning external equity raise (clean cap table, audited accounts).

When to avoid

• Single founder — use SMC-Pvt for simplicity.
• Pure micro / informal activity — sole proprietorship suffices.
• NGO / charitable — use Section 42 Company / Trust / Society.

Section 8 — PSEB Registration (Pakistan Software Export Board) — CRITICAL

PSEB registration is the single most important formation-stage decision for any Pakistani software developer, IT services firm, or IT-enabled services exporter.

What is PSEB

The Pakistan Software Export Board (Guarantee) Limited (PSEB) is the Ministry of IT and Telecommunication's apex body for promoting Pakistan's IT and IT-enabled services exports. Registration is mandatory to access the 0.25% concessional final tax on IT / ITeS export remittances and other incentives.

Key benefits of PSEB registration

1. 0.25% concessional final tax on IT and IT-enabled services export proceeds received from outside Pakistan through normal banking channels (under SRO 1359(I)/2022 and subsequent Finance Act amendments). For non-PSEB-registered exporters, the rate is typically 1% under the same regime. Verify against the Finance Act 2025 and current SRO — this regime is reviewed annually at Budget time and has historically been one of the most negotiated incentives.
2. Zero-rated sales tax on IT/ITeS exports (verify under Sales Tax Act 1990 and relevant SROs).
3. Reduced 7.5% dividend tax (vs 15% standard) on dividends paid out of PSEB-registered company's profits to resident shareholders, where the dividends are sourced from IT/ITeS export income (verify under current Finance Act).
4. Eligibility for PSEB-administered training, marketing, and trade-mission programmes.
5. Access to STZA (Special Technology Zones Authority) incentives where applicable — separate regime with its own tax holidays (typically 10-year corporate tax exemption for STZA-licensed zone enterprises).
6. Credibility for international clients verifying that the Pakistani counterparty is a legitimate IT exporter.

Eligibility for PSEB registration

• Must be a Pakistani-registered business (sole proprietorship NTN, AOP, SMC-Pvt, Pvt Ltd, PLC, or LLP).
• Must engage in the export of IT services (software development, custom software, SaaS, web / mobile development, IT consulting, system integration, etc.) or IT-enabled services (ITeS) (call centres, BPO, KPO, animation, e-commerce platforms, content moderation, data annotation for AI training, etc.) — refer to the PSEB list of qualifying services.
• Must have or commit to having a registered office in Pakistan.
• Must have a corporate bank account capable of receiving export remittances and issuing Proceeds Realisation Certificates (PRCs) / E-Forms.

PSEB registration steps

1. Create an account on the PSEB portal (pseb.org.pk).
2. Submit the online application form including:
   • Company / firm details (CUIN, NTN, STRN, registered office, contact details).
   • List of directors / partners / proprietor with CNIC.
   • Bank account details and authorised signatories.
   • Description of IT/ITeS services offered.
   • Number of employees and key technical personnel.
   • Sample client invoices / contracts (export evidence).
3. Upload supporting documents:
   • SECP Certificate of Incorporation (or Registrar of Firms certificate for AOP, or CNIC for sole proprietor).
   • MEMART (for companies).
   • NTN certificate.
   • Bank account details and at least one Proceeds Realisation Certificate (PRC) or E-Form evidencing past or projected IT/ITeS export remittance.
   • Office tenancy / utility bill.
4. Pay PSEB registration fee (varies by entity type and turnover band).
5. PSEB verification — site visit / desk review.
6. PSEB Certificate of Registration issued, typically within 2–4 weeks.
7. Annual renewal required to maintain status.

Tax treatment after PSEB registration

• Export remittances received through normal banking channels and supported by PRC / E-Form attract 0.25% withholding under section 154A ITO 2001 (IT / ITeS export regime), treated as final tax.
• The company files its income tax return and reflects the final-tax export turnover separately from any domestic income (which is taxed under the regular CIT regime at 29% / 20%).
• Domestic IT/ITeS sales (PKR-denominated invoices to Pakistani clients) do not qualify for the 0.25% regime and are taxed under regular CIT.
• Sales tax: provincial sales tax on services for any domestic sales; exports are zero-rated.
• The PSEB regime is reviewed at every Federal Budget. The 0.25% final-tax rate has been challenged and modified multiple times since 2022. Always verify against the current Finance Act and SROs in force at the date of advice. Flag any 2026 changes.

When NOT to register with PSEB

• Pure domestic IT services (PKR-only revenue from Pakistani clients) — no export benefit accrues; registration adds compliance cost without offset.
• Non-IT / non-ITeS activities — ineligible.

Section 9 — Public Limited Company (PLC)

Nature

A Public Limited Company ("Limited" or "Ltd" without "Private") is a public company incorporated under Companies Act 2017 whose shares can be offered to the public and which may be listed on the Pakistan Stock Exchange (PSX) or remain unlisted. PLCs face the heaviest regulatory burden.

Founders, members, and directors

• Minimum 3 members and 3 directors (7 directors for listed PLCs under the Code of Corporate Governance).
• No statutory maximum members.
• At least one independent director for listed PLCs; female director(s) required by the Code of Corporate Governance.
• Company secretary mandatory.
• Chief Financial Officer (CFO) mandatory for listed PLCs.

Capital

• Minimum paid-up share capital: Rs 200,000 under Companies Act 2017 for ordinary PLCs.
• Listed PLCs face higher capital and free-float requirements under PSX Rule Book (free-float ≥ 25% in most cases).
• Sectoral floors override for banking, insurance, NBFC.

Formation steps

1. Name reservation (must end with "Limited" or "Ltd" — without "Private").
2. MEMART filing (bespoke MEMART required for PLCs; SECP model articles are not appropriate).
3. Statutory declaration of compliance.
4. SECP incorporation and CUIN issuance.
5. Registration with the Securities and Exchange Commission of Pakistan (SECP) for any public offer (separate prospectus filing under Public Offering Regulations 2017).
6. PSX listing application if listing.
7. Full corporate governance regime: audited accounts, AGM mandatory, half-yearly reviewed accounts, quarterly accounts if listed.

Tax

• CIT 29% (typically large company; small-company 20% rare for PLCs by virtue of scale).
• Super tax up to 10% under section 4C.
• Minimum tax 1.25% of turnover under section 113.
• ACT 17% under section 113C.
• Special tax treatment for listed companies (reduced rate on disposal of listed securities under Eighth Schedule; CGT on listed securities currently 15% for filers — verify under current Finance Act).

When to use

• Capital-raising at scale (public offer, PSX listing, private placement to institutional investors).
• Mature businesses with strong governance and stable profitability.

When to avoid

• SMEs — compliance cost is disproportionate.
• Family / founder-led businesses where dilution is undesirable.
• Early-stage ventures — Pvt Ltd is the appropriate launch vehicle; convert to PLC at IPO stage.

Section 10 — Non-Profit Organisations (NPOs)

Nature

Pakistani NPOs may be formed under three principal regimes:

1. Section 42 Company under Companies Act 2017 — "company limited by guarantee not having share capital", suffix "(Guarantee) Limited" or analogous.
2. Trust under Trusts Act 1882 (private trusts) or provincial Charitable Trust Acts (public charitable trusts).
3. Society under Societies Registration Act 1860 — common for literary, scientific, charitable, educational, professional, and religious associations.

Section 42 Company

• Minimum 3 members and 3 directors.
• Minimum paid-up capital: Rs 1,000,000 under Companies Act 2017 s.42 (raised from earlier thresholds).
• Profits must be applied wholly to the objects; no dividends to members.
• SECP licence under section 42 required before incorporation; 6–12 weeks process.
• Suffix "(Guarantee) Limited" or other approved designation.
• Annual audit and Form A annual return.

Trust

• Minimum 2 trustees (3+ recommended).
• Trust deed registered with the Sub-Registrar in the relevant district under the Registration Act 1908.
• Stamp duty on trust deed varies by province.
• No SECP role.
• Public charitable trusts require Commissioner of Auqaf / Charity Commissioner registration in some provinces.

Society

• Minimum 7 members under Societies Registration Act 1860 s.1.
• MOA and rules filed with Registrar of Societies (Joint Stock Companies registrar in some provinces).
• Annual list of governing body members filed annually.
• No SECP role.

Tax (all NPO regimes)

• Section 2(36) ITO 2001 — definition of "non-profit organisation".
• Clause 58 / 66 Second Schedule ITO 2001 — exemptions for NPOs that obtain Commissioner's approval (formerly section 2(36)(c) certificate).
• PCP (Pakistan Centre for Philanthropy) certification strengthens the case for donor-side tax credit under section 61 ITO 2001 (donations to PCP-certified NPOs).
• Trading income unrelated to charitable objects is taxable under the regular CIT regime — see R-PK-F8.
• Sales tax / GST applies on taxable supplies above threshold.

When to use

• Genuine NGO, charity, religious body, professional association, research institute, alumni group, cultural body.

When to avoid

• Any commercial / profit-distributing intent — use Pvt Ltd.
• "Charity" used to disguise trading or to obtain tax-free status — refused (R-PK-F8).

Section 11 — SECP eServices Registration Workflow

SECP registration is now fully electronic through the eServices portal at eservices.secp.gov.pk. Paper filing is residual.

Standard workflow

1. Account creation. Each subscriber creates an eServices account using CNIC

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