Process of Chinese enterprises' investment in Pakistan
Process of Chinese enterprises' investment in Pakistan
Procedures for Chinese-funded enterprises to carry out investment cooperation in Pakistan
3.1 Formalities required for investment registration of enterprises
3.1.1 Form of setting up an enterprise
Pakistani law allows foreign enterprises to operate in Pakistan in three forms: 1. Sole Proprietorship, 2. Partnership and 3. the formation of companies. Sole proprietorship, or individual operation, refers to a natural person engaged in a certain business activity with his own funds, and there are no formal requirements for establishment. A partnership is a business organization established by two or more natural persons or organizations under a partnership contract, and each of the partners is fully responsible for the profits and losses of the partnership. A company is a legal entity established under the provisions of the Companies Act 1984, and it is classified as a joint stock company, a limited liability company and an unlimited liability company.
3.1.2 Handling agencies of registered enterprises
The competent government agency responsible for the registration and management of companies is the Securities and Exchange Commission of Pakistan (SECP).
The main functions of the committee are:
To manage the securities market and related research;
The implementation, supervision and management of the Company law (including company registration);
Management of credit institutions other than banks;
Insurance industry management, etc.
The Securities and Exchange Commission has offices in Islamabad, Karachi, Lahore, Peshawar, Faisalabad and other cities. Its website is www.secp.gov.pk
3.1.3 Main procedures for registering an enterprise
To open a branch in Pakistan, a foreign company needs to apply to the Pakistan Investment Commission within 30 days before opening, and then register with the Securities and Exchange Commission. After the registration, the enterprise should submit the relevant approval documents to the Pakistan Tax Department (www.fbr. gov.pk) for tax registration to obtain a tax identification number (NTN number), and go to a commercial bank to open an account and other procedures.
Contact information and related forms are available on the BOI website (boi.gov.pk) and the Securities and Exchange Commission website (www.secp.gov.pk).
【Register Procedure】
(1) Approve the name of the company. The first step in the registration of a company is to pay 100 rupees to the Company Registry to approve the name of the company to ensure that the proposed company name is not identical or similar to other companies and is not fraudulent or contrary to religious principles.
(2) Approval procedures. A public limited company may be formed by any group of seven or more persons who, for lawful purposes, have signed contracts and articles of association and registered with the Securities and Exchange Commission; Any two or more persons may form a private limited company under the same procedure.
(3) The establishment of a company in the manufacturing sector does not require government approval, but the establishment of a financial asset investment type of company requires the pre-approval of the relevant ministries and commissions:
(4) Documents required for company registration:
If you want to register a company, you are recommended to log on to the Securities and Exchange Commission website (www.secp.gov.pk) for more information about the procedures and matters
The required documents are as follows:
① Private company:
lThe Articles of association shall be signed by the promoters in quadruplicate, with one copy sealed;
lComplete the specified form under the Company Law and be signed by a director or solicitor or certified public accountant;
lFill in the company address form;
lFill in the information form of managers, directors and other personnel of the company.
② Public company or Listed company:
In addition to the above documents required for the registration of a private limited company, two specified forms agreeing to the appointment of the Chief Executive Officer and director are also required.
③ Open project offices or offices and liaison offices:
lForeign companies intending to engage in export activities in Pakistan can be registered without any formalities;
lIf you intend to establish a liaison office in Pakistan to promote products and services, you need to obtain the permission of the Pakistan Investment Commission;
lIf a foreign company intends to open a branch, liaison office or representative office in Pakistan, it needs to fill in the form to apply for permission from the Investment Board of Pakistan, and the Investment Commission will make a decision within 6-8 weeks.
Table: Sectors that require pre-approval from relevant ministries to establish a company in Pakistan
No. | Business | Approval Ministries |
1 | Bank | Ministry of Finance of Pakistan State Bank of Pakistan |
2 | Insurance Company | Ministry of Commerce of Pakistan |
3 | Financial investment company or investment bank | Ministry of Finance of Pakistan State Bank of Pakistan |
4 | leasing company | Pakistan Stock Exchange |
5 | The venture capital company | Pakistan Stock Exchange |
6 | Asset management company | Pakistan Stock Exchange |
Source: Economic and Commercial Office of the Chinese Embassy in Pakistan
3.2 Procedures for contracting engineering projects
3.2.1 Obtaining Information
According to the regulations of the Pakistani government, tenders for procurement or construction of projects costing more than 100,000 rupees are required to be published on the PPRA website or in the media. Therefore, foreign project contracting enterprises can obtain project bidding information through: local media, PPRA website or project responsible department website and local agency. PPRA website is: www.ppra.org.pk
3.2.2 Bidding and Tendering
According to Pakistan's Public Procurement Act 2002 (i.e., Bidding Law), projects with amounts above 100,000 rupees, loans from international organizations and aid projects should be determined through open tender. All bidders are required to pass the project pre-qualification and submit the bid documents within the specified time. Usually, the bidding period for domestic bidding projects in Pakistan is not less than 15 working days, and the international open bidding period is not less than 30 working days. The AD hoc bid evaluation committee must conduct its selection in accordance with the principles of fairness, openness and transparency, and in principle should give priority to the lowest bidder. Under special or emergency circumstances, individual cases may be subject to bid negotiation.
3.2.3 Licensing Procedures
According to Pakistan's Public Procurement Law 2002 (i.e., Bidding Law), foreign contractors must form a joint venture with local enterprises to participate in the project bidding, and the Pakistani enterprises shall hold no less than 30% of the shares in the joint venture, and the joint venture shall apply for bidding permission.
The Project proposal (PC-1) and the final bid results of all tender projects are subject to the final approval of the Public Procurement Authority of Pakistan.
3.3 Patent and registered trademark applications
3.3.1 Applying for a Patent
The Patent Office of the Intellectual Property Organization of Pakistan (PIPRO) is the competent authority for accepting patent applications in Pakistan.
The application documents to register a Pakistani patent mainly include: application form, power of attorney (such as applying through an agent), patent specification, and payment of patent application fee.
Application procedures include: ① Submit the application; ② review and approval; (3) If it fails to pass the review, the applicant will be required to supplement or modify the materials; If it passes the review, a notice of acceptance will be published in the official Gazette; (4) Issuing certificates.
3.3.2 Trademark Registration
Application documents to be submitted for the registration of a Pakistan trademark: trademark application, trademark drawing, power of attorney (if applying through an agent), trademark registration application fee (1,000 rupees, no cash).
Applications for domestic trademarks in Pakistan should be made at the "Trademark Registry of the Intellectual Property Organization of Pakistan", which is located in Karachi and has a representative office in Lahore. Foreign enterprises that are not registered in Pakistan must apply through local trademark registration agents.
Applications for international trademark protection can be made through the Trade Marks Registry of Pakistan to the International Bureau of the Office of the World Intellectual Property Organization (WIPO) in Geneva, Switzerland.
3.4 Relevant procedures for enterprises to declare tax in Pakistan
3.4.1 Tax filing time
The Pakistani government requires companies to report and pay the previous month's sales tax and federal excise tax before the 15th of each month. The import (export) tax shall be reported and paid within 15 days after the import (export) of the goods. Corporate income tax is declared and paid at the end of the year.
3.4.2 Tax declaration channels
Pakistan’s tax declaration channels are relatively flexible, and enterprises can choose to declare by themselves, withholding by the owner, or declaration through a local accounting firm.
3.4.3 Tax declaration procedures
The tax declaration procedures in Pakistan are relatively simple. Enterprises fill in the tax return form according to the regulations and provide relevant documents. After paying the tax, the tax department will issue the tax payment certificate.
3.4.4 Tax declaration information
The documents to be submitted to the local tax authorities include: tax statement, enterprise tax ID number file, tax return forms, etc. In addition, the local tax authorities every year from time to time spot check enterprises related accounting vouchers and documents are consistent with the above documents. The above procedures can be found on the website of the Federal Tax Board of Pakistan: www.fbr.gov.pk
3.5 Application for work permit in Pakistan
3.5.1 Competent authorities
Foreigners will no longer need to obtain a work permit to work in Pakistan, they only need to apply for a work visa. Eligible foreign nationals with valid job offers are eligible to apply for this visa. The regulatory authorities in charge of work visas for foreigners in Pakistan are the Board of Investment (BOI), which is responsible for the application or extension of work visas, and the Ministry of Home Affairs, which authorizes and issues them. According to the Pakistani government, Pakistani embassies and consulates will only be authorized to issue multiple work visas to Chinese citizens, valid for one year, and visa issuing agencies will need to verify the authenticity of their participation in the projects and obtain security clearance from Chinese authorities. The extension of the work visa can only be approved by the Ministry of Interior of Pakistan, and the applicant should submit the extension application and relevant documents from his employer.
3.5.2 Work permit system
Foreigners must apply for a work visa to work in Pakistan, and those who hold a work visa must register with the Pakistani police. Previously, applications by foreign investors or employees to replace business visas with work visas will be accepted by the Ministry of Home Affairs on the basis of the verification results of the Pakistan Investment Commission. But since 2010, the Interior Ministry has in principle stopped accepting applications for business visas to replace work visas.
3.5.3 Application Procedure
For foreigners to work in Pakistan, the employer shall submit relevant materials to the Investment Commission of Pakistan, including passport information, professional qualification certificate, credit certificate of the employer, etc. After the approval of the BOI, the applicant will issue a letter of approval, with which the applicant can apply for the work visa to the Ministry of Interior of Pakistan. Details can be found on the BOI website: www.pakboi.gov.pk
3.5.4 Providing Information
The detailed procedures and materials required for the work visa application can be found on the BOI website:
www.pakboi.gov.pk/index.php?option=com_content&view=article&id=97&Itemid=57
