How international businesses can establish legal presence in Pakistan — comparing liaison offices, branch offices, and subsidiary companies.
Pakistan's growing economy and strategic location make it an attractive destination for foreign investment. International companies looking to establish operations in Pakistan have three main options: liaison office, branch office, or subsidiary company. Each structure has different legal implications, tax treatments, and operational freedoms.
Liaison Office
A liaison office (also called a representative office) is the simplest form of foreign presence. It can only perform promotional and liaison activities — no commercial transactions, revenue generation, or contracts. It's ideal for companies wanting to explore the Pakistani market before committing to a larger investment. Registration is through the Board of Investment (BOI) and SECP.
Branch Office
A branch office can conduct commercial activities in Pakistan but is not a separate legal entity — it's an extension of the parent company. The parent company retains full liability for branch operations. Branch offices must register with SECP, obtain an NTN, and comply with all applicable tax laws. Profits can be remitted to the parent company subject to tax clearance.
Subsidiary Company
A subsidiary is a Pakistani company with foreign shareholding — either wholly owned or majority held by the foreign parent. It's a separate legal entity with limited liability, its own NTN, and full operational freedom. This is the preferred structure for companies planning significant investment, local partnerships, or access to government contracts and incentive programs.
Regulatory Approvals
Foreign companies must obtain approval from the Board of Investment (BOI) for sectors not on the negative list. Certain sectors (defense, media, airlines) have additional restrictions or require special permissions. The State Bank of Pakistan (SBP) regulates foreign exchange transactions, profit remittances, and capital account transactions for foreign entities.
Tax Considerations
Branch offices are taxed at 29% on Pakistan-source income plus a branch profits tax on remittances. Subsidiaries are taxed at standard corporate rates with additional tax on dividend distribution. Pakistan has double taxation treaties with over 65 countries, which can reduce withholding tax rates on cross-border payments. Treaty planning is essential for tax-efficient structuring.
WeFile Foreign Investment Services
Our corporate and tax teams work together to advise foreign companies on optimal structuring, handle all registrations with SECP, BOI, and FBR, and provide ongoing compliance management. We also assist with repatriation planning and cross-border tax optimization.