A foreign company with a Pakistani contract, a client base, or a project award has three realistic ways in. They are not interchangeable, and the choice is difficult to unwind once made.

The three routes

Liaison office. A representative presence only. It may promote the parent, coordinate with customers, source, and act as a communication channel. It may not trade, sign revenue contracts, invoice, or earn income in Pakistan. It is funded entirely by remittances from the parent.

Use it when: you are exploring the market, supporting existing customers, or sourcing from Pakistan.

Branch office. An extension of the foreign parent, permitted to execute a specific contract or project in Pakistan. It can perform that contract and receive payment for it.

Use it when: you have won a defined project — commonly construction, engineering, infrastructure, or a supply-and-install contract — with a known scope and duration.

Note: a branch is not a separate legal person. Liability sits with the parent.

Subsidiary — a Pakistani company. A locally incorporated private limited company, wholly or partly foreign-owned, registered with SECP.

Use it when: you intend to trade generally, employ at scale, hold assets, take on multiple customers, or stay.

Advantage: separate legal personality, limited liability, general commercial capacity, and by far the cleanest position for tax, banking and eventual exit.

For the mechanics of incorporation see foreign company setup in Pakistan and choosing a business structure.

BOI permission

Branch and liaison offices require permission from the Board of Investment, which is granted for a defined period and renewed. In outline:

  • Application with parent company constitutional documents, board resolution, financial statements and details of the proposed activity — all duly attested through the Pakistani mission abroad
  • For a branch, the contract or award underpinning the application
  • Security clearance and sectoral input
  • Permission letter stating the permitted activities and the validity period
  • Registration with SECP as a foreign company having a place of business in Pakistan, with prescribed filings
  • Tax registration, bank account opening, and — where staff are employed — labour registrations

Renewals require evidence that you stayed inside the permitted scope. Timelines vary; treat this as months, not weeks, and start before you need the office.

Where liaison offices get into trouble

This is the single most common problem we are asked to fix, and by the time we are asked, tax has usually attached.

A liaison office that negotiates prices, concludes contracts, holds stock, delivers services or receives payment is not doing liaison work. The consequence is not merely a permission breach: it risks creating a permanent establishment for the parent, bringing the parent's Pakistan-source income into charge here, with penalties and interest, and complicating treaty relief.

The line to hold is genuine and simple: no revenue activity, no contract conclusion, no invoicing. If the business is doing those things, it needs a branch or a subsidiary, and the honest answer is to convert rather than to continue.

Tax and repatriation

The structure determines the tax profile — corporate rate on branch profits, withholding on payments, treatment of dividends from a subsidiary, and the availability of relief under the applicable double taxation treaty. Pakistan has a wide treaty network and the treaty position is often decisive; check it before you choose the vehicle, not after.

Repatriation of profits, dividends, royalties, technical fees and capital is permitted through the banking channel subject to State Bank requirements and documentation. The requirements are procedural, but they are exacting, and the time to structure for them is at entry.

See repatriating profits and capital from Pakistan, FBR audit notices and sales tax registration.

Sector permissions

Foreign investment is broadly open, but several sectors carry their own licensing and, in some cases, equity or approval conditions — banking and finance, insurance, telecom, energy, media, aviation, mining, defence-related manufacturing, and security services. Check the sectoral regime before the corporate one. See fintech licensing, telecom and PTA licensing, energy and NEPRA and mining and mineral titles.

The other things to settle before you enter

Local partner arrangements, if any — in writing, with exit and deadlock provisions. See joint ventures with a Pakistani partner.

Employment — local hiring documentation, and work visas for expatriate staff. See employment contracts.

Intellectual property — register your marks in Pakistan before your distributor or partner does. See trade mark registration.

Dispute resolution — arbitration with a properly specified seat, because that determines whether an eventual award reaches local assets. See enforcing foreign judgments and awards.

Distribution instead of presence. Sometimes the right answer is not to establish at all, but to appoint a distributor or licensee. See franchising and distribution into Pakistan and dealership and distribution agreements.

Exit

Closing a branch or liaison office requires winding up the permission, tax clearance, settlement of employee dues and closure of accounts. Companies that simply stop operating leave open registrations that generate penalties and complicate any future return. Plan the exit at entry.

How the firm can help

We advise on which route fits the actual commercial plan, prepare and pursue BOI applications, handle SECP registration and ongoing filings for foreign companies, structure entry with tax and repatriation in mind, and regularise liaison offices that have drifted outside their permitted scope — ideally before FBR raises it.

See corporate and commercial, or contact the firm.