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How to Register a Sole Proprietorship in Pakistan

February 20, 2021
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With over 200 million inhabitants, Pakistan is the second most populous Islamic country after Indonesia. Located in South Asia, the country borders China, India, Afghanistan, and Iran and is also a member of the UN, the World Trade Organization, and the Organization for Economic Cooperation. The capital is Islamabad has about a million inhabitants, while the largest city of Karachi has about 15 million inhabitants.  Pakistan has been growing in GDP for years, while in 2022, it is expected to grow by 4% in GDP.

Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

Sole proprietorship in Pakistan

The easiest way to open your business in Pakistan is as a sole proprietor. About 80% of businesses in Pakistan open as sole proprietorships due to the ease of the process. Business opportunities and economic growth are contributing to a large number of people from abroad opening sole proprietorships in Pakistan.

If you seek business opportunities in Pakistan, this article will make the registration process easier for you.

How to register a sole proprietorship in Pakistan

The registration process of a sole proprietorship has several steps:

  • Registration of a unique business name
  • Making a business stamp (cost around 500 Rs)
  • National Tax Number registration (NTN)
  • Creation of a dedicated bank account

The document proving your business's establishment, and the only document you will receive is the NTN containing all your data.

Business name registration in Pakistan

Before you decide on the business name, you can check its availability online through the eService portal. After reviewing the name's availability, you can make a reservation of the name on the same website. All you need to do is to create an account and complete the reservation with your ID, telephone, address, and email information.

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National Tax Number (NTN) Registration in Pakistan

To obtain your National Tax Number (NTN), you must create an account on the Federal Board of Revenue website. (There is also the possibility of offline registration.) On the website, choose the registration for unregistered persons and fill in the required information. To confirm your identity, you will receive a six-digit number to your email or phone. After a few minutes, check the completed task folder, read From 181 (the Oder to Grant or Refuse Registration on application), and print the document.

Taxation system in Pakistan

The Value Added Tax (VAT) is locally known in Pakistan as Sales Tax and is ordinarily levied at 17%. When it comes to taxes on imports and exports in Pakistan, they depend on what is imported and exported, as well as on the value of goods. In practice, if you import something that has a value of less than EUR 150, you will not pay the tax, while above that, the tax rate starts from 2.5% and increases depending on the type of goods.

If you want to make a VAT refund, you can do it online by filling out the online form. VAT refund is applied in December for the current year.