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Pakistan is a South Asian nation that is officially known as the Islamic Republic of Pakistan. With a population of about 242 million people, it is the world's fifth-most populated nation and home to the world's second-largest Muslim population. Pakistan is the 33rd-largest nation in terms of land area, with an area of 881,913 square kilometers (340,509 square miles). It has a 1,046-kilometer (650-mile) coastline along the Arabian Sea and Gulf of Oman in the south, and is bounded to the east by India, to the west by Afghanistan, to the southwest by Iran, and to the northeast by China. It has a sea border with Oman and is separated from Tajikistan by Afghanistan's Wakhan Corridor in the north.
Pakistan is home to various ancient civilizations, notably the 8,500-year-old Neolithic site of Mehrgarh in Balochistan and the Bronze Age Indus Valley Civilisation, the most widespread of Afro-civilisations. Eurasia's The Achaemenid; briefly that of Alexander the Great; the Seleucid, the Maurya, the Kushan, the Gupta; the Umayyad Caliphate in its southern regions, the Hindu Shahis, the Ghaznavids, the Delhi Sultanate, the Mughals, the Durranis, the Sikh Empire, British East India Company rule, and, most recently, the British Indian Empire from 1858 to 1947 ruled the region that is now Pakistan
The Pakistan Movement, which sought a homeland for British India's Muslims, and electoral wins by the All-India Muslim League in 1946 fueled the movement. Pakistan obtained independence in 1947, after the British Indian Empire's Partition, which granted separate states to its Muslim-majority areas and was followed by unprecedented mass migration and loss of life. Initially, a British Commonwealth Dominion, Pakistan formally adopted its constitution in 1956 and emerged as a proclaimed Islamic nation. After a nine-month civil war, the exclave of East Pakistan declared independence as the new nation of Bangladesh in 1971. Pakistan was controlled by regimes whose descriptions, although complicated, often fluctuated between civilian and military, democratic and authoritarian, largely secular and Islamist. Pakistan chose a civilian administration in 2008 and a parliamentary system with periodic elections in 2010.
Pakistan is a middle-power country with the world's sixth-largest standing military forces. It is a proclaimed nuclear-weapons state with a big and quickly increasing middle class, and it is listed among the emergent and growth-leading economies. Since independence, Pakistan's political history has been marked by times of considerable economic and military expansion, as well as periods of political and economic turmoil. It is a nation with a diversified ethnic and linguistic population, as well as a diverse terrain and fauna. Poverty, illiteracy, corruption, and terrorism remain major issues in the nation. Pakistan is a member of the United Nations, the Shanghai Cooperation Organization, the Organization of Islamic Cooperation, the Commonwealth of Nations, the South Asian Association for Regional Cooperation, and the Islamic Military Counter-Terrorism Coalition, and the United States considers it to be a major non-NATO ally.
In Pakistan, employees are entitled to 14 days of paid vacation. They receive this immediately after completing 12 months of service. Employees are paid their regular salaries while on leave. Before the start of the leave, factory workers are paid half of their wages. Annual leave cannot be broken up into smaller chunks and must be used in its whole. Unused vacation time is carried over to the next year. The maximum amount of transferable days is 14.
Pakistan recognizes seventeen public holidays.
10 days of unpaid absence in the event of an emergency, such as a sudden sickness or other pressing need.
Employees are paid for 16 days of sick leave at full pay and 8 days at half pay, but must submit a medical certificate signed by a doctor.
Employers can provide employees ill benefits for a total of 121 days at 75 percent of their last wage after the initial 16 days of sick leave. Employees who have TB or cancer are granted a maximum of 365 days off and are paid in full.
To be eligible for benefits, the employee must have contributed for at least 90 days in the six months before to sickness or injury.
Employees who are female are entitled to three months of paid maternity leave. The six-week maternity leave is required. To be eligible for maternity leave, an employee must have worked for the same company for at least four months before to giving birth. While a woman is on maternity leave, her employer is not allowed to fire her.
To be eligible for benefits, the employee must have contributed for at least 180 days in the year prior to the projected birth of the child.
For each of their first three children, qualified fathers will earn one month of paid leave.
There are no statutory laws regarding parental leave in Pakistan.
If a female employee's spouse dies, the company is required to offer paid Iddat leave. This is a period during which the employee gets paid at his or her regular rate.
Either party may end the contract by giving the other party one month's notice. The same restriction does not apply to temporary employees, "badlis" (alternative employees who fill in for an absent permanent employee or probationer), or probationers. They do not have the right to a one-month notice. A terminated employee for any reason other than misconduct shall receive a severance payment of one month for each completed year of service or portion thereof in excess of six months. One month's salary, computed on the average of the last three months of service prior to termination, must be paid immediately or the next day.
No notice is necessary when firing full-time employees for misconduct. Termination may be based on significant illness, inability to do the job adequately, or the organization's financial and economic demands. Employers have the right to terminate an employee's employment contract if the employee is accused of misconduct such as breaking the law, being absent without leave, willful disobedience, causing damage to the employer's property, theft, fraud, illegal strike or work slowdown, or committing a crime, civil or criminal.
All terminations must be in writing and include a statement of the reasons for the dismissal. Labor courts have the authority to investigate and intervene in labor disputes.
In Pakistan, the notice period is one month.
In the private sector, an employee's probationary period is typically between three and six months. Probationary periods are generally between one and two years in the public sector.
When employees are terminated for reasons other than misconduct, they are entitled to severance pay. Severance pay is equal to 30 days' wages for each year of service completed or any portion exceeding six months. For instance, 5 years and 8 months of service is considered 6 years.
In Pakistan, the standard workweek is nine hours per day and 48 hours per week spread over six days. Each employee receives a one-hour break daily and is not permitted to work for more than six hours without taking a break. Employees who work more than 8.5 hours per day are entitled to a minimum of two breaks. Employees who are female are not permitted to work past 7:00 p.m. Seasonal employees may work up to 50-56 hours per week if necessary for technical reasons.
It is illegal for an employer to require an employee to work ten consecutive days without a holiday. No employee is permitted to work on Sunday unless they have been granted a substitute holiday within the next or previous three days.
Employees entitled to overtime pay if they work more than the stipulated 9 hours per day and 48 hours per week. In Pakistan, overtime pay is 200 percent of the employee's regular pay. Employees receive a pay rate of 300 percent during the holidays.
In Pakistan, the minimum wage varies by area.
Pakistan increased its monthly minimum pay for unskilled employees to PKR 17,500, or approximately $115, in 2019. The minimum monthly salary in the Punjab province has been raised to PKR 20,000 for 2021. There is no minimum wage for skilled workers in the nation. This is instead discussed between the employer and the employee.
Healthcare in Pakistan is regarded as one of the most corrupt industries, with just 0.8 percent of the country's GDP presently allocated to health care. Pakistan has no national health insurance system, and 78% of the population pays for health care out of pocket. Pakistan is the only nation in the world that does not have a National Health Ministry.
In Pakistan, healthcare is provided through costly private-sector insurance firms. Employees who go on pilgrimage, such as Hajj, Umra, or Ziarat, are given exceptional leave of up to 60 days under certain Collective Bargaining Agreements.
Some businesses provide medical insurance, life insurance, and tuition reimbursement.
A resident corporation gets taxed on its global earnings. Non-resident corporations that operate in Pakistan via a branch are taxed on their Pakistan-sourced revenue attributable to the branch at the corporate rate.
The federal corporate tax rate on taxable income of banking companies is set at 35 percent. For any other public company, the rate is reduced at 29 percent. For companies categorized as small enterprises, the rate is 21 percent.
Pakistan imposes a tax on its citizens' global income. A non-resident person is only taxed on income derived from Pakistan, which includes money received or considered to be received in Pakistan, as well as income deemed to accrue or originate in Pakistan.
For a taxable income between PKR 0 to PKR 600,000, the tax rate is 0.
For a taxable income between PKR 600,000 to PKR 1,200,000, the tax rate is 5 percent.
For a taxable income between PKR 1,200,000 to PKR 1,800,000, the tax rate is 10 percent.
For a taxable income between PKR 1,800,000 to PKR 2,500,000, the tax rate is 15 percent.
For a taxable income between PKR 2,500,000 to PKR 3,500,000, the tax rate is 17.5 percent.
For a taxable income between PKR 3,500,000 to PKR 5,000,000, the tax rate is 20 percent.
For a taxable income between PKR 5,000,000 to PKR 8,000,000, the tax rate is 22.5 percent.
For a taxable income between PKR 8,000,000 to PKR 12,000,000, the tax rate is 27.5 percent.
For a taxable income between PKR 12,000,000 to PKR 30,000,000, the tax rate is 30 percent.
For a taxable income between PKR 30,000,000 to PKR 50,000,000, the tax rate is 32.5 percent.
For a taxable income over PKR 75,000,000, the tax rate is set at 35 percent.
VAT (sometimes known as "sales tax") is normally collected at 17 percent on the value of products, unless expressly exempted or subject to sales tax at a lower rate, after accounting for relevant input credits.
All four provinces, Islamabad Capital Territory, Gilgit-Baltistan, Azad Jammu and Kashmir, levy a sales tax on services at rates ranging from 13% to 16%.
With a few exceptions, sales tax paid on services, federal sales tax on products, and federal excise duty are all adjustable against each other.
Certain persons/sectors' supplies are subject to particular sales tax regimes (e.g., retail price/fixed tax regime) or otherwise subject to lower sales tax rates.
Commercial imports are liable to 3% VAT in addition to the normal rate of sales tax at the time of importation.
Local supplies produced by individuals working in the five export-oriented industries (textile, leather, footwear, surgical products, and sport goods) are subject to sales tax at the relevant rate of 17%, with a lower rate facility available in some circumstances.
Once authorized by the Board of Investment, work visas are typically provided for one year; they must be renewed and re-approved on an annual basis. Pakistan offers many visa applications for various nations, each with its own set of criteria and degrees of responsibilities.
Foreign workers wishing to work in Pakistan must get a working visa from the Pakistani Consulate in their home country. An official invitation/letter from the Chamber of Commerce and Industry on behalf of the sponsoring firm in Pakistan is required for the visa. The letter must include information such as the duration of stay, the location of the stay, and so on.
Once a three-month work visa is approved, a candidate may apply for an extension of up to two years with numerous entries.
An employee may seek for permanent status after two years of service.
In Pakistan, employment contracts might be written or informal. Employers often sign a formal contract or appointment letter that defines the terms and circumstances of the employment relationship. Contracts should include the following provisions:
Employer and employee names
Employment start date
Employment time frame (if for a fixed term)
Detailed job description
Probation time (if applicable)
Position has been allocated
Salary and payment information
Working hours Holidays
Wage deductions (fines, absence, damage, taxes)
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Before you can learn how to set up a Pakistan subsidiary, you must first decide where your actual office will be in Pakistan. Similarly to how various states have their own laws, different areas may have distinct subsidiary laws as well as cultural aspects that might influence how you manage your business.
You must also pick which company entity is most suited to your objectives. Companies in Pakistan may form a limited liability company (LLC), a free zone business (EPZ company), a limited liability partnership (LLP), a public limited company (joint stock company), a representative office, and other structures. The most prevalent is an LLC, however each business has its own incorporation process.
The following are the stages to forming an LLC:
1. Obtaining the Securities and Exchange Commission's approval for your company's name
2. All application costs must be paid via a recognized Muslim Commercial Bank (MCB)
3. Establishing a bank account in the nation
4. Signing a statement of conformity and a business memorandum, then providing a list of company leaders
5. Using the National Institutional Facilitation Technologies to get a digital signature (NIFT)
6. Registering with the Federal Board of Revenue's Regional Tax Office
7. Depending on where you live in Pakistan, you may need to register with a social security agency.
8. Registering with the Department of Labor
Before you establish a subsidiary, you must first get familiar with all of Pakistan's subsidiary laws. These rules also differ by entity and area, so it's critical to discover which ones apply to you.
Typically, LLCs must be registered with two directors and two stockholders, as well as a $1,000 minimum capital requirement. Non-resident directors and shareholders are permitted, however they must register for an NTN number with the local tax department. If your share capital exceeds $5,000, the Pakistani government requires you to have a legal counsel who resides in Pakistan.
In general, forming an LLC in Pakistan takes roughly six weeks. Your registration will also need permission from the Board of Investment, as well as authorization from the Ministry of Interior.