How can a foreign company open a branch office in Pakistan?

A foreign company seeking to establish a branch office in Pakistan ordinarily requires permission from the Board of Investment (BOI) and registration of its place of business with SECP under the applicable law. The branch is a presence of the overseas legal entity rather than a separately incorporated Pakistani subsidiary. Its permitted operations may be limited to the specific contracts and purpose set out in BOI permission.

BOI's current published guidance explains that a branch office may be established to fulfil contractual obligations with public or private sector entities in Pakistan, with activities restricted to the agreement or contract and no general commercial trading. A liaison office has a different representative function. The proper structure depends on what the foreign investor intends to do.

Branch versus subsidiary

A locally incorporated subsidiary is its own company with shares, directors and corporate obligations. A foreign branch remains part of the parent company's legal enterprise.

The distinction affects liability, contracting, tax, foreign exchange and investor participation. The foreign parent may be directly exposed to obligations incurred by the branch under relevant law.

A business seeking ongoing local trading should compare the subsidiary route before assuming a branch is appropriate.

BOI permission

The Board of Investment grants relevant permissions for branch and liaison offices. The application must identify the foreign parent and the intended Pakistan operations.

BOI's published checklist includes an application, authenticated parent company incorporation and constitutional documents, corporate authorisation, company profile and particulars of the local representative.

For a branch, a copy of the contract supporting the proposed presence is generally relevant.

Activity limitations

Permission may restrict the branch to specified contractual work. The foreign company should not assume it can use the office to undertake unrelated import, retail or consulting business.

If the underlying contract is extended or replaced, review the BOI approval conditions and current renewal or amendment process.

A project office authorised for installation of equipment is not necessarily a licence to distribute products generally.

The liaison-office alternative

A liaison office may promote products, offer technical assistance and explore collaborations within BOI's published restrictions.

It is generally not intended to conduct commercial or trading activity. Its employees should not automatically enter into local sales contracts outside its permission.

The applicant should describe proposed activity accurately rather than choose an office type solely on lower expense.

Authenticate foreign records

The parent must ordinarily produce corporate registration documents, constitutional instruments and properly authorised board resolutions.

BOI guidance refers to attestation of specified documents by the relevant Pakistani embassy. Confirm current legalisation and translation requirements.

Incomplete records or documents signed by an unauthorised representative can delay permission and subsequent SECP registration.

Appoint a representative

The parent should identify an authorised person for filings, communications and local administration.

The authority letter must be sufficiently precise for the functions intended. Authority to register the office does not automatically grant unlimited powers to borrow or dispose of parent assets.

Where the representative is a foreign national, immigration and work permission require separate consideration.

SECP foreign-company registration

After securing BOI permission, the foreign company should register its place of business with SECP according to the Companies Act, 2017 and Companies Regulations, 2024.

SECP's official foreign-company FAQs identify BOI permission as a prerequisite to the relevant SECP registration route.

A successful SECP filing does not enlarge the scope of BOI's underlying permission.

Reporting and local records

The registered foreign company may have obligations concerning changes of registered place, parent corporate information, authorised persons and prescribed reports.

Maintain a register of deadlines and keep local filings consistent with parent company decisions.

An overseas restructuring or change of company name may require updates in Pakistan rather than merely amending the foreign records.

Permission duration and renewal

BOI guidance describes permissions generally for one to five years, renewable upon fulfilment of prescribed conditions.

Renewals may require current project contracts, financial statements, tax records and other supporting material, depending on the office category.

The company should start renewal preparations before expiry. An extended customer contract does not automatically extend regulatory permission.

Tax and permanent establishment

Branch operations can create Pakistani tax obligations under the Income Tax Ordinance, 2001. Double taxation agreements and the facts of the parent company's activity may affect the assessment.

The business should examine income attributable to Pakistani operations, withholding, employees and related-party charges.

Obtaining BOI permission is not equivalent to an exemption from corporate income tax.

Banking and foreign exchange

A local bank may require permission documents, SECP registration, parent authorisations, beneficial-owner details and other KYC material.

Funding, project receipts and repatriation must comply with State Bank foreign exchange requirements and banking procedures.

Operating through an individual employee's bank account can create serious accounting and compliance problems.

Contracts and guarantees

The parent should consider governing law, dispute resolution, performance security, insurance and the potential enforcement of liabilities.

A contract signed locally should identify the legal entity correctly as the foreign company acting through its branch.

The local representative's authority should be evidenced, and the parent should understand the effect of warranties or guarantees given.

Personnel and visas

Pakistani employees require lawful contracts and compliance with applicable labour and payroll requirements. Foreign specialists may need appropriate visas or work authorisation.

BOI approval does not replace immigration, labour or social security obligations.

Contracts should clarify reporting lines, workplace location and the identity of the employer.

A project illustration

An overseas technology supplier wins a three-year installation contract with a Pakistani government authority. It needs a small office for engineers and contract administration.

A BOI-authorised branch may be suitable if the permitted scope matches the contract, followed by SECP, tax and banking registration.

If it then proposes general sales to consumers, counsel should reassess the structure and permissions rather than rely on the original project approval.

Opinion and recommended course

A foreign company may establish a Pakistan branch after obtaining BOI permission and completing SECP foreign-company registration, with activities confined to authorised purposes.

Identify actual operations, compare branch and subsidiary alternatives, authenticate parent documents, secure BOI permission, complete SECP and tax formalities and maintain renewal, employment and foreign exchange compliance.

Principal sources: BOI, Branch/Liaison Office (invest.gov.pk/branch-liaison-office); SECP, FAQs regarding Foreign Company; Companies Act, 2017; Companies Regulations, 2024; Income Tax Ordinance, 2001.