05-06-2010, 02:21 AM
I need help in understanding the process of tax in pakistan and setting up a company as I live outside pakistan.
I am a pakistani citizen.
I want to setup a private ltd. IT company in pakistan and provide IT services to some of middle east and EU clients.
1) To my knowledge Income from exports of computer software or IT services or IT enabled services is exempt from tax upto the period ending on 30th day of June, 2016.(See Clause 133 of Second Schedule of ITO,2001)
<b>So this means no corporation tax to pay. Correct?.</b>
2) I will put myself as an employee and director of the company or my brother (in pakistan) will be director & I will be the employee.
a)So whatever salary I set I will be able to draw salary from the company and appropriate tax paid on salary as per regulations.
b) <b>For dividends I have heard that 10%</b> is the flat tax rate. Not sure whether there are limits like 5 lakhs, 10 lakhs etc and dividend tax rate goes higher after that.
c) Are there any good and cost effective companies that you know who will help in me setting up the paperwork for company and deal with tax affairs/payroll etc. Also do you know what charges they take roughly and what they cover.
d) I might have to higher few outside pakistan consultants to complete the project. I can put them <b>on payroll of my company </b> and pay them but than resident and non-resident pakistan laws might kick in.
if I pay to their companies in EU on a fixed term contract basis that might work out to be the easiest option in terms of paperwork. <b>Isn't it? </b>
They will invoice my company for the work they do. <b>Are they additional tax that are levied by pakistan gov for these services.</b> I mean if they charge me X. Would I have to pay X+Y where Y being the tax levied by pakistan government. I mean like import where you have pay duty etc
e) <b>What happens if I close my company after 6months -2 years.</b> Are there any legal requirements that I can't do since I have paid no corporation tax. reason I am asking is that if the business is not that successful as I think now.
Appreciate your help.
triwhdxk
I am a pakistani citizen.
I want to setup a private ltd. IT company in pakistan and provide IT services to some of middle east and EU clients.
1) To my knowledge Income from exports of computer software or IT services or IT enabled services is exempt from tax upto the period ending on 30th day of June, 2016.(See Clause 133 of Second Schedule of ITO,2001)
<b>So this means no corporation tax to pay. Correct?.</b>
2) I will put myself as an employee and director of the company or my brother (in pakistan) will be director & I will be the employee.
a)So whatever salary I set I will be able to draw salary from the company and appropriate tax paid on salary as per regulations.
b) <b>For dividends I have heard that 10%</b> is the flat tax rate. Not sure whether there are limits like 5 lakhs, 10 lakhs etc and dividend tax rate goes higher after that.
c) Are there any good and cost effective companies that you know who will help in me setting up the paperwork for company and deal with tax affairs/payroll etc. Also do you know what charges they take roughly and what they cover.
d) I might have to higher few outside pakistan consultants to complete the project. I can put them <b>on payroll of my company </b> and pay them but than resident and non-resident pakistan laws might kick in.
if I pay to their companies in EU on a fixed term contract basis that might work out to be the easiest option in terms of paperwork. <b>Isn't it? </b>
They will invoice my company for the work they do. <b>Are they additional tax that are levied by pakistan gov for these services.</b> I mean if they charge me X. Would I have to pay X+Y where Y being the tax levied by pakistan government. I mean like import where you have pay duty etc
e) <b>What happens if I close my company after 6months -2 years.</b> Are there any legal requirements that I can't do since I have paid no corporation tax. reason I am asking is that if the business is not that successful as I think now.
Appreciate your help.
triwhdxk
