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SECP · PSEB · Equity · ESOP · Seed Funding · 2026

Pakistan startups face tax traps
at every growth stage.

From choosing the right incorporation structure to managing founder equity, PSEB export exemptions, angel round compliance, and employee ESOPs — each stage has a distinct set of FBR and SECP obligations. Getting these wrong early is expensive to fix later.

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Key startup tax facts

Pakistan corporate income tax rate (standard) 29%

Income tax on IT export income with PSEB registration 0%

Withholding tax on dividends paid to shareholders 15%

Tax credit available for Angel investors (conditions apply) 100%

Minimum tax: 1% of turnover even if company shows a loss Section 113

Window to report foreign investment receipt to SBP 30 days

Tax & compliance by growth stage

What you need at every stage.

Pakistan startup compliance isn't a one-time event — it evolves as you incorporate, hire, fundraise, and scale. Here's the full map.

Pre-incorporation

Choose the right entity structure (private limited, SMC, or LLC)
Founder agreements and equity split documentation
Pre-incorporation tax planning

SECP Registration

SECP company incorporation (private limited)
Memorandum and articles of association
NTN registration for the company
Opening business bank account

PSEB & IT Exemptions

PSEB registration for IT/tech companies
Zero-tax exemption on export income
SBP foreign currency account setup
Export proceeds retention entitlement

Fundraising Round

Shareholder agreement tax review
Angel investor exemption documentation
Equity valuation for ESOP and investor entry
SBP reporting for foreign investment

ESOP Pool Setup

ESOP scheme design with FBR compliance
Employee share option agreement templates
Tax modelling for exercise scenarios
Ongoing compliance as options vest/exercise

Ongoing Compliance

Monthly payroll WHT deductions and filing
Quarterly advance income tax payments
Annual corporate tax return
Sales tax / SRB registration if applicable

PSEB registration = 0% income tax on IT export income

Pakistan Software Export Board registration gives IT/tech companies a full income tax exemption on foreign currency earnings. Combined with SECP private limited status, it is the single most valuable tax benefit available to Pakistani tech startups. The window to apply is open — but requires active compliance with PSEB conditions to maintain the exemption.

0% Tax on IT
export income

Our startup services

From day zero to Series A and beyond.

SECP incorporation

Private Limited Company registration — memorandum and articles, share structure, director/shareholder setup. Combined with NTN registration and bank account documentation.

PSEB & IT export exemption

PSEB registration for software/IT companies. We handle the application, documentation, and ongoing annual renewal to maintain your 0% tax status on export income.

Fundraising compliance

Shareholder agreement tax review, equity valuation for investor entry, SBP reporting for foreign currency investment, and angel investor tax credit documentation.

ESOP scheme design

Design employee stock option schemes that comply with FBR rules. Model the tax impact at exercise, structure vesting terms, and prepare the legal framework for the ESOP pool.

Monthly payroll & WHT

Monthly payroll processing, withholding tax deductions, and FBR e-filing of salary withholding statements. Keeps you compliant as you hire and scale the team.

Annual corporate tax return

Full corporate income tax return on FBR IRIS — financial accounts, tax computation, deductions, advance tax adjustments. Filed on time, every year, with proper documentation trail.

Pakistan startup tax questions

Founder questions answered directly.

Should I incorporate in Pakistan or set up a foreign company?

It depends on your revenue source and investor base. If you are serving Pakistani customers and plan to raise from local investors or apply for government grants (SMEDA, IGNITE, PSEB), a SECP private limited company is the right structure. If you want to raise from international VCs or list on a US accelerator, a Delaware C-Corp with a Pakistani subsidiary is the standard playbook. We map your specific situation to the right structure.

Is the capital raised from investors (seed/angel rounds) taxable?

Equity investment itself is not income — it increases your share capital. However, if investors receive shares at a discount to fair market value, FBR may treat the discount as a benefit in the recipient's hands. Angel investors in SECP-registered startups may qualify for a 100% tax credit on their investment under the Angel Investor tax incentive scheme (if conditions are met).

How do ESOPs (Employee Stock Option Plans) work for tax in Pakistan?

ESOPs granted to employees are complex. FBR treats the benefit as employment income at the time of exercise (not grant or vesting). The income is the difference between the exercise price and fair market value on the exercise date, taxed at the employee's marginal income tax rate. We structure ESOP plans with this in mind to minimise the tax hit for employees when they exercise.

What is PSEB registration and how does it help tax-wise?

Pakistan Software Export Board (PSEB) registration is available to IT/tech companies and gives access to: zero income tax on export income (under the Technology Companies Ordinance or exemptions), reduced WHT rates, and eligibility for government tech sector benefits. PSEB registration requires SECP incorporation, a minimum team, and IT-service-focused operations. We handle the full PSEB registration process.

How is foreign investment (wire transfers in USD) treated by FBR?

Foreign currency received as equity investment (not revenue) must be reported to the State Bank of Pakistan within 30 days. It appears in your company's financial statements as share capital or premium, not as income. FBR will cross-check large USD inflows against your filing. Undisclosed or unexplained foreign transfers trigger FEMU (Foreign Exchange Monitoring Unit) scrutiny in addition to FBR.

At what point does our startup need to start paying corporate tax?

SECP-incorporated private limited companies pay income tax on net profit at 29% (standard corporate rate). Startups with no profit have no tax liability. However, they still must file an annual tax return even with zero income, or face penalties. Minimum tax under Section 113 (1% of gross turnover) may apply once turnover exceeds PKR 10 million, even if the company is loss-making.

What tax issues arise when a founder takes a salary vs. dividends?

Founder salary: deductible from company profit, but subject to income tax (WHT deducted monthly) at personal income tax slab rates. Dividends: paid from after-tax profit, subject to 15% withholding tax for individual shareholders. For most early-stage founders, taking a modest salary and reinvesting profits is more tax-efficient than dividend distributions. We model the optimal mix for your stage.

SECP · PSEB · FBR — all handled

Build your startup on a
clean compliance foundation.

Wrong structure early costs you at fundraising. Missing PSEB costs you 0% tax every year. Getting ESOP wrong creates angry employees at exit. We get these right from the start.

Book startup tax consultation → WhatsApp your question

SECP · PSEB · FBR · SBP · ESOP · Angel rounds

Pakistan startups face tax trapsat every growth stage.