Pakistan
Two hundred and forty million people and duty-free access to the Union under GSP+ — a market to buy from as much as to sell to
Pakistan is the world's fifth most populous state and has two faces for a European firm. As a supplier it is exceptionally competitive: under GSP+ most of its exports enter the Union duty-free, which in textiles, surgical instruments from Sialkot, leather and sporting goods means a price Europe cannot match. As a market it is demanding: tariffs are high and change every year with the finance act, profit tax is 29 % plus surcharges, and the foreign-exchange position has repeatedly restricted the opening of letters of credit. Anyone selling machinery here normally does it through a local distributor, and with attention to securing payment.
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Setting up a company
Setting up a company and tax are the part of the profile you cannot assemble elsewhere in an afternoon. The rest of the page is open.
- ·Legal forms
- ·How long registration takes
Taxes
Setting up a company and tax are the part of the profile you cannot assemble elsewhere in an afternoon. The rest of the page is open.
- ·Corporate income tax
- ·VAT
Visas and residence
Setting up a company and tax are the part of the profile you cannot assemble elsewhere in an afternoon. The rest of the page is open.
- ·Short stay
- ·Work permit
Investment opportunities
Setting up a company and tax are the part of the profile you cannot assemble elsewhere in an afternoon. The rest of the page is open.
- ·Where the capital goes
What it makes and needs
Textiles and clothing (the largest export), surgical and dental instruments from Sialkot, leather and leather goods, sporting goods, rice and agricultural produce, cement. It imports machinery, transport equipment, chemicals, steel and fuel.
Money and payments
This is the principal risk of trading with Pakistan, and it is not counterparty risk but country risk. Foreign-exchange reserves have repeatedly come under pressure, and in those periods the central bank restricts the opening of letters of credit and the approval of payments abroad — the shipment is ready, the customer is solvent, and the money still does not leave. So sales here are made against an irrevocable letter of credit confirmed by a European bank, or against payment in advance, and the delivery period runs from the opening of the credit.
Bringing their goods into the EU
GSP+ — DUTY-FREE ACCESS TO THE UNION. Pakistan holds GSP+ status with the European Union, so most of its exports enter the European market duty-free. GSP+ is not a permanent state: it is conditional on ratifying and actually applying 27 international conventions on human rights, labour rights, environmental protection and good governance, and the Union monitors and reviews it regularly. From 1 January 2027 a new EU GSP Regulation applies (signed 18 June 2026, for ten years), under which GSP+ requires 32 conventions. A calculation that assumes it will still be there in five years carries an open risk — on a long-term contract that belongs in a change-of-circumstances clause.
Outlook
What to watch: the level of foreign-exchange reserves and the IMF programme, because whether a letter of credit can be opened depends directly on them; the Union's review of GSP+, which decides duty-free access for Pakistani exports; and the progress of CPEC projects including the port of Gwadar.
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