Shared services hub Pakistan: Accessing global talents, operational scale and competitive tax advantages
International companies looking to outsource internal routine tasks – such as IT, finance, or customer service – will find favourable conditions in Pakistan, ranging from highly qualified personnel and a broad technology sector to ideal tax conditions. Ecovis experts explain the details.
With a population of around 255 million, Pakistan is the fifth most populous country in the world, and a young one. It has a large and long-established accounting and finance profession, whose members have been working in the Gulf, the UK and North America for decades, and a technology sector that has grown steadily on the back of service exports. Operating costs compare well with the established outsourcing destinations in the region. These are the conditions shared service centres look for.
What international groups are already doing here
Centres operating in Pakistan today handle accounting and finance, payroll, HR, IT support, customer service and back-office administration for international companies in Europe, North America and the Middle East. The work is no longer confined to routine processing. Several centres now support month-end close, group reporting and internal audit.
We minimise the operational complexity of market entries and support companies by providing comprehensive, end-to-end services for incorporation and business operations from a single source.
Israr Khan, Partner, ECOVIS KRW Khilji Rahat Waheed, Chartered Accountants, Islamabad, Pakistan
Favourable tax situation
Exporting IT and IT-enabled services attracts a concessional rate on gross receipts, as low as 0.25% for exporters registered with the Pakistan Software Export Board, subject to the prescribed conditions being met. Other exported services are taxed on a different basis. The concession is granted through the annual Finance Act and has been extended more than once, so the position for the relevant tax year should be confirmed before any commitment is made.
What companies should do and consider
Before setting up or use a shared services hub in Pakistan, companies should clarify two points:
- Whether the planned service areas fall under the incentive scheme, as this classification determines the entire business case.
- The company’s legal form and the associated registration requirements.
Rectifying either of these points at a later stage would be costly.
