From Our Correspondent
KARACHI: With the deepening of the construction of China-Pakistan Economic Corridor and the strengthening of economic and trade exchanges between China and Pakistan, more and more Chinese enterprises are coming to the Pakistani market to develop their business. To improve efficiency and reduce unnecessary trouble, it is imperative for Chinese enterprises to understand Pakistan’s economic environment and legal framework.
Under the support of the All-Pakistan Chinese Enterprises’ Association, the Industrial and Commercial Bank of China Ltd Karachi Branch organized an online lecture on Legal Overview of Pakistan by Mr. Ziad Munawar Shaikh, senior legal adviser of ICBC Karachi Branch. About 80 representatives of China-funded enterprises attended the lecture and their questions on the contract law and other issues were answered on the occasion.
Pakistan is a parliamentary democracy with a federal system of government. Legislative competence and executive authority with respect to various subjects are split between the federation and the provinces. Mr. Ziad Munawar Shaikh explained that the country has a bicameral federal legislature, known as the Parliament or Majlis-e-Shoora, comprising the National Assembly and the Senate, whereas the provincial legislatures (known as the provincial assemblies) are unicameral. An Act of Parliament (i.e. any legislation) must be passed by a quorum in both houses of Parliament (i.e. Senate and National Assembly) and receive the President of Pakistan’s assent.
Pakistan has bilateral and multilateral trade agreements with several nations and is a member of WTO, South Asia Free Trade Area and has a free trade agreement with China. Its exports include textiles, rice, surgical instruments, leather goods, rice, cement, and fruit and vegetables. The government is making it an investment-friendly destination. “All sectors of the economy, except arms and ammunition, nuclear energy, currency and security printing and mint are open to foreign investors. There is no maximum cap on the shareholding that may be held by foreign investors except in certain sectors including commercial aviation, and print and electronic media.” Mr. Ziad Munawar Shaikh introduced.
He also gave answers to the tax issues that apply to cross-border or foreign-owned businesses and investors. “For tax purposes, locals and foreigners are treated alike. Equity investments made by foreign investors are subject to withholding tax on dividends and profit on debt. Dividends payable to foreign shareholders of Pakistani companies are subject to withholding tax on dividends. Similarly, profit on a debt payable to foreign investors is subject to withholding tax. The rate of corporate tax imposed on the taxable income of a company (other than a banking company) is currently 35 percent.”
