Pakistan
0.25% IT export tax locked through 2036; SECP + State Bank of Pakistan; ESFCA 50% USD retention.
Pakistan is the home market this manual was written from. The regulatory stack is workable but unusual — the State Bank of Pakistan controls almost every USD flow, the IT export tax regime is the best in the world (0.25% locked through 2036), and Mercury banned Pakistan-resident accounts in July 2024. This is the operational reality for a Lahore or Karachi founder building a Delaware C-corp in 2026.
Entity
The standard Pakistan vehicle for a founder building a US-bound startup is a Single-Member Private Limited Company (SMC-Pvt Ltd) registered with the Securities & Exchange Commission of Pakistan (SECP) under the Companies Act 2017. Online incorporation through the SECP eServices portal: 3–7 working days; total fees PKR 25–60K (~$90–215). For two-or-more founders, a regular Pvt Ltd is the same cost and timeline.
Mandatory follow-on registrations:
If you are flipping (Pakistan Pvt Ltd → Delaware Inc), the Pakistan side requires SBP approval for share-swap, valuation by a SECP-licensed valuer, and tax clearance — typically 6–12 months and PKR 5–15M legal cost. Most US VCs require the flip pre-Series A. See Chapter 1, "The Delaware Flip".
FX and capital control
The single most important FX framework for a Pakistan founder is the State Bank of Pakistan Foreign Exchange Manual (Chapters 13 and 14). Read it once — every USD flow in or out of Pakistan operates within its rules.
Since the SBP October 2023 update, PSEB-registered IT/ITES exporters can retain up to 50% of export proceeds (or USD 5,000/month, whichever is higher) in an Exporter's Special Foreign Currency Account (ESFCA) at HBL, Meezan, UBL, or Bank Alfalah. The remaining ~50% must be converted to PKR at the interbank rate (mandatory surrender). ESFCA funds can be used for permitted outward remittances — cloud bills, SaaS subscriptions, dividend repatriation, overseas payroll — without case-by-case SBP approval.
Practical consequence: structure your Delaware Inc → Pakistan Pvt Ltd as an intercompany services agreement (cost-plus 7–8%), receive USD into Pakistan via ESFCA, retain 50% USD (operating expenses, payroll, cloud, dividend) and convert 50% to PKR (local payroll, statutory contributions, office costs). Every wire still requires an M-Form SBP filing through your bank — ESFCA does not eliminate documentation, only pre-approval.
IT export incentive
The 0.25% final tax on export proceeds, locked in through June 30, 2036. Section 154A of the Income Tax Ordinance 2001, extended by Finance Act 2025. PSEB-registered IT/ITES exporters pay a final 0.25% tax on gross export proceeds — no further income tax, no minimum tax. Non-PSEB-registered entities pay 1% (still attractive, but four times higher).
Conditions:
- At least 80% of foreign earnings must arrive through approved banking channels (SWIFT, ESFCA, M-Form documented).
- Continuous PSEB registration. Lapsed registration drops you to the standard 29% corporate rate retroactively.
- Salaries paid by PSEB-registered companies enjoy a 75% reduction on income tax for the engineer — if your senior engineer earns PKR 600K/month, their personal tax bill is roughly a quarter of what a non-PSEB employer would withhold. This is the fact that makes Pakistan tech salaries competitive on a take-home basis even at lower gross numbers.
This regime is the single most founder-friendly IT export incentive in the manual. Treat it as a strategic asset — the difference between PSEB-registered (0.25% + 75% salary discount) and non-registered (29% + full salary tax) is roughly $300K/year for a 25-engineer team at $35K all-in cost. Do not skip the registration to save five days.
Hiring engineers
2025 Lahore and Karachi market for senior engineers (5+ years, full-stack/AI/cloud):
- Junior (1–3 yr): PKR 60–120K/month (~$215–430)
- Mid (3–6 yr): PKR 150–300K/month (~$535–1,070)
- Senior (6+ yr): PKR 350–600K+/month (~$1,250–2,150)
- Staff/principal: PKR 700K–1.2M/month (~$2,500–4,300)
Statutory: EOBI at 5% employer / 1% employee on minimum wage; provincial social security (PESSI/SESSI) ~6% of wages; gratuity at one month per year of service; termination requires 30 days' notice or pay in lieu.
The Pakistan tech labour market is relatively employer-friendly compared to India — there is no equivalent of EPF's 12%/12% bite, gratuity only triggers after extended service, and there is no statutory bonus. Realistic fully-loaded cost is gross salary × 1.10–1.15 once EOBI, social security, and gratuity accrual are included.
Banking
The defining 2024 fact: Mercury banned Pakistan-resident accounts in July 2024. Brex similarly restrictive. The workaround that works in 2026:
- Keep a Mercury, Brex, or Chase US business account with a non-Pakistan-resident director or US-resident signatory (a US co-founder, a US-based advisor, or a relocated founder).
- Receive customer payments into the US account.
- Wire to your Pakistan ESFCA against an SBP M-Form filing. The wire goes through Mercury/Brex outbound — the inbound to the Pakistan side is a clean USD wire that ESFCA banks accept.
Pakistan-side banking: HBL, Meezan, UBL, Bank Alfalah all offer ESFCA. HBL and Meezan have the strongest international correspondent relationships. Wise Business still works for Pakistan-resident founders for outbound payroll to engineers in third countries. State Bank of Pakistan has been tightening AML scrutiny — every wire over $10K triggers a source-of-funds review.
Realistic timeline for a Pakistan corporate ESFCA: 2–3 weeks once SECP/PSEB/NTN are in hand.
Pitfalls
Stories
Wins. Sastaticket (acquired by Daraz/Alibaba). Cosmoz (e-commerce SaaS). Tag (financial inclusion, Series B 2022). Edraak (edtech). Oraan (women's fintech). The pattern: USD-revenue plays survived the 2022–24 PKR crisis; pure-PKR-revenue plays got crushed.
Failures. Airlift — Series B-funded, July 2022 collapse with the entire 1,500-person workforce laid off. Investors included First Round, Buckley Ventures, Indus Valley Capital, Sarmayacar. Cause: unsustainable unit economics on quick-commerce, masked by 2021 capital-cheap-money excess. Bazaar Technologies — $100M Series B at $700M valuation 2022, ~600 layoffs February 2024, post-money down round late 2024. Truck It In — pivot-and-shutdown 2023.
Pakistani founder-led wins outside Pakistan that this manual is calibrated against: Sidra Qasim and Waqas Ali (Atoms Shoes, US-incorporated, Y Combinator W19, ~$10M raised). Zia Chishti (Align Technology, Afiniti). Qasar Younis (former YC COO, Applied Intuition co-founder, $15B valuation). The pattern: Delaware C-corp from day one, US-resident founder or strong US-resident co-founder, US-bound revenue.
The recommended Pakistan-to-Delaware stack
The result: a Delaware C-corp that US VCs will fund, a Pakistan Pvt Ltd that survives an FBR audit, a 0.25% IT FTR in Pakistan, and ESFCA flexibility on USD payroll and dividend repatriation. The structure scales from solo founder to 100+ engineers without re-architecture.
For deeper context on each piece: Chapter 1 (incorporation), Chapter 2 (banking), Chapter 3 (transfer pricing), Chapter 5 (fundraising).
Notes & sources