- Overview: Pakistan
- Global PEO and payroll
- Global HR Compliance
- Expand without a company set up
- Contractor vs. employee: which is better?
Global PEO and Payroll in Pakistan
If you are considering entering a new market, it’s critical to consider the unique challenges faced in each country. Not every expansion is equally tricky, but navigating global markets will always require rigorous due diligence. As with any expansion, consider the laws, activities of your company, goals, and risk tolerance levels before moving forward. There you go!
Acumen’s Global PEO and Payroll solution was designed especially for companies like yours, to smooth the way for quick, easy and risk-free business operations in Pakistan, without having to establish a legal business entity.
What is a Global PEO?
A global professional employer organization (PEO) is a company that provides various global employment-related services to businesses. These services include payroll and benefits administration, tax reporting, and compliance with local government regulations. Global PEOs typically enter into joint-employment relationships with their clients, which allows them to operate within multiple jurisdictions or countries.
A PEO typically represents an employer in a joint employment relationship and can operate within one or more jurisdictions or countries. A key part of PEO services is taking on responsibility for payroll and benefits administration and compliance with the taxes paid on employee wages in the country.
How Does a Global PEO Work? What Is the “Co-employment” Model?
Organizations that partner with a Global Professional Employer Organization (PEO) enjoy many benefits. By working with a PEO, businesses can take advantage of a co-employment relationship which can free up time and resources that can be better spent on strategic decision-making and business growth. Global PEOs are responsible for payroll, withholding and paying payroll taxes, managing compensation and benefits coverage, and providing HR compliance guidance.
The global PEO becomes a co-employer of the organization’s employees, and PEO shares the employment responsibilities of the client organization. PEOs assume many administrative and HR compliance tasks that businesses would otherwise have to handle, giving business owners and management teams more time to focus on running their companies.
In addition, Professional Employment Organizations can provide valuable services and expertise that businesses might not be able to access on their own. Using a PEO can be a great way for businesses to improve efficiency, save time and money, and gain access to valuable resources and expertise.
Global Employment Challenges and Pitfalls to Avoid
When you’re hiring a staff to work overseas, some challenges come with that far beyond the nuts and bolts of finding and vetting candidates. These challenges are often overlooked by companies when they think only of locally-hired employees, but can have extreme consequences for businesses who employ people internationally.
Why is this? Because if you’re not careful, you might find yourself unwittingly breaking one employment law regulation or another in your new country. This could lead to fines, other legal issues, and negative public exposure for your brand. It’s not just about being bad for your business, though; it’s also about being bad for the people who work in your company.
There are many different types of taxes that businesses have to pay, but employment taxes are one of the most important. These taxes can vary significantly from country to country and can be a large portion of a monthly salary.
In-country Employee Registration
It is essential to ensure that employees are properly registered with the local authorities before they start work. Failing to do so can result in penalties for both the employee and the employer.
Payroll Calculations: Country-specific Requirements
In many countries, payroll calculations vary significantly. For example, employees in some countries may receive a 13th and 14th-month salary halfway through the year or at Christmas as standard. Thus, it’s important to be aware of the payroll practices in your country of employment.
Some countries have different rules when it comes to employment contracts. To avoid any surprises, it is crucial to understand how payroll calculations work in your new country. In some cases, you may be responsible for paying your employees for the entire duration of their contract even if they are not performing as expected or you want to end their employment early. This can be a financial shock to foreign employers who are not used to this practice.
For this reason, it is essential to ensure that you review and understand the terms of the employee’s contract before hiring them, so you know what to expect.
End of Financial Year Reporting
The financial year for many countries ends in March and companies that have a presence in more than one country need to produce financial reports for each country and send them to the relevant government bodies. With the end of the financial year approaching, accountants are busy at work preparing reports, some of which can be complex and difficult to navigate through as they may be on foreign websites with little or no English language support. It is important that you get these reports lodged on time as it could result in late payment penalties.
A lot of these reports need to be completed in the local language, so it is recommended that you use an accountant specializing in the country you are based in to ensure compliance before lodgement deadlines.
This is the reason why many companies outsource payroll management to a global Professional Employer Organization (PEO) as they have experts with deep knowledge of local labor laws and tax regulations in each jurisdiction. In such cases, a Global PEO will ensure compliance with local employment and tax requirements.
Local Employment Contracts Compliance
As an employer, it is crucial to have local employment contracts that are compliant with the law of the jurisdiction in which your employees work. These contracts should be provided in both English and the local language. Do not simply copy and paste your existing contract template from your home country – this could result in non-compliance and serious legal consequences.
When recruiting employees for your business, it is critical to ensure that their employment contract is appropriate for the country where they will be working. A Spanish employment contract may not be valid in Latin America, simply because they are both Spanish-speaking countries.
The language of the employment contract is a crucial detail to keep in mind during the recruitment process, as non-compliance to target country employment laws or any mistakes with the paperwork could cost you money, time, and potentially your business’s reputation.
Employment Contract Termination
The employment termination process can be just as important as the hiring process. This part of employment should not be taken lightly as it can have many implications and consequences, both for the employer and the employee. Therefore, it is important to carefully consider all aspects of the situation before making a decision.
The start of the termination process begins when the employee signs the employment contract. If the termination guidelines are clear and precise from the terminating an employee will be much smoother.
When setting out the terms of employment, it is important to be clear about the notice period (making sure it’s aligned with the country-specific regulations), and what is expected in terms of returning company equipment and a credit card or cash float balance. Non-compete clauses protecting your intellectual property are also important considerations. Doing so will help avoid misunderstandings and potential legal problems down the road.
If an employer does not have clear procedures for the termination in their employment contract, they may face litigation. If an employee feels they have been mistreated, they may become disgruntled and contest the termination legally. This can be costly and difficult, especially if the dispute is in another country with a different time zone and language.
15 Burdens a Global PEO Can Relieve for Your In-House HR Department
- Global expansion complexity
- Global payroll administration
- Employee benefits administration
- Drafting compliant employment contracts to adhere to local labor and tax regulations in 190 countries
- Lengthy onboarding
- Complex and risky offboarding
- Background checks
- Compliance assistance
- Guidance on best practices of voluntary benefits provisioning
- Immigration and relocation support for your ex-pat workforce, such as visa sponsorship and securing work permits
- IP right protection
- Lack of local and international legal support
- Convert local contractors into full-time employees
- Business transitions: acquisitions, mergers, close downs
- Need to deal with multiple global employment service providers.
Acumen International – Your Single Point of Truth and Global Employment PEO Solutions Provider in Pakistan
- 100 % compliant, quick, easy market entry. Acumen Global PEO is your local legal entity, helping you reduce the cost and time associated with incorporating
- Immediate global employment service coverage in 190 countries
- Both a single point of contact and a dedicated account manager for your project for all target countries
- Compliant and secure global employment operations. We help you adhere to all local laws and regulations in 190 countries
- A single contract for all in-country services (employment, immigration, legal, etc.)
- A single PEO provider assumes full responsibility for your international employees in multiple countries
- Payments are made within the UK or to the UK bank company account
- Fully compliant with standardized procedures and reporting systems
- You can delegate to Acumen Global PEO all HR responsibilities Payroll & benefits administration, background checks, and HR helpdesk
- Standard payroll breakdowns for all target countries
- As soon as we receive your request for a project in any country, we will send you a payroll breakdown and offer within 2 working hours
- Full 100% fee money-back guarantee for the employee or contractor payment delays.
- Tailored and 100% compliant employment contract drafts
- With Acumen in your corner, you can quickly and easily onboard and compensate your employees without risk of legal repercussions
- Acumen Global PEO and Payroll solution protects your company’s Intellectual Property rights
Acumen International is here to help, from payroll and tax management to social security disbursements and immigration services. We’ll give you the peace of mind you need and reduce your company’s legal costs by 50% or more.
|Our Global PEO&Payroll||Client|
|Employment risks mitigation|
|Tax compliance & payroll processing|
|Incorporation costs||no need for own
|Coverage||190 countries||190 countries|
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Global Employment Services: How a Global PEO can Help You in Business Transition
Acumen International PEO offers a unique blend of experience and service suite, providing global employment opportunities that are genuinely global-ready. If your company is working in transition, such as going through an acquisition or merger, or if you are experiencing a company liquidation, Acumen International can find a legal and compliant solution to hire your employees—anywhere in the world! Many companies struggle with handling the employees being left behind during these times of transition. It’s common for employees to feel insecure about their future employment prospects, particularly when they have been forced out of their positions.
This can also be problematic for companies, who will likely have open positions that need filling but still have lingering contracts to fulfill. In both cases, having a resource like Acumen International PEO can ensure that the company’s business continues without being negatively affected by the change. When you’re working with Acumen International, we take care of all the paperwork and legal obligations so that you can focus on completing your transition plans. We also handle everything from payroll, benefits, and even full payroll tax administration for all our employees worldwide. This gives employers peace of mind that all of their global obligations are fulfilled while allowing them to focus on their transition plans.
A reduction in the workplace can be a scary time for employees. Global PEO and Payroll solution can provide outplacement services to help reduce the risk and ensure downsized employees have some assistance while searching for a new employer.
What Services Can a Global PEO Provide in Pakistan?
The expert team at a global PEO partner usually provides strategic guidance and a wide array of high-quality, cost-effective services tailored to your specific requirements that can help your company grow and scale up safely. Here are some of them:
- Human resources administration, including payroll, taxes, and benefits administration; employee training and development; recruitment; employee relations; compliance training; background or education checks; timekeeping services;
- Regulatory compliance assistance, including payroll tax law and reporting requirements;
- IP protection and offboarding;
- Hiring and HR compliance services, helping you navigate local regulations and avoid prohibited HR practices, including discriminatory job listings, Illegal criminal background checks, misclassified workforce, inaccurate payroll, and tax payments;
- Human resource support;
- End-to-end talent management, including recruiting, onboarding, engagement, performance management, and termination (upon employer approval);
- Liaison with legal counsel on employment issues such as discrimination, wrongful termination, sexual harassment, whistleblower protection, non-compete agreements, severance agreements, and other employment law matters.
Global Employment Solutions: How to Put Together a Hard Puzzle
There are many things that can go wrong when you try to find employment overseas. Acumen International can help you navigate these challenges, but it is important to be aware of the potential obstacles you may face.
As a Global PEO, our role is to enable organizations to quickly and easily hire employees in any country. We take care of all the employment-related details so that our clients can focus on their business goals. However, if candidates are unhappy at any stage, the whole arrangement can fail.
When making the decision to move abroad for work, your selected candidates consider a number of factors. The visa and work permit process complexities, currency fluctuations, lifestyle choices and family considerations can all impact their final decision.
As a PEO, we understand that when expanding your business globally, it’s vital to put your employees’ needs first. Considering the impact that this move will have on their lives, it’s important to think outside the box and make sure they are comfortable and supported every step of the way.
“It has become critical for organizations to have an understanding of applicable laws and regulations concerning issues such as minimum wages and benefits, employment standards, immigration and labor relations in each location. A Global PEO can play an important role in helping organizations navigate this complex global employment landscape through offering reliable and country-specific solutions and expert advice on matters related to compliance,” says Nick Ganzha, CEO and founder at Acumen International.
Acumen Global PEO and Payroll solution can help you solve the hard puzzle of global employment. As a Global PEO partner, we help businesses meet all of their HR needs while also handling compliance issues that are specific to the international arena. By offering comprehensive global employment solutions and reality checks about the compliance aspects of employing staff across the globe, we can be an important resource for your in-house HR and Management teams.
How Much Does a Global PEO Charge?
Global PEOs typically mark up payroll totals by a certain percentage to cover taxes and fees. This figure can vary depending on the size and scope of the business. Some GEOs also include the cost of employee insurance plans in their overall percentage, while others bill for these separately. It can be difficult to determine actual costs since some employer taxes (state and federal unemployment taxes, Social Security) are only paid on annual wages that exceed a certain threshold.
12 Benefits of Partnering with a Global PEO and EOR
- A global PEO can help your company save on internal costs by acting as the single contact for insurance and benefits coverage. Global PEOs can also help improve the quality of your benefits coverage by providing access to a wider range of options.
- Your business faces many potential threats, from compliance issues to insurance costs and beyond. A global PEO can help you mitigate these risks by providing expert guidance and support.
- A global PEO can help with immigration challenges and other concerns that may impact your business.
- By partnering with a global PEO, clients can often secure more favorable terms on employee benefit plans.
- Streamlined payroll and tax filings.The PEO processes payroll and does all the necessary tax filings for the company, significantly reducing administrative overhead for employers.
- PEO clients have access to greater resources and opportunities for growth than other businesses.
- PEO clients have been shown to have a turnover rate that is 10-14% lower per year than comparable companies.
- Expanding your business globally can be risky, but by partnering with a global PEO, you can stay flexible and mitigate major global expansion risks. This allows your business to enter new markets securely and efficiently while knowing there is always an exit strategy available if needed.
- With a global PEO partner, you can test the waters before making a permanent commitment. Before you decide to invest in offices, equipment, and employee training at an overseas location, you’ll get valuable information about whether the location will be successful by seeing how well operations are received via a third party before committing to managing them yourself.
- In addition to helping with taxes and payroll, global PEOs can also help handle things like relocation, providing temporary housing and support while you find a permanent location for your employees to live.
- A global PEO can provide advice on international and local employment laws, tax, and compliance regulations. Suppose you hire people abroad and they start working for you without guidance. In that case, there is a risk that their expectations might not match up with reality—setting yourself up for an unpleasant surprise down the line when they realize their salary or work conditions aren’t what they had been promised.
- Many businesses use PEOs (Professional Employment Organizations) to take care of their HR needs abroad. A global PEO is an organization that provides services such as payroll and benefits without actually employing workers itself—instead, they simply manage employee records so that you don’t have to worry about it yourself. When using a PEO, you’ll need to set up an account with them to file payroll reports online.
Difference between a Global EOR and a PEO. Employment Risk Mitigation Strategy
When expanding your business into new countries, there are many benefits to using a global PEO (Professional Employment Organization) or EOR (Employer of Record). A global PEO or an EOR is an alternative to hiring your employees via an in-country legal entity. Instead of hiring your employees, you contract with a global employment solutions provider to hire and manage them for you.
A Global PEO and EOR Partners can handle all the immigration, hiring, payroll, tax, and HR compliance for you, freeing up your time to focus on other aspects of running your business. And if you ever need to leave the country, you can do so without being tied down by any long-term commitments.
However, both global PEOs and EORs work differently. So, it’s important to understand the differences between the two, so you can find the right one for your needs.
The main difference between a global EOR and a PEO is how they hire the workers. A global PEO assigns employees to the client company for employment so that it can replace the clients in their duties of hiring and managing the employees. The PEO is not a direct employer on paper. An EOR, on the other hand, is an employer of record in the country of business. They hire and terminate employees on behalf of the client company.
|Employment Model||Co-employer||Sole Employer|
|Key Services||Global employment, payroll, benefits, immigration (visa, work permits), mobility||Global employment, payroll, benefits, immigration (visa, work permits), mobility|
|Local Entity Establishment||Required||Optional|
|Liability||Shares responsibilities and liabilities||Assumes all responsibilities and liabilities|
|Global Labour & HR Compliance||Optional||Required|
Global Payroll Calculator: Accurate Global Employment Cost Estimation
The Global Payroll Calculator is built by Acumen International to help businesses understand the compliance requirements for conducting business in a new country. Acumen’s research team tracks developments in 190 countries around the globe. It provides up-to-date data on local regulations related to tax, payroll regulations, benefits, hiring practices, compliance requirements, and other labor-related factors that impact an employer’s bottom line. This valuable information makes the Global Payroll Calculator an invaluable tool for businesses looking to expand internationally.
Global Payroll Calculator helps companies reduce labor costs by providing up-to-date information on hiring, compensation, and tax requirements. It is also an ideal tool for quickly locating employees in any country.
International Global Payroll and Taxation in Pakistan
Employment related taxes
Personal Income Tax:
- Tax resident employees
- Non-tax resident employees
Pakistan levies tax on its residents on their worldwide income. A non-resident individual is taxed only on Pakistan-source income, including income received or deemed to be received in Pakistan or deemed to accrue or arise in Pakistan.
Social Security contributions. Pakistan offers benefits to employees for death, disability, injury, medical expenses and pensions, as well as academic scholarships for workers’ children.
Taxation of Employer (just descriptions of types and possible procedures of taxation, with a link on payroll calculator): A resident company is taxed on its worldwide income. Non-resident companies operating in Pakistan through a branch are taxed on their Pakistan-source income attributable to the branch at rates applicable to a company.
Nontaxable payments. Reimbursement of expenses on medical treatment or hospitalisation or both received by an employee is tax exempt. Furthermore, medical allowance of up to 10% of basic salary is exempt if the facility of reimbursement of medical expenses is not available to the employee.
Double taxation. Under Pakistani tax law, residents are taxed on worldwide income. However, a tax credit is generally granted for income from sources outside Pakistan (from both treaty and non-treaty jurisdictions), at the lower of the average foreign tax paid or the average Pakistani tax attributable to the foreign income.
Most of these treaties exempt from Pakistani tax any profits or remuneration received for personal services performed in Pakistan in an assessment year if one or more of the following
conditions are satisfied:
- The individual is present in Pakistan for less than a specified period (usually not in excess of 183 days).
- The services are performed for, or on behalf of, a resident of the other country.
- The profits or remuneration are subject to tax in the other country.
- If self-employed, the individual has no regularly available fixed base in Pakistan.
- The remuneration is paid by, or on behalf of, an employer who is not a resident of Pakistan.
- The remuneration is not borne by a permanent establishment or a fixed base maintained by the employer in Pakistan.
Payroll Cycle in Pakistan
Wages can be paid on daily, weekly, fortnightly or monthly basis. However, a wage period can’t exceed one month.
13th salary in Pakistan
Outline whether the payments are mandatory according to the law or voluntary?
Every employer that earns a profit in any year shall pay to the workmen who have been employed during that year for a continuous period of at least 90 days, a bonus in addition to the wages due to such workmen, which shall be up to one month’s wages. Such bonus must be paid within three months of the end of that year.
Non-payroll taxes in Pakistan
VAT (locally termed as ‘sales tax’) is ordinarily levied on the value of goods, unless specifically exempt or subject to sales tax at a reduced rate, after allowing related input credits.
Sales tax paid on services, federal sales tax on goods, and federal excise duty are adjustable against each other, with a few exceptions.
Supplies made by certain specific persons/sectors are subject to specific sales tax regimes [e.g. retail price/fixed tax regime] or otherwise subject to reduced rates of sales tax.
Local supplies made by persons operating in the five export-oriented sectors (textile, leather, footwear, surgical goods, sport goods) are subject to sales tax at applicable rate of 17%, with reduced rate facility available in certain cases.
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How Acumen’s International PEO and Payroll Service can Benefit Your Business in Pakistan
Compensating your local and expat workforce in Pakistan and closely adhering to Pakistani taxation requirements can divert your attention and resources from activities that help your business grow. A reliable global employment solution like Acumen’s Global PEO and Payroll service can take a substantial burden off your shoulders so you can focus on running your company.
Outsourcing the administrative and compliance tasks involved in employee payroll is one approach, but we have a better solution. Acumen International offers a global PEO and payroll solution that goes beyond outsourcing. We hire and compensate your global workforce on your behalf, and take care of all the details of payroll while ensuring full compliance with Pakistani labor and taxation laws.
It is important to note that Acumen does not provide international global payroll services as a standalone solution, but only as a part of our global PEO and Payroll solution.
Our comprehensive global PEO and payroll services are just some of the benefits of partnering with Acumen International. We make it easy for you to achieve your business goals in Pakistan by officially employing and compensating your best selected global talent – both locals and expats – without concerns for legal and compliance risks faced by global employers.
Disclaimer: Any of the above information is subject to changes imposed by Pakistani laws. To get the latest updates on taxation in Pakistan and in 190 countries worldwide, contact Acumen’s team of global employment experts.