ANL 22.33 Decreased By ▼ -1.86 (-7.69%)
ASC 14.60 Decreased By ▼ -0.60 (-3.95%)
ASL 23.65 Increased By ▲ 1.65 (7.5%)
BOP 8.28 Decreased By ▼ -0.14 (-1.66%)
BYCO 8.15 Decreased By ▼ -0.31 (-3.66%)
FCCL 17.97 Increased By ▲ 0.57 (3.28%)
FFBL 23.48 Decreased By ▼ -0.74 (-3.06%)
FFL 16.10 Decreased By ▼ -0.80 (-4.73%)
FNEL 7.97 Decreased By ▼ -0.18 (-2.21%)
GGGL 19.40 Decreased By ▼ -1.29 (-6.23%)
GGL 41.74 Increased By ▲ 0.21 (0.51%)
HUMNL 6.34 Decreased By ▼ -0.21 (-3.21%)
JSCL 19.37 Decreased By ▼ -0.76 (-3.78%)
KAPCO 37.18 Decreased By ▼ -0.32 (-0.85%)
KEL 3.48 Decreased By ▼ -0.03 (-0.85%)
MDTL 2.70 Decreased By ▼ -0.25 (-8.47%)
MLCF 34.99 Decreased By ▼ -0.06 (-0.17%)
NETSOL 139.30 Decreased By ▼ -5.55 (-3.83%)
PACE 5.12 Decreased By ▼ -0.85 (-14.24%)
PAEL 28.35 Decreased By ▼ -1.74 (-5.78%)
PIBTL 8.90 Decreased By ▼ -0.27 (-2.94%)
POWER 7.30 Decreased By ▼ -0.30 (-3.95%)
PRL 18.30 Decreased By ▼ -0.95 (-4.94%)
PTC 10.00 Decreased By ▼ -0.12 (-1.19%)
SILK 1.51 Decreased By ▼ -0.11 (-6.79%)
SNGP 45.30 Increased By ▲ 1.80 (4.14%)
TELE 20.41 Decreased By ▼ -1.59 (-7.23%)
TRG 169.50 Decreased By ▼ -1.00 (-0.59%)
UNITY 33.05 Decreased By ▼ -0.89 (-2.62%)
WTL 2.96 Decreased By ▼ -0.13 (-4.21%)
BR100 4,822 Decreased By ▼ -36.54 (-0.75%)
BR30 23,477 Decreased By ▼ -388.55 (-1.63%)
KSE100 45,597 Decreased By ▼ -411.61 (-0.89%)
KSE30 18,029 Decreased By ▼ -149.92 (-0.82%)

Coronavirus
VERY HIGH Source: covid.gov.pk
Pakistan Deaths
27,432
5824hr
Pakistan Cases
1,232,595
2,35724hr
4.9% positivity
Sindh
453,051
Punjab
425,703
Balochistan
32,812
Islamabad
104,619
KPK
172,210

KARACHI: The State Bank of Pakistan (SBP) on Thursday notified revision of foreign exchange instructions pertaining to commercial remittances for ease of doing business and facilitating legitimate cross-border commercial payments on account of services.

The State Bank is in the process of revising the Foreign Exchange (FE) Manual in consultation with different stakeholders, including Authorized Dealers, in a phased manner. In this respect, thirteen chapters of the FE Manual have already been revised through and now the Chapter No. 14 titled Commercial Remittance has been revised. SBP believes that these amendments will help the business community of Pakistan in growing their businesses.

The significant changes made in the chapter 14 of the Foreign Exchange Manual pertain to following policies:

Remittance of Royalty, Franchise & Technical (RFT) Fees for Manufacturing Sector: SBP has revised the policy on remittance of RFT fees. Banks have been delegated the authority to register the agreements of parties and to allow remittances of RFT fees under revised policy. The threshold for remittance of such fee has been revised upwards to cater the needs of business community. Now, entities belonging to manufacturing sector, through their designated bank, can remit USD 1 million as upfront payment and up to 8% of net sales (excluding taxes and cost of imported components). Moreover, a new category i.e. royalty on export-related manufacturing has been introduced under which Pakistani entities collaborating with foreign counterparts can remit recurring royalty payment of up to 10% of net export sales (i.e. excluding taxes and cost of imported components).

SBP's foreign exchange reserves soar to $18.2 billion, highest since January 2017

Acquisition of Services: In view of increasing reliance of businesses on digital services procured from abroad, SBP has enhanced the per year limit assigned to 62 white-listed digital service provider companies from USD 200,000 to USD 400,000 per annum. Further, for acquiring digital services from companies not included in the list, per year limit of remittance has also been increased from USD 25,000 to USD 40,000.

Moreover, to facilitate businesses in acquiring services from abroad, apart from digital service providers, SBP has enhanced the threshold from USD 10,000 to USD 25,000 up to which banks can process request for acquiring services from abroad. Beyond this limit remittance can be made after getting the agreement registered with Foreign Exchange Operations Department (FEOD) of SBP-Banking Services Corporation (BSC).

Remittance of profit/ head-office expense by branches of foreign companies: In order to facilitate branches of foreign companies in remitting legitimate payments such as profit, head office expenses and winding up proceeds, SBP has made changes in existing regulations and authorized banks to allow such remittances with minimum involvement of SBP. The branches of foreign companies working in Pakistan and intending to remit profit/ head office expenses/ winding up proceeds shall get their bank designated from Exchange Policy Department, SBP, after which the remittances under these heads can be made by the designated bank.

Business Process Outsourcing (BPO) for non-core activities: To share expertise and reduce related costs, companies are increasingly restructuring their business processes by outsourcing their supporting (non-core/shared service) functions to the related or third parties abroad. Accordingly, in order to cater the demands of such companies, SBP has introduced foreign exchange regulations on Business Process Outsourcing for non-core activities. Now resident companies intending to outsource non-critical/non-core business processes to foreign entities can approach FEOD, SBP-BSC, through a bank, for acknowledgment of underlying agreement based on the guidelines. After obtaining acknowledgment, the designated bank can affect remittance as per applicable regulations.

Forex reserves cross $24bn mark

Logistics related Remittances: SBP has issued specific instructions on logistic related cross-border payments such as container detention charges, port demurrage charges etc. with an aim of harmonizing foreign exchange regime with current business environment. Banks have been delegated to process such payments up to a certain threshold under the newly introduced policy.

Payment of charter cost direct to the owner of ship/air craft: With the intention to facilitate business community of Pakistan in making payment of charter cost directly to the owner of ship/ aircraft, SBP has revised regulations and banks have been authorized to process such payments without prior regulatory approval of SBP.

Copyright Business Recorder, 2021

Comments

Comments are closed.