Elimination of Cumbersome Documentation for Making Outbound Forex Payments
|Reform Description||Before: Earlier the outbound foreign exchange payments were heavily regulated and involved cumbersome paperwork which caused unwarranted delay and frustration among the newly founded businesses.
After: Now these businesses can make outbound forex payments on the basis of their National Tax Number, Sale Tax certificates or other tax registration evidence with FBR.
|Jurisdiction/ Location||Federal (Entire PAll Sectorsakistan)|
|Department||State Bank of Pakistan|
|Date of Implementation||25-11-2021|
|Timeline||Last 03 Months|
|Details||Difficulty||Newly formed businesses such as firms and companies which were in their first year of operations were facing difficulty in acquiring services from abroad as they cannot make outbound foreign exchange payments since they could not meet the compliance criteria such as proof of being “Active Tax Filer” which is granted at the close of each fiscal year on filling of income tax returns.|
|Analysis||It was realized that the requirement for documentary compliance cannot be met by the newly founded businesses since they do not have any such documentary evidence before the completion of at least one year of their operations.|
|Solution||State Bank of Pakistan issued necessary instructions to authorized dealers to facilitate newly founded business who do not have the proof of Active tax Payer etc. Now a business can acquire services from the foreign and made outbound foreign exchange payments on the basis of NTN or registration proof with FBR in first year of their incorporation.|
|Evidence||Acquisition of Services from Abroad by Newly Formed Firms/ Companies Para 11, Chapter 14 of Foreign Exchange Manual|
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