The State Bank of Pakistan (SBP) changed foreign exchange instructions, facilitated the making of commercial remittances abroad through a number of ways on account of services.
On Thursday, the State Bank of Pakistan (SBP) facilitated the making of commercial payments abroad through a number of ways on account of services availed by the local as well as foreign companies operating in the country.
“It is envisaged that the facilitative measures will help the business community of Pakistan in growing their businesses,” read the SBP’s statement.
The central bank said that it had changed foreign exchange instructions related to commercial remittances aimed at ease of doing business and facilitating cross-border commercial payments on account of services. It revised the policy on remittance of Royalty, Franchise & Technical (RFT) fees for the manufacturing sector.
“Now, entities belonging to manufacturing sector, through their designated bank, can remit $1 million as upfront payment and up to 8 per cent of net sales (excluding taxes and cost of imported components),” said the SBP.
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 percent of net export sales (i.e. excluding taxes and cost of imported components).
“To facilitate businesses in acquiring services from abroad, apart from digital service providers, SBP has enhanced the threshold from $10,000 to $25,000 up to which banks can process request for acquiring services from abroad,” said the SBP.
An additional important change was made for remitting of profit and head-office expenses by branches of foreign companies. “The branches of foreign companies working in Pakistan and intending to remit profit/head office expenses or winding up proceeds, shall get their bank designated from Exchange Policy Department after which the remittances under these heads can be made by the designated bank,” said the SBP.