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Tag: foreign currency

  • Outbound passengers to declare currency above $5,000

    Outbound passengers to declare currency above $5,000

    Federal Board of Revenue (FBR) Wednesday issued draft rules to make it mandatory for outbound passengers to make declaration of currency amounting above $5,000.

    The FBR issued draft amendment to Baggage Rules, 2006 by issuing SRO 1751(I)/2022 dated September 20, 2022.

    READ MORE: Rupee ends near historic low; Dollar gains to PKR 239.65

    The revenue body said that the draft rules had been published for information of all persons likely to be affected and notice is also given that objections or suggestions may for consideration of the board should be sent within seven days of the draft amendments.

    According to the amendment, in case of accompanied baggage, the outbound passenger who is in possession of foreign currency exceeding $5,000 of equivalent, any other prohibited or restricted item or any other item requiring declaration before Customs, shall file a declaration before or on departure, electronically in the WeBOC or manually.

    READ MORE: PKR falls for 13th session as dollar ends near record high

    Similarly, the incoming passenger who is in possession of foreign currency exceeding $10,000 or equivalent, any other prohibited or restricted item or any other item requiring declaration before customs shall file a declaration.

    Earlier, on September 11, 2022, the FBR issued a clarification stating that a misleading impression has been created in some section of the press that Pakistan has recently imposed currency declaration requirements for passengers coming into Pakistan, which is contrary to facts. Unlike portrayed by some section of the press, the mandatory requirement for passengers coming into Pakistan and bringing currency and/or negotiable instruments was notified by the State Bank of Pakistan more than 10 years ago vide notification no. F.E.1/2012-SB dated 16th June 2012. This requirement came into force on July 01,2012.

    READ MORE: PKR plunges for 12th session; Dollar ends at PKR 237.91

    Subsequently, in order to widen the scope of declaration to include gold jewelry, precious stones and other prohibited/ restricted goods, Pakistan Customs also introduced a comprehensive “Customs Declaration Form for Passengers” which was notified vide SRO 689(I)/2019 dated 29th June, 2019. These rules cover both the incoming and outgoing passengers.

    These requirements for declaration are in line with international standards and the best practices adopted by most of the countries in the world. The passengers can make the declaration either manually at the Customs counter or electronically in the Customs System. In order to increase awareness amongst the international passengers, Pakistan Customs has been collaborating with the Civil Aviation Authority, Airlines, and Immigration Authorities to improve its outreach for both departing and arriving passengers. As a result, the compliance has been steadily increasing.

    READ MORE: Dollar rallies for 11th straight session; ends PKR 236.84 at interbank

    FBR has further reiterated that the currency declaration regime for all international passengers has been in field for more than a decade, rather than being recently introduced on account of any recent FATF review requirements.

  • SBP issues FAQs to foreign currency account rules

    SBP issues FAQs to foreign currency account rules

    KARACHI: State Bank of Pakistan (SBP) on Sunday issued Frequently Asked Questions (FAQs) in response to SRO issued by the finance ministry related to foreign currency account rules.

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  • FOREIGN CURRENCY ACCOUNTS: SBP says new regulations to strengthen forex regime

    FOREIGN CURRENCY ACCOUNTS: SBP says new regulations to strengthen forex regime

    KARACHI: State Bank of Pakistan (SBP) has said that recently issued regulations related to foreign currency account have been aimed to strengthen the foreign exchange regime in the country.

    “The recently issued rules aim to provide a regulatory framework for the operation of individual foreign currency accounts,” the SBP said in a statement issued on Saturday-Sunday midnight.

    Such a framework represents a continuation of the State Bank of Pakistan’s efforts to strengthen the foreign exchange regime and make it more market-oriented.

    Looking ahead, SBP will continue to take steps to facilitate greater use of banking channels for individuals to meet all their foreign exchange needs.

    The SBP said that on October 06, 2020, the Federal Government issued Foreign Currency Accounts Rules, 2020 under the provisions of Protection of Economic Reforms Act, 1992.

    There has been no change in the general or special permissions given by the State Bank to individuals under the foreign exchange regulations. According to paragraph iv, Chapter 6 of the Foreign Exchange Manual, foreign currency accounts can be fed by remittances received from abroad, travelers’ cheques issued outside Pakistan and encashment of securities issued by Govt. of Pakistan.

    A foreign currency account of a citizen of Pakistan resident in Pakistan can also be fed with cash foreign currency only if the account holder is a filer as defined in Income Tax Ordinance, 2001.

  • SBP allows opening foreign currency accounts on declared assets abroad

    SBP allows opening foreign currency accounts on declared assets abroad

    KARACHI: The State Bank of Pakistan (SBP) on Thursday introduced a separate category of foreign currency account for non-resident and resident Pakistanis, who have assets abroad and declared with the tax authorities.

    The SBP in a circular said that in order to facilitate the non-resident Pakistanis as well as resident Pakistanis, who have assets abroad duly declared with Federal Board of Revenue (FBR), for investment in foreign currency denominated government registered debt securities on repatriable basis, it has been decided to introduce a separate category of foreign currency account.

    The SBP amended foreign exchange manual to introduce the new facilitation.

    According to the amendment:

    8A. Foreign Currency Value Account (FCVA)

    (i)   Authorized Dealers [banks, financial institutions] may open ‘ Foreign Currency Value Account’ of the following:

    a)  A non-resident individual Pakistani;

    b)  A resident individual Pakistani who has duly declared assets held abroad, as per wealth statement declared in latest tax return with Federal Board of Revenue (FBR).

    Operations of Foreign Currency Value Account shall be governed by the regulations set out below:

    ii) General Operations

    ADs shall clearly mark the account as resident or non-resident at the time of account opening.

    ADs shall allow operations in the account through the digital channels e.g. internet/mobile banking, ATM/ Debit cards. The ADs may also issue cheque book to the account holder, if required.

    ADs may issue supplementary ATM/Debit cards as per applicable laws /regulations.

    The resident individual desirous to open FCVA shall have to provide the declaration of his/her assets held abroad, including latest wealth tax statement filed with the FBR.

    The ADs are encouraged to provide online real time convertibility from FCY to PKR based on the request made by the account holder digitally for the eligible debits from the account. For the sake of transparency, the ADs shall indicate the exchange rate applicable to the transaction.

    ADs may allow non-resident Pakistanis to open the account jointly with other residents/non-residents, as per applicable laws/banking practices. These accounts should, however, be treated as non-resident accounts. However, a resident Pakistani, having foreign assets declared with FBR, may be allowed to open the account jointly with a resident only.

    In case the account becomes dormant due to non-operation, ADs shall devise a mechanism, aligned with applicable regulations, to reactivate the account digitally, in case of non-resident account. However, for resident FCVA, the ADs may reactivate the account digitally or otherwise in compliance with the applicable regulations and their own policy.

    Authorized Dealers will ensure ongoing monitoring of these accounts to mitigate ML/FT risk.

    iii)   Credits to the Foreign Currency Value Account.

    Remittances received from abroad through banking channels.

    Transfer of funds from his/her own NRP Rupee Value Account (NRVA) with the same AD.

    Profit/interest on the permissible investments made from the account

    Dis-investment proceeds from the permissible investments made from the account.

    Reversal of any incorrect debit in the account.

    iv)  Debits to the Foreign Currency Value Account.

    Investment in permissible securities, provided that the relevant laws/regulations permit such investment, as under:

    1. Government of Pakistan’s registered debt securities denominated in FCY only.

    2. Term deposit/remunerative product scheme, denominated in FCY, of the same AD.

    The funds for the above investments shall be transferred by the ADs only in the eligible products, through the instructions received from the account holder in this behalf.

    Transfer of funds to account holder’s own NRP Rupee Value Account (NRVA) with the same AD.

    Transfer to other FCY, PKR account and non-resident Rupee account – non-repatriable with any bank in Pakistan.

    Remittances and payments outside Pakistan to the extent of balances available in the account, without any prior approval from the bank or the State Bank.

    Cash withdrawal in foreign currency and equivalent local currency.

    Any payment in PKR to any person resident in Pakistan. However, any amount so paid shall not be allowed to be credited back into the account.

    Reversal of any incorrect /wrong credit entry.

    ADs shall submit a consolidated monthly statement of transaction(s) executed from FCVA on the attached format (Annexure-A) to [email protected] through their head/principle office by 7th of the ensuing month for each reference month.

    The ADs are encouraged to make necessary arrangement in their system to facilitate non-resident Pakistanis in opening and operating this account remotely through digital channels.

    ADs shall comply with all other applicable rules and regulations.

    ADs are advised to bring the above instructions to the knowledge of all their constituents for meticulous compliance.

  • SBP issues instructions on foreign currency loan by private sector

    SBP issues instructions on foreign currency loan by private sector

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued instruction to banks and exchange companies related to foreign currency loan by private sector.

    A circular issued by the central bank said that the chapter 19 of Foreign Exchange Manual 2019 contained that it is required to register all foreign currency (FCY) loans, above USD one (1) million, with Exchange Policy Department, State Bank of Pakistan.

    In this regard, the SBP decided that all FCY loans will be registered by the banks and exchange companies irrespective of the amount. ADs will be responsible to ensure that FCY loans registered by them, are in compliance with all the parameters given against each type of FCY loan, in Chapter 19 of FEM 2019. However, prior permission of SBP will continue to be required for raising following FCY Loans:

    Private sector FCY loans mobilized through securitized instruments, issuance of bonds and financing under Islamic arrangements.

    Long term FCY borrowing by ADs.

    FCY borrowing by other Financial Institutions i.e. NBFIs, DFIs, PSOs, PSPs, Leasing Companies, House Building Finance Companies & Insurance Companies.

    The SBP said that authorized dealers shall also ensure to have independent assessment of each FCY loan proposal/ transaction from money laundering/ terrorism financing risk and foreign exchange risk perspective, by their Compliance or Risk Management Department, prior to its registration. For this purpose, ADs shall conduct appropriate due diligence of the proposal including particulars of lender and shall determine the ultimate beneficial ownership, if it is not a Financial Institution.

    In case, the lending entity is controlled by residents, ADs shall ensure that their investment abroad is in compliance with foreign exchange regulations. Further, ADs shall conduct annual focused Internal Audit of FCY Loan Registration function.

    Further, the minimum tenor of loans raised as PSBA for working capital under Para 7(iii) and FSBA for liquidity management purposes under Para 9(iii) of Chapter 19 of FEM 2019 has been reduced to one month.

    For reporting these foreign private loans (FPL) data on Data Acquisition Portal (DAP), all ADs are required to get Loan Registration Number (LRN) of each loan from Statistics and Data Warehouse Department by 5th of the following month by providing information along with repayment schedule.

    All other terms, conditions and instructions in the matter shall remain unchanged. Accordingly, Chapter 19 of the FEM 2019 has been revised and is attached herewith. ADs are advised to bring the above contents to the notice of all their constituents and ensure meticulous compliance.

  • Pakistan Customs’ travel guide for passengers

    Pakistan Customs’ travel guide for passengers

    KARACHI: Pakistan Customs has issued travel guide for persons departing to or arriving from abroad regarding clearance of goods under prevailing laws.

    GREEN CHANNEL

    Green Channel, as the color signifies, means freely passing without any Customs formalities. This is for the passengers who do not posses articles or goods that are restricted or in excess of the admissible duty-free allowance, if any.

    Customs officials are authorized to randomly request the passengers availing the facility of Green Channel to allow scanning of their luggage and if necessary to allow physical examination by opening the luggage. This is normal custom procedure adopted world wide to counter misuse of Green Channel facility.

    If you are so requested by a custom official, please understand that you have been picked up either randomly or on the basis of certain risk parameters and you are expected to cooperate with the customs officials.

    Passengers passing through the Green channel with articles or goods that are prohibited, restricted or dutiable are liable to prosecution, penalty as well as confiscation of the articles or goods.

    RED CHANNEL

    Red Channel, as the color signifies, means passing after completion of customs formalities. This is for the passengers having restricted or dutiable articles or goods.

    REGULATION ON ARTICLES OR GOODS

    Articles or goods brought in commercial quantities are released only on payment of fine equal to 30% of the value of articles or goods or in addition to the applicable duty and taxes.

    COMMERCIAL QUANTITY

    A quantity of goods imported prima facie for trading or pecuniary gain and not for personal use or gift.

    PROHIBITED ARTICLES OR GOODS

    Are those which cannot be imported in to or exported from Pakistan under any circumstances being prohibited or banned to protect society, health and the environment.

    RESTRICTED ARTICLES OR GOODS

    Are those which can be imported to or exported from Pakistan subject to certain certifications, conditions, licenses, permissions or restrictions.

    Some of the most common prohibited and restricted articles or goods that cannot be imported to or exported from Pakistan, are listed in the baggage rules brochure.

    RE-IMPORT OF ARTICLES OR GOODS

    Re-import of articles or goods earlier taken out of Pakistan can be brought back free of custom duty and other taxes. Passengers intending to re-import articles or goods are advised to obtain export certificate or an endorsement on the passport, as to the exact description of the articles or goods, and distinguishable marks thereof certified by the Assistant Collector of Customs at the time of passenger’s departure from Pakistan.

    Duty free re-import of articles or goods is not allowed in the absence of the export certificate or endorsement on the passport.

    FOREIGN CURRENCY REGULATION

    Bringing in of foreign currencies is permitted without any limit. A passenger can bring any amount of any foreign currency to Pakistan. Taking out foreign currencies is permitted up to US $ 10,000 un-conditionally.

    Taking out Pakistan currency exceeding Rs. 3,000 is not permitted and in case of departing for India a maximum of Rs. 500 is permitted.

    DUTY FREE ALLOWANCE

    Regulations related to duty free allowance for Pakistani nationals are laid out in the baggage rules brochure.

    TRANSFER OF RESIDENCE

    The concept of Transfer of Residence means return of Pakistani national after staying abroad for a period of two (2) years or more. It also includes the transfer of residence by a foreign national coming to Pakistan for a period of not less than two (2) years.