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Tag: foreign remittances

  • PM Imran launches incentive program for remittances

    PM Imran launches incentive program for remittances

    KARACHI: Prime Minister Imran Khan on Thursday launched an incentive program for overseas Pakistanis sending remittance to their homeland.

    The incentive program namely Sohni Dharti Remittance Program (SDRP) offered jointly by the State Bank of Pakistan (SBP), Ministry of Finance and financial institutions.

    SDRP is an innovative program designed to incentivize Pakistani workers abroad to send remittances to Pakistan through banks and exchange companies and earn reward points.

    These reward points could then be used to avail of different benefits offered by partner organizations.  SDRP can be accessed conveniently from anywhere in the world through a mobile application.

    In his address as the Chief Guest, the Prime Minister thanked the overseas Pakistanis for posing confidence in the bright future of their homeland by sending record high remittances of over $29 billion in the last fiscal year 2020/2021 and continuing the trend in FY22.

    The Prime Minister noted that his Government has always encouraged and appreciated the efforts of Overseas Pakistanis through various initiatives and programs.

    He especially mentioned the incentives like making remittances transfer free of cost, providing free airtime for remittances received through mobile wallets and covering the marketing cost of remittance service providers.

    The Prime Minister congratulated the State Bank of Pakistan (SBP), Ministry of Finance (MoF), financial institutions, participating public sector entities (PSEs) and all other stakeholders as without their efforts the launch of this remittance incentive program would not have been possible.

    He termed the launch of SDRP as a tribute to the Pakistani workers abroad who have been contributing in the development of the country by sending their hard-earned money back to Pakistan.

    He also appreciated the concept of giving incentives through a digital application for sending remittances via official channels.

    Governor SBP, Dr. Reza Baqir in his welcome address expressed heartfelt gratitude to the Prime Minister for his continuous interest and guidance in developing ways to facilitate the Overseas Pakistanis and workers abroad.

    Dr. Baqir elaborated that SohniDharti Remittance Program is another outcome of the PM’s vision. Referring to earlier initiatives, he said that Roshan Digital Account and the Naya PakistanCertificates have been huge successes and the PM’s support has played an instrumental role in it.

    Adding further, he said that another initiative like the Mera Pakistan MeraGhar scheme providing low-cost housing finance for first-time homeowners is another example where the PM’s vision and support have led to a significant takeoff of housing finance in the country, which had otherwise been negligible.

    Dr. Reza Baqirsaid that he was delighted and privileged to announce the launch of SDRP, which is an excellent combined effort of the Government of Pakistan, SBP, financial institutions and other organizations.

    Divulging the details, he disclosed that all home remittances sent from anywhere in the world through legal channels are eligible for inclusion in the SDRP. Besides, funds received in Roshan Digital Accounts which are consumed locally through conversion, and thus become non-repatriable, also qualify for inclusion in the program.

    The Governor termed the launch of SDRP another step towards digitalization and financial inclusion that would play a significant role in the digital onboarding of Overseas Pakistanis and their beneficiaries in Pakistan. The mobile application of SDRPis available at both Google android and Apple IOS platforms. He took the opportunity to appreciate the participating banks, PSEsand other stakeholders in this regard as it was due to their hard work that this initiative finally saw the light of the day.

    Adviser to the Prime Minister on Finance and Revenue Mr. Shaukat Tareen congratulated SBP, PSEs and other relevant stakeholders for implementing the SDRP as a technology-based solution. He observed that the establishment of Pakistan Remittance Initiative in 2009 was a decision that has worked quite effectively to integrate country’s financial institutions with the ones abroad to help the Pakistani diaspora in sending remittance to their families in Pakistan in a very efficient and cost-effective manner.

    Under the SDRP, if an individual sends remittance to the limit of USD10,000 or equivalent in one fiscal year, then he/she will be awarded one percent as a reward and allotted a green card category. Similarly, for remittances sent by an individual between USD10,000 and USD30,000 or equivalent, the remitter would be given 1.25 percent as reward and classified into gold card category. Lastly, for remittances of more than USD30,000 or equivalent, he/she will be awarded 1.5 percent as reward and allotted a platinum card category.

    The reward points can be redeemed by remitters and their beneficiaries for availing free of cost services from eight (08) participating PSEs at the moment. The services offered include international tickets by Pakistan International Airlines (PIA) and the provision to pay for extra luggage on international flights of PIA.

    Along with this, Federal Board of Revenue (FBR) has allowed Overseas Pakistanis to pay duty on import of mobile phone and vehicles.  The National Database & Registration Authority (NADRA) will provide services related to the renewal of CNIC/NICOP and along with this, they can renew their passports without any hassle. Overseas Pakistanis can avail life insurance premium payment through state life insurance services and a facility to pay schools’ fee of Overseas Pakistanis Foundation schools.

    Moreover, overseas Pakistanis will be able to make purchases through a network of utility stores across the country. Federal Investigation Agency (FIA) will provide preferential services to overseas Pakistanis under the umbrella of this program by installing separate counters and provide priority clearance whereas Civil Aviation Authority (CAA) will ensure the placement of standees and banners for the promotion of this initiative.

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  • Pakistani workers send $2.52 billion in October 2021

    Pakistani workers send $2.52 billion in October 2021

    KARACHI: Pakistani workers living abroad have sent $2.52 billion as remittances to their homeland in the month of October 2021, State Bank of Pakistan (SBP) said on Sunday.

    The SBP said that the workers’ remittances continued their strong streak as inflows recorded $2.5 billion in October 2021, up 10.2 percent (y/y) and only marginally lower compared to last month (5.7 percent).

    In addition to remaining above $2 billion since June 2020, this is the eighth consecutive month when remittances have been close to or above $2.5 billion.

    On a cumulative basis, remittances have risen to $10.6 billion during the first four months of FY22 (July-October 2021), which is 11.9% higher than the same period last year.

    Remittance inflows during the first four months of FY22 have mainly been sourced from Saudi Arabia ($ 2.7 billion), UAE ($ 2.0 billion), UK ($ 1.5 billion) and USA ($ 1.1 billion).

    Proactive policy measures by the Government and SBP to incentivize the use of formal channels and altruistic transfers to Pakistan amid the pandemic have positively contributed towards the sustained improvement in remittance inflows since last year.

    Overseas Pakistanis remit $8.03bn in first quarter
  • Overseas Pakistanis remit $8.03bn in first quarter

    Overseas Pakistanis remit $8.03bn in first quarter

    KARACHI: Overseas Pakistanis have remitted $8.034 billion during first quarter (July – September) of the fiscal year 2021/2022, State Bank of Pakistan (SBP) said on Friday.

    The home remittances during the first quarter registered a rise of 12.5 per cent when compared with $7.143 billion in the corresponding period of the last fiscal year.

    The inflows of remittances were $2.7 billion in September 2021 as compared with $2.28 billion in the same month of the last year, showing an increase of 17.1 per cent.

    The SBP said that with $2.7 billion of inflows during September 2021, workers’ remittances continued their strong momentum and remaining above $2 billion since June 2020.

    This is the 7th consecutive month when inflows recorded around $2.7 billion on average.

    Remittance inflows during September 2021 were mainly sourced from Saudi Arabia ($691 million), United Arab Emirates ($502 million), United Kingdom ($370 million) and the United States ($245 million).

    Proactive policy measures by the Government and SBP to incentivize the use of formal channels, curtailed cross‐border travel in the face of COVID‐19, altruistic transfers to Pakistan amid the pandemic, and orderly foreign exchange market conditions have positively contributed towards the sustained improvement in remittance inflows since last year.

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  • Workers send $2.66 billion remittances in August

    Workers send $2.66 billion remittances in August

    KARACHI: Workers’ remittances continued their strong trend, reaching $2.66 billion in August 2021. This is the sixth consecutive month when inflows recorded around $2.7 billion on average, and the fifteen consecutive month they have been above $2 billion, the State Bank of Pakistan (SBP) said on Friday.

    In terms of growth, remittances increased by 26.8 percent (y/y) in August, which is a decade high growth rate for that month. On a m/m basis, inflows were marginally lower than in July, reflecting the usual post-Eid slowdown.

    Nevertheless, this seasonal decline was far less this year compared to historical trends. Cumulatively, at $5.36 billion, remittances grew by 10.4% during the first two month of this year over the same period last year.   

    Remittance inflows during August 2021 were mainly sourced from Saudi Arabia ($694 million), United Arab Emirates ($512 million), United Kingdom ($353 million) and the United States ($279 million).

    Proactive policy measures by the Government and SBP to incentivize the use of formal channels, curtailed cross-border travel in the face of COVID-19, altruistic transfers to Pakistan amid the pandemic, and orderly foreign exchange market conditions have positively contributed towards the sustained improvement in remittance inflows since last year.

    FBR withdraws all appeals in exemption on remittances
  • FBR withdraws all appeals in exemption on remittances

    FBR withdraws all appeals in exemption on remittances

    ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn all the appeals pertaining to income tax exemption on inward foreign remittances.

    In order to implement the decision the revenue body issued, Circular No. 05 – Foreign Remittances – Exemption.

    “In order to win the trust of the taxpayers and spare the public resources for more productive use elsewhere, all departmental appeals filed on the strict sensu interpretation of the law, be withdrawn immediately, and no further appeals be filed if one all fours of this clarification,” according to the circular.

    Further, all circulars and instructions issued on the matter previously issued stand rescinded, the FBR added.

    The FBR said a controversy has loomed for a quite some time as innovations in banking, money transfer mechanism, and development of newer products for cross-border transactions have outflanked the letter of the law as now Money Services Bus (MSBs), Exchange Companies (ECs), and Money Transfer Operators (MTOs) perform almost identical to those of scheduled banks.

    In some situations, IRS Field Formations have refused concessions vis-à-vis foreign remittances remitted via ECs, that is, Money Gram, Western Union and Ria France etc. relying on Appellate Tribunal Inland Revenue’s judgment reported as ITA.No.794/LB of 2021.

    It has been held that four conditions are mandatory to claim the benefit of foreign remittances under Income Tax Ordinance, 2001. The exemption is available subject to fulfillment of the four conditions, namely: the remitted amount is in foreign exchange; the amount is remitted into Pakistan through normal banking channels; the amount is encashed by a scheduled bank; and a certificate of encashment is issued by the bank concerned.

    However, the State Bank of Pakistan (SBP) while responding to Federal Tax Ombudsman (FTO)’s memorandum through letter No.EPD/8302/EPP16(37)-Misc-2019, dated April 08, 2019, has categorically taken the position that foreign exchange remitted into Pakistan etc. does constitute ‘foreign exchange remitted through normal banking channels’ for all legal purpose.

    The FBR said that SBP’s stance legitimizing remittances via MSBs, ECs and MTOs, and equating them with scheduled bank as laid down in Section 111(4) of Income Tax Ordinance, 2001, was challenged through a precise reference bearing C.No.1(1)TP/2017(A), dated March 31, 2021, mainly on four grounds.

    First, that all four conditions are to be concomitantly fulfilled and that, prima facie, “prefunded non-resident rupee account and the foreign current account of Overseas Money Service Bureau (MSB), Exchange Companies (ECs), Money Transfer Operators (MTOs) etc. locally maintained with the Pakistani banks, and the subsequent replenishment through SWIFT cannot substitute the strict conditions of Section 111(4) of the Income Tax Ordinance, 2001.

    Second, as per Section 2(m) of the SBP Act, 1956, a scheduled bank means a bank for the time being included in the list of banks maintained under sub-section (1) of Section 37 of the SBP Act, 1956, and that MSBs, ECs and MTOs were not scheduled banks as per section 37(1) read with Section 111(4) of the Income Tax Ordinance, 2001.

    Third, Honorable Supreme Court of Pakistan in case law titled as Army Welfare Sugar Mills Ltd. and other versus Federation of Pakistan reported and reported as 1992-SCMR-1652 has laid down a couple of fundamental principles of claiming exemption, namely that (a) the onus of proof is on the one who claims exemption, and (b) that “a provision relating to grant of tax exemption is to be construed strictly against the person asserting and in favor of the taxing officer.”

    Fourth, it is for Supreme Court and High Courts to interpret law and not the regulators like SBP to do the same.

    The FBR further stated that the SBP through Memorandum No. EPD-30-4-2021-97865, dated May 7, 2021, held their ground and have responded to FBR’s afore-cited observations by stating that “to claim exemption under aforementioned clause of Income Tax Ordinance, 2001, a taxpayer receiving home remittances” via MSB and ECs “strictly fulfills all the conditions set in Section 111(4)(a) of the Income Tax Ordinance, 2001.”

    The SBP has also gone on to item-wise address the question of fulfillment or non-fulfillment of the four cardinal conditions laid down in the Income Tax Ordinance, 2001.

    “The SBP having unequivocally responded to all four critical questions, that is, that foreign exchange ought to originate overseas, must reach and be surrendered to the SBP, and transaction should have a banking trail behind, have been answered affirmatively.”

    Moreover, the SBP under the Foreign Exchange Regulations Act, 1947, is the institutions to attend to all matters pertaining to ‘dealings in foreign exchange and securities and the import and export of currency.”

    Therefore, the SBP being the frontline regulator of all foreign exchange moving into or outside the country, is in best position to decide as to whether the necessary legal requirements have been met or not of a particular transaction to be able to avail the benefit cover under tax laws.

    Foregoing in view, it is clarified, the FBR said, that all cases of claim of foreign remittances be disposed of by according lenient interpretation to the conditions stipulated in section 111(4) of the Income Tax Ordinance, 2001.

    “Moreover, in order to win the trust of the taxpayers and spare the public resources for more productive use elsewhere all departmental appeals filed on the strict sensu interpretation of the law, be withdrawn immediately, and no further appeals be filed if on all fours of this clarification.”

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  • Remittances grow by 25 percent; half year highest in 14 years

    Remittances grow by 25 percent; half year highest in 14 years

    KARACHI: The inflows of workers remittances have registered 25 percent growth during first half of the current fiscal year. This is the highest half yearly growth since FY07, the State Bank of Pakistan (SBP) said on Friday.

    On a cumulative basis, workers’ remittances reached an unprecedented level of $14.2 billion during the first half of FY21, 25 percent higher than the same period last year.

    Workers’ remittances maintained their strong momentum for the seventh consecutive month in December.  Remittances rose further to $2.4 billion, growing by 16.2 percent on a year-on-year basis and 4.2 percent on a month-on-month basis.

    Remittance inflows have been well-diversified. Most of the inflows during H1-FY21 were sourced from Saudi Arabia ($4.0 billion), United Arab Emirates ($3.0 billion), United Kingdom ($1.9 billion) and United States ($1.2 billion).

    This strong growth in workers’ remittances is attributable to the increased use of formal channels on the back of sustained efforts by the government and SBP to encourage inflows through official channels as well as limited cross-border travel due to the second wave of the COVID-19 pandemic, together with favorable foreign exchange market dynamics.

  • Record $2.46 billion as remittances received in June

    Record $2.46 billion as remittances received in June

    KARACHI: State Bank of Pakistan (SBP) on Monday said that the workers’ remittances rose by a significant 50.7 percent during June 2020 to reach record high $2.46 billion compared with $1.63 billion in June 2019.

    Similarly, on a cumulative basis, workers’ remittances increased to a historic high level of $23.12 billion during FY20, witnessing a growth of 6.4 percent over $21.74 billion during FY19.

    The significant increase in remittances during June 2020 can be attributed to a number of factors. Since many of the countries eased lockdown in June, overseas Pakistanis were able to transfer accumulative funds, which they were unable to send earlier.  Further, it is also believed that they sent remittances to support extended families and friends due to COVID-19.

    In addition to these, efforts by the Government and SBP also played their role in the increased inflow of workers’ remittances during FY20 in general and Covid-19 period, March till June 2020, in particular.

    Supportive government policies in terms of extension of Reimbursement of TT Charges Scheme (Free Send Remittance Scheme) to small remitters by reducing threshold from USD 200 to USD 100, as well as, broadening the scope of incentive scheme for marketing scheme for financial institutions increased the incentives for sending remittances through regular channels.

    Further, on-boarding of a large number of technology based money transfer companies by SBP and PRI also helped absorb the shock of lockdowns.

    Financial institutions were motivated to use effective marketing campaigns with particular focus on digital channels for sending and receiving remittances to promote the use of legal channels.

    It would also be pertinent to mention here that inflow of workers’ remittances registered an increase of a 7.8 percent during March-June 2020 pandemic period compared with the corresponding period of 2019.

    During June 2020, larger amounts of Workers’ Remittances are received from Saudi Arabia (US $ 619.4 million), USA (US $ 452.0 million), UAE (US $ 431.7 million) and UK (US $ 401.0 million) recording an increase of 42.0 percent, 7.1 percent, 33.5 percent and 40.8 percent respectively as compared to May, 2020.

  • Exemption from withholding tax on foreign remittances may not practical for banks

    Exemption from withholding tax on foreign remittances may not practical for banks

    The Pakistani government has announced a significant tax relief measure, granting withholding tax exemption on the transfer of foreign remittances to Pak Rupee (PKR) accounts. However, tax experts have raised concerns about the practical implementation of this exemption, particularly regarding the bifurcation of transactions for banks.

    (more…)
  • SBP tightens remittances reporting system

    SBP tightens remittances reporting system

    KARACHI: The State Bank of Pakistan (SBP) has implemented stricter reporting measures for monthly foreign exchange returns submitted by banks, aiming to ensure more accurate data on remittances.

    (more…)
  • Remittances grow by 5.4% in July-February

    Remittances grow by 5.4% in July-February

    KARACHI: The workers’ remittances received during July – February 2019/2020 amounted to $15.126 billion recording an increase $770.7 million or 5.4 percent over remittances received during July – February FY19 ($ 14,355.8 million), State Bank of Pakistan (SBP) said on Tuesday.

    Workers’ remittances during February 2020 amounted to $ 1,824.3 million recording a decrease of $ 83 million or 4.4 percent over remittance received during previous month (January 2020 $ 1,907.32 million).

    The remittances during February 2020 ($ 1,824.3 million) increased by $ 242.6 million or 15.3 percent over remittance received during corresponding month of FY 19 ($ 1,581.8 million).

    During February 2020, larger amounts of Workers’ Remittances are received from Saudi Arabia ($ 421.96 million), UAE ($ 387.1 million), USA ($ 333.5 million) and UK ($ 253.5 million) recording a decrease of 2.6 percent, 2.1 percent, 0.5 percent and 15.2 percent respectively as compared to January 2020.