Ministry of IT and Telecom has said that steps will be taken to resolve profit repatriation issues of foreign tech companies. These steps will help attract FDI towards Pakistan’s tech sector, enable high-worth job growth, and enhance export income for the country.
By Bilal Hussain
“Steps have been agreed upon to facilitate opening foreign currency accounts under the FCA regime for IT, ITeS industry, startups, and freelancers,” tweeted MoITT.
Pakistan’s IT exports crossed the $2 billion mark for the first time in the country’s history in the preceding financial year, growing over 47%, according to data released by the Ministry of Commerce.
MoITT tweeted this after SBP notified changes in its foreign exchange manual saying that they have been made to promote ease of doing business.
The central bank eased the payment structure in paying foreign service providers from Pakistan.
“In view of increasing reliance of businesses on digital services procured from abroad, SBP has enhanced the per year limit assigned to 62 whitelisted digital service provider foreign tech companies from $200,000 to $400,000 per annum,” the State Bank said in a notification.
“For acquiring digital services from companies not included in the list, per year limit of remittance has also been increased from $25,000 to $40,000,” it added.
“Moreover, 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 requests for acquiring services from abroad. Beyond this limit remittances can be made after getting the agreement registered with Foreign Exchange Operations Department of SBP-Banking Services Corporation,” it said.
The State Bank has also revised the policy on remittance of Royalty, Franchise, and Technical (RFT) fees. Banks have been delegated the authority to register the agreements of parties and to allow remittances of RFT fees under the revised policy.
“The threshold for remittance of such fee has been revised upwards to cater the needs of the business community. Now, entities belonging to the manufacturing sector, through their designated bank, can remit $1 million as upfront payment and up to 8% of net sales,” the central bank said.
The State Bank has also made changes in existing regulations and authorised banks to allow remittance of profit or 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, the State Bank has made changes in existing regulations and authorised banks to allow such remittances with minimum involvement of SBP,” it said.
Originally published at Samaa tv