KARACHI: In order to encourage IT companies and freelancers to bring their foreign exchange earnings into the country, the State Bank of Pakistan (SBP) has advised the banks to mandatorily allow the retention of 35 percent of their export proceeds in special foreign currency accounts.
SBP on Friday announced the amendment in its foreign exchange regulations aimed to facilitate exporters of software, IT & IT Enabled Services and bring more foreign exchange earnings into the country. Now IT exporters and companies can retain 35 percent of their export proceeds in special foreign currency accounts.
However, such exporters need to be registered either with Pakistan Software Export Board (PSEB) or Pakistan Software Houses Association ([email protected]), and involved in the export of Software, Information Technology (IT) services, IT Enabled Services (ITeS).
According to SBP, these instructions are valid until March 31, 2023, and these instructions will be reviewed in the light of incremental export performance by IT sector and realization of export proceeds thereof during this period.
Exporters would also be allowed to use their retained funds for legitimate business payments or expenses abroad, as per the revised list of purposes issued by SBP. Banks can now provide facilitation of outward remittances from the retained proceeds through issuance of corporate debit cards after conducting necessary due diligence.
SBP has also advised banks to provide digital channels for opening and operation of these accounts. Banks to facilitate these exporters in opening their exporters’ special FCY accounts and for carrying out remittances’ transaction from their Exporters’ Special FCY retention accounts by issuing corporate debit cards, and providing digital platforms including FX digital portal, after necessary due diligence and establishing mechanism for ongoing monitoring of permissible payments abroad to meet their business requirements, the SBP said.
Furthermore, SBP has advised banks to institute a mechanism for facilitation and speedy resolution of the customers’ complaints. Banks are required to nominate focal persons at Head Office level, and designate an appropriate officer at each branch dealing in foreign exchange business. Exporters can also approach SBP to share their suggestions and concerns.
SBP believed that the amendments will incentivize new entrants in this field to focus on exports and enable existing exporters to boost their business that in turn will create employment opportunities and increase foreign exchange earnings of the country.
As per SBP instructions, in order to facilitate exporters of goods or services, the scope of utilization of funds held in exporters’ Special Foreign Currency Account is being enhanced.
These funds can be used for payment of commission/ discount to the overseas agents/ buyers/ affiliates, payment for fee/ expenses related to advertisement, promotion, publicity, marketing, brand building, shelf spacing, etc., of products abroad through third party agent, e-commerce platforms, digital platforms or through company’s own subsidiary/ liaison/ marketing office abroad.
In addition, payment for import of goods by exporters for the purpose of their own business, subject to compliance with applicable Import Policy Order and related laws/ regulations issued by any government department and SBP.
In addition, they are allowed to make payments for software purchasing, hosting, licensing subscription, payments for dividends of domestic entities to their shareholders abroad, payments for product listing on different platforms, including affiliate platforms, payments for certification fees and payments for acquiring game development services and publishing services.
Copyright Business Recorder, 2023