Govt moves to offset remittances shortfall
To offer incentives to expatriates so that they use banking channels
To offer incentives to expatriates so that they use banking channels. PHOTO: REUTERS/FILE
ISLAMABAD:
Expecting a shortfall in the amount of money sent back to the country by migrant workers because of the Covid-19 pandemic, the government has decided to offer an incentives package to overseas Pakistanis to encourage them to use banking channels to transfer remittances.
According to a recent World Bank, remittances to low- and middle-income countries are projected to fall by nearly 20%, “representing the loss of a crucial financial lifeline for many vulnerable households”.
Describing the decrease as the worst in recent history, including the 2008 financial crisis, the bank said migrant workers were especially vulnerable to losing their jobs during coronavirus lockdowns which are still largely in place across the developed world.
The package -- to be effective from the start of the next fiscal year -- includes tax exemptions and other incentives under a special loyalty programme.
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Under the incentives package, “withholding tax will be exempted from July 1, 2020 on cash withdrawal or on issuance of banking instruments/transfers from a domestic bank account to the extent of remittances amount received from abroad in that account in a year”.
In this connection, the finance ministry has directed the Federal Board of Revenue to propose necessary amendment to the Income Tax Ordinance through the finance bill.
Under a ‘National Remittance Loyalty Programme’ to be launched from September 1, various incentives will be given to remitters through mobile apps and cards.
They will be offered debit and loyalty cards, in addition to a smartphone-based incentive product. Moreover, a special application similar to Vouch365 will also be launched to facilitate them.
Under the programme, children of overseas Pakistanis sending remittances home will be given 50% discount in Overseas Pakistanis Foundation (OPF) School and college fees and a special quota will also be allotted to the expatriates in the OPF housing schemes.
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According to finance ministry sources, a sub-committee led by additional finance secretary (international finance and investment) has started designing the loyalty programme.
A high-level committee formed for the purpose has completed the preliminary work on it.
The committee consists of Ministry of Finance (MoF), State Bank of Pakistan (SBP), Federal Board of Revenue (FBR), Ministry of Overseas Pakistanis, Overseas Pakistanis Foundation (OPF), National Database and Registration Authority (NADRA), Immigration and Passport office, National Bank of Pakistan (NBP) and representatives of other banks.
Sources said the committee will finalise the comprehensive programme and present it for approval.
It was further said that the finance bill will be amended in the next fiscal budget and a National Remittance Loyalty Programme with the collaboration of banks will be introduced in September 2020 along with an incentive package.
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The federal government, in an attempt to offer additional relief to the overseas Pakistanis, has decided to introduce a centralised loyalty programme under which debit card and loyalty cards will be issued, while a smart-phone based incentive product and a special application similar to Vouch 365 will also be launched.
The committee is further deliberating over exempting the immigration fees, insurance premiums and registration fees for the overseas Pakistanis.
The expatriates will be issued frequent flyer cards, while special facilities in the government institutions will also be offered to them under the programme.
The PIA will draft the incentive package and share it with the sub-committee, which will later be added to the loyalty programme.
In addition, recommendation to open a separate counter for overseas Pakistanis at the international airports is also under consideration where they will be given clearance on priority basis on their arrival and departure.
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Sources said that the panel had reviewed the initial recommendations put forth and in a recent meeting, the SBP, OPF, FBR and other institutions had reached a consensus on the matter.
The committee had been directed to complete the work on the proposals and finalise them.
The recommendation to exempt the overseas Pakistanis from the immigration fees is also under consideration, for which Bureau of Immigration and Overseas Employment (BIOE) had been tasked to complete its work.
The Overseas Pakistanis Foundation Welfare Fund (OPFWF) and Overseas Employment Corporation (OEC) authorities will complete the working with the BIOE to determine the additional financial burden that they will have to bear for exempting the immigration fees, insurance premium and registration fees.
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Similarly, the Civil Aviation Authority (CAA) is also reviewing the recommendations to offer special concessions to overseas Pakistanis for which the Pakistan Remittance Initiatives (PRI) and State Bank of Pakistan (SBP) will complete the work in consultation with other banks and decide a procedure for the use of CIP lounges at all international airports and estimate the cost to be borne in this regard.
Moreover, separate counters will be set up for overseas Pakistanis and red carpet will be rolled out for them.
Special standing and welcoming notes will be posted at these counters from where the expatriates will be able to deposit their remittances in exchange for the local currency.
Expecting a shortfall in the amount of money sent back to the country by migrant workers because of the Covid-19 pandemic, the government has decided to offer an incentives package to overseas Pakistanis to encourage them to use banking channels to transfer remittances.
According to a recent World Bank, remittances to low- and middle-income countries are projected to fall by nearly 20%, “representing the loss of a crucial financial lifeline for many vulnerable households”.
Describing the decrease as the worst in recent history, including the 2008 financial crisis, the bank said migrant workers were especially vulnerable to losing their jobs during coronavirus lockdowns which are still largely in place across the developed world.
The package -- to be effective from the start of the next fiscal year -- includes tax exemptions and other incentives under a special loyalty programme.
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Under the incentives package, “withholding tax will be exempted from July 1, 2020 on cash withdrawal or on issuance of banking instruments/transfers from a domestic bank account to the extent of remittances amount received from abroad in that account in a year”.
In this connection, the finance ministry has directed the Federal Board of Revenue to propose necessary amendment to the Income Tax Ordinance through the finance bill.
Under a ‘National Remittance Loyalty Programme’ to be launched from September 1, various incentives will be given to remitters through mobile apps and cards.
They will be offered debit and loyalty cards, in addition to a smartphone-based incentive product. Moreover, a special application similar to Vouch365 will also be launched to facilitate them.
Under the programme, children of overseas Pakistanis sending remittances home will be given 50% discount in Overseas Pakistanis Foundation (OPF) School and college fees and a special quota will also be allotted to the expatriates in the OPF housing schemes.
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According to finance ministry sources, a sub-committee led by additional finance secretary (international finance and investment) has started designing the loyalty programme.
A high-level committee formed for the purpose has completed the preliminary work on it.
The committee consists of Ministry of Finance (MoF), State Bank of Pakistan (SBP), Federal Board of Revenue (FBR), Ministry of Overseas Pakistanis, Overseas Pakistanis Foundation (OPF), National Database and Registration Authority (NADRA), Immigration and Passport office, National Bank of Pakistan (NBP) and representatives of other banks.
Sources said the committee will finalise the comprehensive programme and present it for approval.
It was further said that the finance bill will be amended in the next fiscal budget and a National Remittance Loyalty Programme with the collaboration of banks will be introduced in September 2020 along with an incentive package.
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The federal government, in an attempt to offer additional relief to the overseas Pakistanis, has decided to introduce a centralised loyalty programme under which debit card and loyalty cards will be issued, while a smart-phone based incentive product and a special application similar to Vouch 365 will also be launched.
The committee is further deliberating over exempting the immigration fees, insurance premiums and registration fees for the overseas Pakistanis.
The expatriates will be issued frequent flyer cards, while special facilities in the government institutions will also be offered to them under the programme.
The PIA will draft the incentive package and share it with the sub-committee, which will later be added to the loyalty programme.
In addition, recommendation to open a separate counter for overseas Pakistanis at the international airports is also under consideration where they will be given clearance on priority basis on their arrival and departure.
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Sources said that the panel had reviewed the initial recommendations put forth and in a recent meeting, the SBP, OPF, FBR and other institutions had reached a consensus on the matter.
The committee had been directed to complete the work on the proposals and finalise them.
The recommendation to exempt the overseas Pakistanis from the immigration fees is also under consideration, for which Bureau of Immigration and Overseas Employment (BIOE) had been tasked to complete its work.
The Overseas Pakistanis Foundation Welfare Fund (OPFWF) and Overseas Employment Corporation (OEC) authorities will complete the working with the BIOE to determine the additional financial burden that they will have to bear for exempting the immigration fees, insurance premium and registration fees.
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Similarly, the Civil Aviation Authority (CAA) is also reviewing the recommendations to offer special concessions to overseas Pakistanis for which the Pakistan Remittance Initiatives (PRI) and State Bank of Pakistan (SBP) will complete the work in consultation with other banks and decide a procedure for the use of CIP lounges at all international airports and estimate the cost to be borne in this regard.
Moreover, separate counters will be set up for overseas Pakistanis and red carpet will be rolled out for them.
Special standing and welcoming notes will be posted at these counters from where the expatriates will be able to deposit their remittances in exchange for the local currency.