Tax return filers free to deposit forex

Non-residents cannot feed accounts with forex purchased from domestic markets

Pakistan’s central bank has affirmed that resident tax return filers are free to deposit cash in their foreign currency (FCY) accounts in local banks, removing the confusion following introduction of new FCY account rules last week.

The Foreign Currency Accounts Rules 2020 reads, “A foreign currency account (maintained by individuals) shall not be credited with any foreign exchange purchased from an authorised dealer, exchange company or money changer, except as allowed by the State Bank of Pakistan (SBP) through general or special permission under any law.” The Ministry of Finance introduced the new rules last week.

“Since SBP has already provided general permission for filers to deposit foreign currency into their FCY account and similarly general permission is also in place for the purchase of FCY from exchange companies under the Exchange Companies Manual, filers can continue to deposit cash in their FCY accounts,” the central bank said. “There is no change in State Bank’s existing regulations regarding FCY accounts and these regulations do not conflict with the rules issued by the Ministry of Finance,” it added. Anyone can pay education fee for their children studying abroad and/or pay hospital bills through their Pakistani rupee and foreign currency accounts as per current practices, the central bank said.

Non-residents

The central bank, however, made it clear that non-resident Pakistanis operating accounts at local banks cannot feed their accounts with foreign currencies purchased from domestic markets.

“RDA (Roshan Digital Account) is a distinct scheme for non-resident Pakistanis, offering both FCY and Pak rupee accounts. Funds can be received into these accounts from abroad but they cannot be fed from within Pakistan,” SBP said.

Published in The Express Tribune, October 13^th, 2020.

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