SBP Allows Local Companies To Acquire Services of Digital Companies for up to $400,000 a Year

State Bank of Pakistan (SBP) has allowed local companies to acquire services of digital media platforms for up to $400,000 per year while revising up the limit by 100 percent.

In view of the increasing reliance of businesses on digital services procured from abroad, SBP has enhanced the per year limit assigned to 62 white-listed digital service provider companies from USD 200,000 to USD 400,000 per annum.


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Some of the platforms included Facebook, Youtube, Twitter, LinkedIn, Google, etc. Further, for acquiring digital services from companies not included in the list, the per-year limit of remittance has also been increased from USD 25,000 to USD 40,000, a statement issued said.

Moreover, to facilitate businesses in acquiring services from abroad, apart from digital service providers, SBP has enhanced the threshold from USD 10,000 to USD 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 the Foreign Exchange Operations Department (FEOD) of SBP-Banking Services Corporation (BSC).

Remittance of Royalty, Franchise & Technical (RFT) Fees for Manufacturing Sector

SBP has revised the policy on remittance of 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 fees has been revised upwards to cater to the needs of the business community. Now, entities belonging to the manufacturing sector, through their designated bank, can remit USD 1 million as upfront payment and up to 8 percent of net sales (excluding taxes and cost of imported components). Moreover, a new category, i.e., royalty on export-related manufacturing, has been introduced under which Pakistani entities collaborating with foreign counterparts can remit recurring royalty payment of up to 10 percent of net export sales (i.e., excluding taxes and cost of imported components).

In this regard, SBP has notified revision of foreign exchange instructions pertaining to commercial remittances, with the objective of promoting ease of doing business and facilitating legitimate cross-border commercial payments on account of services.


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Remittance of Profit/ Head-office Expense By Branches of Foreign Companies

To facilitate branches of foreign companies in remitting legitimate payments such as profit, head office expenses, and winding up proceeds, SBP has made changes in existing regulations and authorized banks to allow such remittances with minimum involvement of SBP. The branches of foreign companies working in Pakistan and intending to remit profit/head office expenses/winding up proceeds shall get their bank designated from the Exchange Policy Department, SBP, after which the remittances under these heads can be made by the designated bank.

Business Process Outsourcing (BPO) for Non-core Activities

To share expertise and reduce related costs, companies are increasingly restructuring their business processes by outsourcing their supporting (non-core/shared service) functions to the related or third parties abroad. Accordingly, in order to cater to the demands of such companies, SBP has introduced foreign exchange regulations on Business Process Outsourcing for non-core activities. Now, resident companies intending to outsource non-critical/non-core business processes to foreign entities can approach FEOD and SBP-BSC through a bank for acknowledgment of the underlying agreement based on the guidelines. After obtaining acknowledgment, the designated bank can affect remittance as per applicable regulations.


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Logistics related Remittances

SBP has issued specific instructions on logistics-related cross-border payments, such as container detention charges, port demurrage charges, etc., intending to harmonize the foreign exchange regime with the current business environment. Banks have been delegated to process such payments up to a certain threshold under the newly introduced policy.

Payment of Charter Cost Direct to the Owner of Ship/ aircraft

With the intention to facilitate the business community of Pakistan in making payment of charter cost directly to the owner of ship/aircraft, SBP has revised regulations, and banks have been authorized to process such payments without prior regulatory approval of SBP.

It is envisaged that the above-mentioned facilitative measures will help the business community of Pakistan in growing their businesses.