SBP Directs Banks to Credit 35% Exports Proceeds of IT Companies into Special Forex Accounts

In order to encourage IT companies and freelancers to bring their foreign exchange earnings into the country, the State Bank of Pakistan (SBP) directed banks to credit 35 percent of the export proceeds into these exporters’ special foreign currency accounts mandatorily.

The exporters should be registered with Pakistan Software Export Board (PSEB) or Pakistan Software Houses Association (P@SHA), and involved in the export of Software, Information Technology (IT) services, and IT Enabled Services (ITeS).

However, these instructions are valid until March 31, 2023. These instructions will be reviewed in light of incremental export performance by the IT sector and the realization of export proceeds thereof during this period.

Banks have been advised 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.

Banks have also been advised to provide proper training to relevant staff of all foreign exchange dealing branches (FE Designated Officer) to ensure facilitation to the IT-based exporters/ freelancers and establish a permanent help desk overseen by two officers not below the rank of Vice President to act as lead coordinators on behalf of the bank to resolve the matters pertaining to account opening, retention in accounts, outward remittances, etc.

The names and contact details of the lead coordinators and designated officers at the Authorized Dealer branches should be made available on the bank’s website immediately.

SBP Directs Banks To Facilitate IT Exporters Without Its Approval

  1. Authorized Dealers may allow the exporters to utilize the funds available in this account for the purposes stated below, without prior approval of SBP, except where specifically mentioned otherwise:
  2. Payment of commission/discount to the overseas agents/buyers/ affiliates;
  3. Shortfall in realization up to 10% of the FOB value of export proceeds realized, subject to submission of sufficient documentary evidence for short realization to the satisfaction of the concerned Authorized Dealer. Any shortfall exceeding the 10% limit may also be adjusted through this account.
  4. Payment abroad against the collection of commercial intelligence, purchase of designs/patterns, market studies, and bona fide export claims.
  5. Payment for fees/expenses related to the advertisement, promotion, publicity, marketing, brand building, shelf spacing, etc. of products abroad through third-party agents, e-commerce platforms, digital platforms, or through the company’s own subsidiary/liaison/marketing office abroad.
  6. Subscription fee for participation in foreign exhibitions, and fairs for promotion/marketing of company’s products;
  7. Payment to foreign consultant for the acquisition of services from abroad in relation to enhancing exports of goods/services;
  8. Payments for hotel booking and other travel expenses abroad, in lieu of official visits of company’s employees/ directors;
  9. Payment for warehousing services including insurance of goods warehoused through a third-party agent or through the company’s own subsidiary/liaison/marketing office abroad;
  10. Payment of lab testing charges, audit/inspection/certification charges, and logistics/other charges for clearance of goods at the destination port, as per the terms of the contract;
  11. Payment of debit notes to the importer for chargebacks/penalties or any other charges incurred by the importer on behalf of the exporter;
  12. Refund of advance payment received against goods/ services on account of cancellation of the underlying contracts within one year from the date of receipt of advance payments.
  13. Payments for registration of patents, copyrights, drug registration, license fee etc.
  14. Payment for import 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;
  15. Payments for software purchasing, hosting, licensing subscription;
  16. Payments for dividends of domestic entities to their shareholders abroad;
  17. Payments for product listing on different platforms, including affiliate platforms;
  18. Payments for certification fees;
  19. Payments for acquiring game development services and publishing services;
  20. Payment for acquisition of digital services from abroad in accordance with the provisions of relevant Para.

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