Next Budget May Allow Unlimited Dollar Transfers Into Pakistan Without FBR Checks

The federal government is reviewing a proposal that could allow individuals to bring unlimited foreign currency into Pakistan through formal banking channels. If allowed, it could attract as much as US$ 20 billion annually and strengthen the country’s external account position.

Authorities are considering changes to Section 111(4) of the Income Tax Ordinance, which currently prevents the Federal Board of Revenue (FBR) from questioning the source of foreign exchange remitted through banking channels up to Rs. 5 million in a tax year.

One option under review would remove the cap altogether, subject to verification by the State Bank of Pakistan (SBP) regarding the legitimacy of the sender and recipient.

A second option being examined is increasing the existing Rs. 5 million threshold, which was introduced years ago and has lost value due to inflation and currency depreciation. At current exchange rates, the limit is equivalent to roughly US$ 17,900.

The proposals have gained attention ahead of the federal budget after tax advisory firm Tola Associates estimated that increasing the declaration threshold to US$ 100,000 could potentially mobilize up to US$20 billion in FATF compliant overseas assets through formal channels.

The firm has also proposed a Rs. 10 per dollar incentive for remittances sent through banks, which it believes could add another US$4 billion to US$5 billion annually to formal remittance inflows.

The Pakistan Business Council has separately urged the government to reduce taxes on foreign assets, restore previous tax residency rules and phase out the super tax, arguing that current policies are discouraging investment and prompting wealthy Pakistanis to move assets and residency abroad.

No final decision has been made, but the proposals are understood to be under active consideration as part of broader budget discussions aimed at boosting foreign exchange inflows and supporting economic growth.