CHAPTER 14

COMMERCIAL REMITTANCES (OTHER THAN FOR IMPORTS)

1. Freight and Passage Collections.

2. Reporting of Passage and Freight Earnings.

3. Remittance of Surplus Passage and Freight Collections by Foreign Airlines operating in

Pakistan.

4. Remittance of Surplus Passage and Freight Collections by Foreign Shipping Companies.

5. Remittance of Freight Charges by Freight Forwarders/Consolidators.

6. General Average Payments.

7. Operating Expenses of Pakistani Shipping Companies/Airlines.

8. Charter of Foreign Ships and Aircrafts.

9. Export Claims.

10. Guarantees for Payment of Claims.

11. Acquisition of Services from Abroad.

12. Remittance of Royalty/Franchise and Technical Fees.

13. Technical Services and Consultancy Agreements and Engagement of Foreign

Technicians.

14. Remittances by Information Technology Sector.

15. Remittance of Profits by Foreign Banks/Companies.

16. Payment of Dividend to Non-Resident Shareholders.

17. Export of Dividend Warrants.

18. (i) Foreign Articles in Pakistani Newspapers and Magazines.

(ii) Remittances on account of News Feature, News Picture, Syndication Services,

Gambles, Comics, Puzzles, Book Reviews etc.

(iii) Remittances of salary/remuneration as well as Telex/Telefax/Telegram/Telephone

Charges to the Overseas Correspondents of Pakistani Newspapers.

1
19. Advertisements in Newspapers and Magazines abroad.

20. Bank Charges and Sundries.

21. Purchase of Tender Forms from abroad.

22. (i) Registration of Patents and Trade Marks in Foreign Countries.

(ii) Registration of Exporters of Pharmaceutical products in Foreign Countries.

23. Reporting of Remittances.

2
 CHAPTER 14

COMMERCIAL REMITTANCES
(OTHER THAN FOR IMPORTS)

1. Freight and Passage Collections.

i) Shipping companies/airlines may accept freight and passage money in Rupees only in the
under-noted cases without the prior approval of the State Bank:

a) Exports from Pakistan made on C&F/CIF basis against Form ‘E’/ ‘EFE’ duly certified
by Authorized Dealers on their letter heads in terms of para 32 of Chapter 12 of the
Manual.
b) Imports into Pakistan on FOB basis:

aa) Against Authorized Dealer’s certificate on form prescribed at Appendix V-29 in

terms of para 24 of Chapter 13 of the Manual.
bb) Against SBP’s approval for import on FOB basis in public sector in terms of para
25 of Chapter 13 of the Manual.
cc) Against certificate of importers for freight on Import of Trade Sample not
exceeding Rs. 2,000/- per year in terms of para 27 of Chapter 13 of the Manual.

c) Freight on personal effects/excess baggage in accordance with the provisions laid

down in paras 39(i) & 39(iii) of Chapter 17 of the Manual.
d) Freight on Export of Trade Sample and gift parcels in accordance with the procedure
laid down in para 39 (ii) of Chapter 17 of the Manual.
e) Passage money in accordance with the instructions laid down in Chapter 17.
In all other cases prior approval of State Bank should be obtained before collecting freight
in Rupees. For this purpose, applications should be made to the State Bank giving the nature of
the transactions and the reasons why freight cannot be paid in foreign currency.
ii) Foreign shipping companies and airlines, whether having an office in Pakistan, or not,
were not allowed to open PLS accounts. They could open current accounts for keeping funds
received from abroad and the amounts of freight and passage collections, pending remittance to
their head offices.1However, in terms of F.E. Circular No. 5 dated 17th March, 2003, Shipping
Companies/Airlines having offices in Pakistan or operating their ship/airlines in Pakistan can open
and operate profit-bearing Pak rupee accounts in Pakistan with the condition that profit so earned
would not be remittable but can be used for meeting local expenses. Agents of foreign shipping
companies and airlines may continue to retain freight/passage collections in PLS accounts held in
their own names provided the profits earned in these accounts are not passed on in any manner to
their principals.

1
FE Circular No. 5 dated March 17, 2003.

3
 2
iii) Cargo Consolidators/Forwarders who are approved members of FIATA and registered
with regulating authorities as per Para 1 (iv) ibid may accept freight in rupees without the prior
approval of the State Bank only in respect of Pakistani exports cargo on C&F/CIF basis as per
procedure prescribed in paragraph 32 of Chapter 12 of the Manual provided the consignment is
being dispatched against Advance Payment or an irrevocable letter of credit which contains a
provision for issuance of documents of title under Cargo Consolidation System and a certificate
to this effect issued by the Authorized Dealer on Appendix V-12 is produced.

iv) The Regulating Authorities for respective Agents of Foreign Principals are as below:

Type of Agency Regulating Authority Type of permission

a) Shipping Agency Director General (Ports and Registration
Shipping Wing) Ministry of
Communications and Railways,
Government of Pakistan.

b) Cargo Consolidators -do- Registration

c) Airline GSA/PSA Civil Aviation Authority NOC

2. Reporting of Passage and Freight Earnings.

Foreign airlines/General Sales Agents/Shipping companies/Shipping Agents are required

to report each month to the State Bank full particulars of the passages and freight booked by them
in Pakistan on form ‘F.P. Airline’/‘F.P. Shipping’ in duplicate as per specimen appearing at
Appendices V-36 and V-37. 3The statements by foreign airlines/General Sales Agents and foreign
shipping companies/agents i.e. Appendices V-36 & V-37 should be sent to Statistics and Data
Warehouse Department of the State Bank of Pakistan at [email protected] and [email protected]
respectively by 18th of the following month. While the Airlines should submit only one form ‘F.P.
Airline’ in respect of bookings made by them and their agents, the Shipping Agents should submit
separate statement (form F.P. Shipping) for each of their principals whose ships are handled by
them during a month. The forms F.P. should be supported by bank encashment certificate in
support of inward remittances received.

3. Remittance of Surplus Passage and Freight Collections by Foreign Airlines operating

in Pakistan.

i) Authorized Dealers may allow remittance of surplus passage and freight collections,
4
twice a month on receipt of payments from the travel agents, of those foreign airlines/General
Sales Agents which are keeping their collections with them, on submission of application
alongwith the following documents: -

2
FE Circular No. 19 dated December16, 2002.
3
FE Circular No. 07 dated August 18, 2016
4
FE Circular No. 09 dated August 09, 2005.

4
 a) A copy of F.P. Statement (Appendix V-36).

b) Import/Export freight manifests.

c) Authorized Dealers certificates as stated in paragraph 1 (i)(b)(aa).

5
d) BSP Sales Statement provided by the International Air Transport Association
(IATA) alongwith the Counter Sales Report which contains full details of each sale
transaction and other documents prescribed in Chapter 17. (Data contained in
Appendix V-38 statement should readily be available with the concerned ticket
issuing office).

e) Statement of passage/freight bookings earlier made on credit now realized

(Appendix V-39).

f) Disbursement Statements (Appendix V-40).

g) Cancellation/refund statement (Appendix V-41).

h) Statement of outstanding passage/freight bookings on credit (Appendix V-42).

i) Auditors’ certificate showing payment of income tax, or exemption certificate

given by the Revenue authorities.

6
j) In the case of agents, a copy of the valid permission letter given by the regulating
authorities as stated under Para 1 (iv) ibid for acting on behalf of the foreign
principal.

k) An undertaking to repatriate back to Pakistan, the amount found by the State Bank,
on post-facto checking, to have been remitted in excess of the entitlement.

ii) Authorized Dealers will allow remittance of surplus passage and freight collections plus
inward remittance, to the extent of amounts of passage and freight actually realized less
disbursements, refunds, and income tax paid/payable. No remittance is to be allowed in
excess of the balance available in the account, as it is not permissible to make remittances
out of borrowed funds.

(iii) 7Airlines will retain photocopies of Tickets/Coupons/Airway Bills at their end for submission
to the concerned Authorized Dealer, as and when required for random verification by the State
Bank of Pakistan. Instead of submitting photocopies of tickets/ coupons/Airway Bills, they
may attach with their remittance application, the counter Sales Report which contains full
details of each sale transaction.

5
FE Circular No. 05 dated December 17, 2007.
6
FE Circular No. 19 dated December16, 2002.
7
FE Circular No. 9 dated August 09, 2005.

5
 iv) The requirement of submission of foreign currency Encashment Certificate for repatriation of
cargo revenue has also been done away. Further, other supporting documents for repatriation
of cargo revenue will also not be required to be submitted along with funds transfer
application form. The same may be submitted by the Airline to the concerned Authorized
Dealer within 120 days after departure of the cargo.

v) The requirement of submission of Encashment Certificate by the foreign nationals at the time
of booking of their passage has also been withdrawn forthwith.
8
vi) Airlines will submit a copy of manifest of Cargo Consolidators together with relative non-
negotiable copies of House Airway Bill (quoting reference of original Master Airway Bill
issued by them with names of each shippers), “E”/ ‘EFE’ Form Certificates prescribed vide
Para 32 of Chapter 12 of the Manual, and a copy of valid permission letter given by the
regulating authorities as stated under Para 1 (iv) ibid to the concerned Authorized Dealer
within 120 days after departure of the cargo.
9
vii) Authorized Dealers will retain all the documents mentioned in sub paragraph (i) alongwith a
photocopy of Form ‘M’ submitted by foreign Airlines/General Sales Agents for on- site
inspection by the Banking Inspection Department, State Bank of Pakistan. The original Form
‘M’ shall be submitted as usual through schedule E-4 while reporting the transaction in the
monthly Foreign Exchange Returns.

viii) Any irregularity detected and advised by the State Bank shall be rectified by the concerned
airline/GSA within ninety days or the amount under objection will be repatriated or adjusted
from subsequent remittance, as applicable.

ix) The Authorized Dealers will ensure submission of statement V-36 to the Statistics & Data
Warehouse Department of State Bank of Pakistan before repatriation of surplus/ balance.

4. Remittance of Surplus Passage and Freight Collections by Foreign Shipping

Companies.

i) Authorized Dealers may allow remittance of surplus passage and freight collections of
those foreign shipping companies/agents which are keeping their collections with them, on
submission of application alongwith the following documents: -

a. A copy of F.P. Statement (Appendix V-43).

b. Import/Export freight manifests.

8
FE Circular No. 19 dated December 16, 2002.
9
FE Circular No. 23 dated December 31, 2002.

6
 c. A copy of each bill of lading issued in respect of export on freight pre-paid basis,
alongwith Authorized Dealers certificates as stated in paragraph 1.

d. Passage Statement (Appendix V-38) alongwith photocopies of ticket coupons and

other documents prescribed in Chapter 17.

e. Statement of Passage/freight bookings earlier made on credit now realized

(Appendix V-44).

f. Disbursement Statements (Appendix V-45).

g. Cancellation/Refund Statement (Appendix V-41).

h. Statement of outstanding passage/freight bookings on credit (Appendix V-46).

i. Authenticated copy of the charter party if the vessel calling at the ports in Pakistan
has been chartered by the principals of the shipping agents in Pakistan.

j. A copy of manifest of Cargo Consolidators together with relative non-negotiable

copies of House Bill of Lading (quoting reference of original Master Bill of
Lading issued by them with names of each shippers), “E”/ ‘EFE’ Form
Certificates prescribed vide Para 32 of Chapter 12 of the Manual, Encashment
Certificate where freight is paid in foreign exchange separately and a copy of
valid permission letter given by the 10regulating authorities as stated under Para
1 (iv) ibid.

k. A copy of encashment certificate in respect of inward remittance.

l. Auditors’ certificate showing payment of income tax, or exemption certificate

given by the Revenue authorities.

m. In the case of agents, a copy of the valid permission letter given by the
10
regulating authorities as stated under Para 1 (iv) ibid for acting on behalf of the
foreign principal.

n. An undertaking to repatriate back to Pakistan, the amount found by the State

Bank, on post-facto checking, to have been remitted in excess of the entitlement.

ii) Authorized Dealers will allow remittance of surplus passage and freight collections plus
inward remittance, to the extent of amounts of passage and freight actually realized less
disbursements, refunds, and income tax paid/payable. No remittance is to be allowed in excess of
the balance available in the account, as it is not permissible to make remittances out of borrowed
funds.

10
FE Circular No. 19 dated December 16, 2002.

7
iii) 11Authorized Dealers will retain all the documents mentioned in sub paragraph (i) alongwith
a photocopy of Form ‘M’ submitted by foreign shipping companies/shipping agents for on-site
inspection by the Banking Inspection Department, State Bank of Pakistan. The original Form ‘M’
shall be submitted as usual through schedule E-4 while reporting the transaction in the monthly
Foreign Exchange Returns.

iv) Any irregularity detected and advised by the State Bank shall be rectified by the concerned
shipping company/agent within ninety days or the amount under objection will be repatriated or
adjusted from subsequent remittance, as applicable.

v) The Authorized Dealers will ensure submission of statement V-37 to the Statistics & Data
Warehouse Department of State Bank of Pakistan before repatriation of surplus/ balance.

5. Remittance of Freight Charges by Freight Forwarders/Consolidators.12

(i) As declared under the Trade Policy 2005-06, freight forwarders were allowed
remittance of locally collected freight charges to their principals abroad. However, such
remittances would require SBP’s prior approval. In order to further facilitate the industry,
Authorized Dealers are allowed to effect remittances of surplus freight directly on behalf of
concerned freight forwarder/consolidators on a monthly basis, after verification of documentary
evidence in support of the remittance.

In order to mitigate inherent risks and establish genuineness of the transactions,

Authorized Dealer will require verification through the following documents at the time of
allowing monthly remittances:

a) Client’s letter, indicating purpose of remittance, particulars of the

beneficiary and beneficiary’s bank.

b) Agency Agreement with counterpart abroad (Annually).

c) NTN and PIFFA Membership Certificates (Annually).

d) Certificate from a practicing Chartered Accountancy firm to the effect that

the amount of remittance applied for has been verified with reference to
authenticated copies of prepaid Master Airway Bill/Master Bill of Lading
with the related House Airway Bill /House Bill of Lading, cargo manifests
and billed invoices from counterparts abroad, and had been found correct.

e) M – Form.

11
FE Circular No. 23 dated December 31, 2002.
12
FE Circular No. 06 dated May 15, 2006.

8
 f) Statement of Freight collected and/or payable abroad against Shipments made
during the month (Appendix V-47).

g) Statement of Freight Payable against Imports on Consolidated basis by Air/

Sea during the month (Appendix V-48).

h) Monthly Statement of Air/Sea Cargo Consolidation (Appendix V-49).

Authorized Dealers will report all such transactions to Foreign Exchange Operations
Department (FEOD), SBP-Banking Services Corporation, Karachi with copies of supporting
documents obtained from the Freight Forwarders/Consolidators by the 15th of the following
month. They will also retain copies of all such supporting documents at their remitting branches
for SBP inspection as and when required or called for.

13
(ii) The Shipping Companies/Air lines or their authorized agents may issue Master Bill
of Lading (MBL) /Master Airway Bills (MAWB) in the name of the Freight Forwarders (as
shippers) only if the same conforms to the following:

a). Name of the Freight Forwarders/Consolidators will appear in shipper column of MBL
followed by the wording “on behalf of exporter (s)” along with their names, related House
Bill of Ladings/Airway Bills’ numbers and dates. The above information may either be
provided on the face of the MBL/MAWB or as an attachment with the notation on the
MBL/MAWB as per the “attachment which constitutes an integral part of the
MBL/MAWB”.

b). Name of the counterpart of Freight Forwarders/Consolidators will appear in consignee

column of MBL.

c). Name of the counterpart of Freight Forwarders/Consolidators will appear as notify

party column of MBL.

d) (i) In case of FCL/FCL CY/CY shipments, both MBL and HBL will be attached and
sent through bank for the receiver to retire and Freight Forwarders/Consolidators to be
given for delivery. Shipping Lines will not deliver cargo unless shipping line’s MBL is
surrendered at destination.

(ii) In case of LCL shipments, the cargo will be released/delivered to the Freight
Forwarders’ counterpart at the port of discharge who will release/deliver the goods against
a duly endorsed HBL only.

e). In the body of the MBL following may be mentioned:

i). Goods Description.

ii). E-Form Number & date of issue.

13
FE Circular No. 02 dated April 14, 2010.

9
 iii). Corresponding HBL number issued against carrier’s B/L.
iv). Actual Importer at destination.

f). Under no circumstances, the freight forwarders/consolidator/their agents or agents of

shipping Company/airline may surrender MBL/MAWB to the carrier/agent in Pakistan
and must instead be presented to the carrier by the Overseas Freight Forwarder/Agents at
the destination/port of discharge.

Further, in the context of related regulations and undertaking on Form ‘E’, the exporters/banks
before carrying out transactions with their counterparts, freight forwarders, etc. should exercise
due diligence/take necessary precautions to mitigate allied risks while making such arrangements.

6. General Average Payments.

i) Applications for remittance of general average collected from consignees in Pakistan shall
be made by the shipping companies/shipping agents on Form ‘M’ accompanied by the following
information/documents:-

a) Circular of Insurance Association regarding general average.

b) N.O.C. from the Insurance Association and National Insurance Company Limited
about the remittance of the amount of the general average.

c) The amounts collected from each individual consignee.

d) List of cargo subject to general average.

e) The general average bonds covering the collections.

f) General Average Award.

Authorized Dealers may allow remittances on the basis of these documents and attach the
same with the ‘M’ form, while reporting the transactions in their monthly Foreign Exchange
Returns.

ii) Pending General Average Award, the Authorized Dealers may also issue bank guarantees
in favour of the General Average Adjusters on submission of the information documents referred
to from (a) to (e) above. Remittances under the guarantees will, however, be allowed by them on
production of General Average Award.

iii) In the case of exports from Pakistan, if general average is declared and if the general
average claim is paid by the overseas importer, the insurance company in Pakistan, with whom
the goods were insured prior to shipment from Pakistan may be allowed to reimburse the amount
to the overseas importer on production of the following documents, which should be submitted to
the State Bank as mentioned in sub-para (i):

a) Export Realization Certificate.

10
 b) All shipping documents viz. a copy of the bill of lading, invoice, insurance policy
etc.

c) Average deposit receipt duly endorsed by the overseas importer in favour of the
insurance company in Pakistan.

d) Letter of subrogation.

e) An undertaking to render the account on finalization of the award.

7. Operating Expenses of Pakistani Shipping Companies/Airlines.

Pakistani shipping companies and airlines are required to submit to Statistics & Data
Warehouse Department of the State Bank a monthly statement of their earnings and expenditure
at foreign ports in the prescribed forms (Appendices V-50 and V-51) supported by passage/ freight
manifest for receipts and by vouchers in respect of payments 14at [email protected] by 18th of the
following month. They can make disbursements in respect of approved transactions only out of
their receipts at foreign ports and they are under obligation to regularly repatriate the excess
collections, if any, to Pakistan and attach the bank encashment certificates with the statement. In
case the collections fall short of the disbursements, the shipping companies/airlines should make
an application to the State Bank for remittance of the deficit or for meeting bonafide individual
items of disbursements like crew wages, bunkering charges, port dues, food charges etc.
Applications for repair of ships/aircrafts and purchase of durable stores other than food provisions
should, however, be routed through the Ministry of Communications in the case of shipping
companies and the Ministry of Defence in the case of airlines.
15
Authorized Dealers can make remittances on account of lease rentals by the Airlines
incorporated in Pakistan upto the guaranteed hours. However, if the amount exceeds the
guaranteed hours, Authorized Dealers would refer the case to the Director, Foreign Exchange
Operations Department, SBP-Banking Services Corporation for necessary approval by submitting
the following documents:

a) Attested copy of valid agreement

b) Original invoices
c) An audited statement showing the opening balance, earning, expenditure and net
amount (surplus/deficit)
The Authorized Dealers will ensure submission of statements V-50 and V-51 to the
Statistics & Data Warehouse Department of State Bank of Pakistan before processing inward/
outward remittances.

8. Charter of Foreign Ships and Aircrafts.

14
FE Circulars No. 06 & 07 dated August 15 & 18, 2016
15
FE Circular No. 08 dated June 22, 2004.

11
i) 16 Ship owners, charterers and operators and/or owners, charterers, and operators of all floating
crafts including tugs, dredgers, survey vessels and other specialized crafts may open and operate
foreign currency accounts in Pakistan. They will be permitted to operate these accounts for both
receipts and payments of foreign exchange. Such foreign currency account holders may retain
their surplus earnings in these accounts and shall surrender the same within three months of
closing of the financial year. Foreign partners in Pakistan based Joint Venture companies may
receive their share of profits after tax. Operation of such account will be subject to the following
conditions:

a) Cash deposits and cash withdrawals from these Accounts will not be permitted.

b) All reporting requirements that are applicable for existing Foreign Currency Accounts
maintained by the Shipping Companies abroad would also be applicable to those
special Foreign Currency Accounts.

c) All withdrawals in Pak Rupees will be at Interbank Rate.

(ii) Persons or firms intending to hire on charter non-resident owned ships or aircrafts should
apply in the first instance to the Ministry of Communications for the charter of ships and the
Ministry of Defence for the charter of aircrafts. Applications for remittance of charter hire should
be made to the State Bank on Form 'M' supported by the Government sanction and a copy of the
Charter Party Agreement and an undertaking that detailed account of all disbursements made for
the account of the owners will be submitted to the State Bank within 15 days of the expiry of the
agreement. If the application is approved, a permit will be issued to cover any advance payments
required under the terms of the charter but the remittance of the total amount agreed upon will not
normally be sanctioned until the final account of disbursements is made available to the State
Bank. The charterers should seek from the owners’ periodical reimbursement of the disbursements
made on their behalf or have them adjusted from their remittances of charter hire.

9. Export Claims.

Applications from exporters for remittance of various types of claims on exports should
be made on Form 'M' accompanied by a declaration in the prescribed form (Appendix V-51A)
duly supported by the following documents: -

(i) QUALITY CLAIMS.

a) Proceeds Realization Certificate.
b) Debit Note from the buyer.
c) Test Report from a recognized Test House or an Arbitration Certificate from an
approved body of arbitrators.

(ii) AMICABLE SETTLEMENT.

16
FE Circular No. 05 dated February 19, 2002.

12
 (a) Proceeds Realization Certificate.
(b) Debit Note from the buyer.
(c) Certificate from the Chamber of Commerce in the country of import.
(d) Correspondence in original exchanged between the shippers and the buyers. Original
cables should be produced if cable charges are included in the Debit Note.

(iii) COMMISSION (If not paid in terms of the authority delegated vide Chapter 12).
(a) Proceeds Realization Certificate.
(b) Debit Note.
(c) Agreement regarding payment of Commission. Shippers should furnish a copy
of the Export Price Check (EPC) form registered with the relevant authority, if
the goods are subject to “Export Price Check” procedure. The form should show
the rate of commission.

(iv) NON-FULFILMENT OF EXPORT CONTRACT EITHER IN FULL OR IN

PART.
a) Debit Note from the buyer.
b) Contract in original.
c) Arbitration award from a recognized arbitrator.
d) Correspondence in original exchanged between the buyer and the shipper.
e) In case of claim for partial non-shipment, Proceeds Realization Certificate for
the quantity shipped.

(v) INSPECTION FEE, ARBITRATION FEE, SURVEY AND ANALYSIS FEE,

CONTROLLING FEE, WEIGHING CHARGES ETC.
(a) Proceeds Realization Certificate.
(b) Debit Note from the institution claiming fees.
(c) Report from the above institution in support of the claim.

(vi) MISCELLANEOUS CLAIMS LIKE REFUND OF EXPORT DUTY ETC.

a) Proceeds Realization Certificate.
b) Debit Note.
c) Contract.
d) Correspondence.

(vii) LOSS IN WEIGHT.

a) Proceeds Realization Certificate and Export Invoice.

13
 b) Debit Note from the buyers.
c) Weighment Certificate/Note from a recognized weighing body and
Controller’s Report.
Applications in respect of items (v), (vi) and (vii) may be approved by the Authorized
Dealers and the prescribed documents surrendered to the SBP-Banking Services Corporation
alongwith the monthly Foreign Exchange Returns. Applications in respect of items (i), (ii), (iii)
and (iv) will, however, require approval from the State Bank.

10. Guarantees for Payment of Claims.

i) In case of export of cotton only, Authorized Dealers may extend guarantees in favour of
overseas importers for payment of claim, provided the following conditions are fulfilled:

a) Advance payment or confirmed and irrevocable letter of credit for hundred percent
value has been received in favour of the exporter.
b) The amount of the guarantee does not exceed 5% of the total invoice value covered
by the advance payment or confirmed and irrevocable letter of credit.
c) The guarantee covers shipment of cotton only.
d) The guarantee is valid for a maximum period of 30 days after the last date of
discharge of cotton in the country of import.
e) The guarantee provides for payment of claims on submission of Liverpool Cotton
Association Arbitration Award in case of exports to U.K. and of internationally
known associations whose names are approved by the State Bank in the case of
export to other countries.

ii) Authorized Dealers may also allow remittance of claims falling within the terms of these
guarantees provided the amount is fully covered by the Arbitration Award of the respective
association. While reporting these remittances to the State Bank, the Authorized Dealers should
enclose with the form 'M': -

a) Relative Arbitration Award,

b) Proceeds Realization Certificate, and
c) Certificate confirming the date of discharge of cotton in the country of import.

17
11. Acquisition of Services from Abroad.

i) The firms or companies in Pakistan, intending to acquire any type of service in Pakistan
from abroad for any purpose, excluding those services for which specific foreign exchange related

17
FE Circular No. 05 dated November 12, 2019.

14
instructions are issued by SBP, are required to obtain prior permission, from foreign exchange
perspective, from Foreign Exchange Operations Department (FEOD), SBP-BSC.

ii) However, as an exception to the above para i, such services can be acquired from abroad
without prior permission of FEOD, SBP-BSC, if total value, of a specific service to be acquired
from abroad, does not exceed USD 10,000/- (or equivalent in other currencies), OR in case of
recurring payments, the underlying service agreement/ letter of engagement, etc. is not more than
five consecutive years and remittance(s) does not exceed USD 10,000/- (or equivalent in other
currencies) for each year. The Authorized Dealers are allowed to effect remittance in such cases,
based on the documents mentioned at para v below, after fulfilling their responsibilities mentioned
at para xiii below, and subject to meeting all other requirements.

iii) Moreover, acquisition of services of agents abroad for export of goods from Pakistan will
not require prior permission of FEOD, SBP-BSC.

iv) All applications, seeking prior permission, for acknowledgement of service agreement/
letter of engagement, etc. and designation of authorized dealer for effecting all related remittances
in future, shall be submitted to the Director, FEOD, SBP-BSC, through an authorized dealer,
which the applicant wants to be designated.

v) Following documents will be submitted by the applicant to Authorized Dealer along with
the application:

a) Copy of draft service agreement/ letter of engagement, etc. covering all necessary
clauses of names/ addresses of both parties, complete scope of services, duration, total
contract price, terms of payment, schedule of remittances, milestones to achieve,
arbitration, and likewise; provided that any late payment surcharge/ mark-up is not agreed
therein,
b) Documentary proof from the applicant for being active tax filer.
c) Economic rationale justifying the acquisition of the required services from
abroad, from applicant’s business perspective along with potential benefits for country.
d) NOC or certificate from related regulatory body (if exists) for acquiring the
requisite specific services from abroad, e.g. Pakistan Telecommunication Authority
(PTA), Pakistan Engineering Council (PEC), Pakistan Software Export Board (PSEB),
Pakistan Council of Architects & Town Planners (PCATP), etc.
e) Justification i.e. valid and cogent arguments with related evidences, for acquiring
the specific services from abroad, instead of acquiring from the local sources.
f) In case the applicant is a financial institution or a bank or an authorized dealer
itself, then the required documentation will also include copy of internal approval from
the appropriate approving authority for the underlying arrangement of services from
abroad, duly supported by the relevant regulatory framework (if applicable).

15
vi) Authorized Dealer will forward all the above mentioned documents to FEOD, SBP-BSC
along with its analysis, rationale/justification and specific recommendation supporting its
customer’s (applicant’s) request, seeking prior permission for acquiring services from abroad and
acknowledgement of the underlying agreement/ letter of engagement, etc.

vii) In the case where underlying service agreement/ letter of engagement, etc. requires
payment (fully or partly) in advance:

a) The amount of advance payment will be repatriated, if the provision of services

is not initiated, within 120 days from the date of its remittance. An undertaking by the
applicant shall also be submitted with the application, in this regard.
b) The designated Authorized Dealer will be responsible to obtain Confirmation
from applicant in the form of ‘Certificate of Commencement of Services’ and
subsequently the ‘Certificate of Completion of Services acquired from abroad’ duly
notarized on Stamp Paper of appropriate value as per the legal requirement.
c) In case the provision of services is not initiated and the amount of advance
payment is not repatriated, within 120 days (from the date of remittance of advance
payment), OR the services are not completely rendered within the time period as
stipulated in service agreement/ letter of engagement, etc.; the designated Authorized
Dealer will report all such cases to FEOD, SBP-BSC on the 10th day of following month
as per prescribed format (Appendix V-145). FEOD, SBP-BSC may initiate regulatory
action against the remitter through Foreign Exchange Adjudication Department, SBP-
BSC, under the Act.
d) The designated Authorized Dealer will ensure that no further remittances under
the acknowledged service agreement/ letter of engagement, etc. is effected until the issue
of advance payment is resolved.

viii) In case prior permission is granted and the underlying service agreement/ letter of
engagement, etc. is acknowledged, FEOD, SBP-BSC shall not be construed as a party thereto.
Further, adherence to all laws, rules and regulations shall be responsibility of the parties to the
service agreement/ letter of engagement, etc.

ix) Once prior permission is granted, the concerned Authorized Dealer is designated and
underlying service agreement/ letter of engagement, etc. is acknowledged by FEOD, SBP-BSC,
the designated Authorized Dealer may allow remittances or establish letter of credit for payments,
on production of beneficiary’s service invoices/bills duly certified by the applicant in Pakistan, in
accordance with the underlying acknowledged service agreement/ letter of engagement, etc. All
the matters related to such letters of credit (types, opening, extension, amendment, time frame,
method of payments, etc.) shall be dealt as per the relevant provisions of Chapter 13 (Imports) of
the Foreign Exchange Manual.

16
x) The designated Authorized Dealer will obtain copy of underlying acknowledged service
agreement/ letter of engagement, etc. duly signed and stamped by the contracting parties, before
making any payment/ remittance in favor of the service provider.

xi) In case the agreement is not executed within 60 days, from the date of its
acknowledgement, the Authorized Dealer will report its status to FEOD, SBP-BSC.

xii) Any subsequent amendment in the underlying acknowledged service agreement/ letter of
engagement, etc. will require prior permission of FEOD, SBP-BSC.

xiii) While processing the transaction, Authorized Dealer shall be responsible to:

a) Take all possible measures to verify the bona fides of the applicant and
genuineness of transaction and to exercise due diligence for all submissions of the
applicant.
b) Ensure compliance with the applicable AML/CFT laws, regulations and
guidelines while effecting outward remittances, as per the service agreement/ letter of
engagement, etc.
c) Ensure that the payment, being made is in accordance with the underlying service
agreement/ letter of engagement, etc.
d) Ensure to obtain ‘Certificate of Completion of Services acquired from abroad’
duly notarized on the Stamp Paper of appropriate value as per the legal requirement,
before effecting remittance. However, in case of advance payment, ‘Certificate of
Commencement of Services’ shall be obtained within 120 days of its remittance, and
‘Certificate of Completion of Services’ shall be obtained certifying that the services have
been completely acquired within the time period stipulated under the service agreement/
letter of engagement, etc.
e) Ensure repatriation of advance payment, in case the provision of services is not
initiated within 120 days from the date of its remittance, or the services are not completely
rendered within the time period as stipulated in the acknowledged service agreement/
letter of engagement, etc.
f) Deduct all applicable taxes (if any) while effecting each outward remittance as
per the service agreement/ letter of engagement, etc.
g) Ensure compliance each of the terms and conditions/ instructions of FEOD, SBP-
BSC including follow-up, where applicable.
h) Maintain applicant wise documents, including record of remittance(s) effected by
it.

xiv) Incomplete requests shall not be considered for acknowledgement/designation by FEOD,

SBP-BSC.

17
 xv) The service agreements/letter of engagements, etc. which had already been signed at the
time of issuance of above instructions, are required to be submitted to FEOD, SBP-BSC for
acknowledgment within six months from the date of issuance of these instructions (November 12,
2019) or before the remittance/payment, thereunder, becomes due for payment, whichever is
earlier.

12. Remittance of Royalty/Franchise and Technical Fees.

(i) Royalty and Technical Fee in the Manufacturing Sector has been defined as under:-

a) Definition of Royalty: Royalty is a fee paid by a local firm to the foreign collaborator
in consideration of “License to use the foreign manufacturers’ patent/brand name for
marketing the product(s).”

b) Definition of Technical Fee: It is a fee paid by the local firm to the foreign
collaborator in consideration of:-

aa) Engineering and Technical Services including assistance on manufacturing

process, testing and quality control, assistance by way of making available
patented process and/or secret know-how and right to avail of the
technical/confidential information resulting from continuous technical research
and development etc; and

bb) Technical training of local personnel.

NOTE:

No technical fee shall be allowed for simple conventional process goods which are being
produced in the country without foreign technical collaboration.

ii) The remittance of Royalty/Franchise and Technical Fee or Service Charges in

Agriculture, Social, Infrastructure and Service Sector projects including international food chains
may be allowed according to the following guidelines:-

(a) The initial lump sum fee payable to the foreign investor/the party providing
technical expertise and/or allowing use of their brand name, should not exceed US$
100,000/- irrespective of the number of outlets under one franchise.

(b) A maximum of 5% remittance of net sales (excluding sales tax) in the food
sector may be allowed as Franchise Fee only for those items, which are core items of
the franchise and are the specialties of the trade name. The payment of such fees will
be allowed on monthly basis. No item will be eligible for twice payment of
Royalty/Franchise Fee. In other words, the payment of Royalty/Franchise Fee shall
not be admissible for those items whose franchise is not held by the food chains and/or
which are sold under some other brand name e.g. soft drinks etc.

18
 (c) Percentage/amount of fees etc., for other non-manufacturing projects may also
be upto the maximum of 5% of net sales (excluding sales tax).

(d) Initial period for which fees is to be allowed to projects in non-manufacturing

sectors, including international food chains, should not exceed 5 years. Subsequent
extension in time period will be considered and allowed by the Government/State
Bank of Pakistan, provided these projects also make investment in allied upstream
projects.
18
iii) The remittance of Royalty/Franchise and Technical Fee or Commission/Service
Charges for the financial sector may be allowed on the following guidelines:

a) The applications for remittances of such payments by the Commercial Banks as well
as Non-Banking Financial Institutes (NBFIs) including leasing/modaraba companies
and investment banks, to the foreign collaborators in respect of their branded financial
products/services within the area of their authorized business, would be processed
and approved by Foreign Exchange Operations Department SBP-Banking Services
Corporation on a case to case basis, on submission of an attested copy of the
agreement and other relevant information/documents.

b) The one time lump sum upfront Royalty/Technical Fee/Franchise Fee should not
exceed US$500,000/-. This would be allowed from the Interbank Market.

c) Continuing royalty payments, service/technical charges/commission or handling

charges/any other directly related charges not exceeding 0.25% in aggregate of
customers’ billing net of taxes/surcharges would be allowed which would either be
recovered from the customers or met through the financial institution’s own
resources. No foreign exchange would be provided/ utilized for this purpose from the
interbank market.

d) Permission for standby LC/guarantee, if required, would be granted on the merit of

each case.

iv) Upon execution of an agreement for transfer of technology with foreign collaborator, the
local firm engaged in manufacturing as stated in sub-para (i) or operating in the non-
manufacturing sectors as stated in sub-para (ii) will designate any of the Authorized Dealers in
foreign exchange in Pakistan through whom payments under the agreement will be made and send
an authenticated copy of the agreement to the Exchange Policy Department (Investment
Division), SBP, Karachi through the designated bank within 30 days from the date of its execution.
Application for acknowledgement will be made on the prescribed form (Appendix V-52). The
State Bank will record the agreement if it conforms to the foregoing definitions of
Royalty/Franchise and Technical Fees and send an acknowledgement or return it if the same is
not in accord therewith.

18
FE Circular No. 14 dated October 03, 2002.

19
v) Remittance of Royalty/Franchise and Technical Fees may be allowed by the Authorized
Dealer designated for the purpose, without the prior approval of the State Bank subject to the
following:-

a) Application for remittance of Royalty/Franchise and Technical Fees is submitted by

the firm concerned in the prescribed form (Appendix V-53) in triplicate alongwith a
copy of the acknowledgement letter issued by the State Bank.

b) The correctness of the information furnished in the application (Appendix V-53)

must be certified by the auditors of the firm in the space provided for the purpose.
An additional statement showing calculation of Royalty/Franchise and Technical
Fees duly certified by the auditors should also be enclosed with the application.

c) Payment of income tax supported by a certificate from the auditors of the paying
firm. In case it is claimed that the amount of Royalty/Franchise and Technical
Fees is exempt from levy of Pakistan taxes, the applicant should invariably
produce a certificate to this effect from the competent tax authority and attested
copy of the said certificate should be enclosed with the prescribed application to
be sent alongwith other relevant documents while reporting the transaction to the
Exchange Policy Department.

vi) Authorized Dealers will maintain company-wise record of remittances allowed by them
on the above account so as to facilitate inspection by the State Bank’s Inspection Teams.

13. Technical Services and Consultancy Agreements and Engagement of Foreign

Technicians.

(i) Foreign experts/technicians may be employed by the local firms in private sector without
requiring approval by any Government agency for rendering such technical services as
supervision of installation, commissioning of plant and training of personnel.

(ii) Authorized Dealers may accordingly allow remittances for engagement of foreign
experts/technicians to foreign firms or establish letters of credit available for payment of such
charges on production of beneficiary’s service invoices/bills duly certified by the employers in
Pakistan. While reporting to the State Bank the remittances effected under this facility in the
monthly foreign exchange returns, the Authorized Dealers will attach the following documents
with relative Form ‘M’:-

(a) Copy of the service agreement entered into with the foreign firms.

(b) Beneficiary’s service invoices/bills duly certified by the employers in Pakistan.

(iii) It will be the exclusive responsibility of the Authorized Dealers to ensure that income tax
has been correctly deducted from the amount payable to the foreign beneficiaries and paid to the
income tax authorities or exemption certificate from the income tax authorities is called and
recorded with the Authorized Dealers.

20
14. Remittances by Information Technology Sector.
19
(i) Authorized Dealers have general permission to release foreign exchange upto a
maximum of US$ 100,000/- or equivalent in other currencies per invoice for private sector
companies incorporated in Pakistan and 20those branches of foreign companies which are
operating in Pakistan with the permission of Board of Investment to undertake permissible
business/commercial activities, pay local taxes and periodically repatriate their profit abroad
under Para 15 of this Chapter, for payments of the following charges on account of utilization of
Information Technology services, after satisfying themselves with the genuineness and bonafides
of the requests through invoices, Government approvals/NOCs/licensing or certifications
wherever so required as per the relevant instructions in the Foreign Exchange Manual, and after
deducting all applicable taxes:
(a) Satellite Transponder Charges.
(b) International Bandwidth Charges.
(c) International Internet Service Charges.
(d) International Private Line Charges.
(e) Software Licence/Maintenance/Support Fees for proprietary/specialized software.
(f) Subscriptions/payments for access to foreign electronic media and databases.

The above remittances may only be made through a bank designated by the remitters for
the purpose under intimation to Exchange Policy Department, State Bank of Pakistan.

(ii) The remittances by the following categories shall, however, continue to be governed
under the existing instructions:

(a) Liaison/Project Offices of foreign companies (other than branches of foreign

banks)
(b) State Bodies and Enterprises

Application on Form ‘M’ for such remittances should be submitted to the Director,
Exchange Policy Department (Investment Division), SBP, Karachi through an Authorized Dealer
alongwith the following:

1. Agreement, if any.
2. Original invoice/demand note.
3. NOC from the concerned authority (viz PTA/Pakistan Software Export Board for
an amount above US$ 100,000/- in case of utilization of information technology
services).21

19
FE Circular No. 12 dated July 07, 2004.
20
FE Circular No. 12 dated July 07, 2004.
21
Circular Letter No. 02 dated January 06, 2006.

21
 4. Evidence of payment of income tax or exemption certificate from Federal Board
of Revenue (FBR).

15. Remittance of Profits by Foreign Banks/Companies.

(i) Applications from branches of foreign banks operating in Pakistan for remittance of
profits to their Head Office abroad should be made to the State Bank on Form ‘M’ duly supported
by the following information/documents: -

a) Audited Balance Sheet and Profit & Loss Account of the branch (es) in Pakistan.

b) Tax provision made during the year for (a) the current year and (b) for the prior years
along with its computation.

c) A certificate from the auditors in Pakistan that tax provision made in the accounts is
sufficient to meet all tax liabilities in Pakistan, or copies of final assessment orders and
forms duly certified by the Income Tax Department.

d) Assessment orders for the previous years, if not submitted earlier to the State Bank.

e) Certificate from the auditors showing the liability for staff gratuity as at the close of
accounts and provision made there-against. If no provision has been made, reasons
thereof.

f) Details of other/miscellaneous income.

g) Amount charged/claimed on account of Head Office expenses for the current year (if not
separately shown in the accounts) and the basis of its calculation alongwith Head Office
expenses claimed/allowed by the Income Tax Authorities for the preceding 3 years.

h) Provision made in the current year for classified assets.

i) Confirmation to the effect that the amount provided for classified assets is not less than
the amount required to be provided on the basis of the Prudential Regulations of the State
Bank.

j) Item-wise details of un-realized/accrued income credited to Profit & Loss Account for
the year and in the previous year.

k) Item-wise details of un-realized/accrued income of the previous years realized in the

current year.

22
(ii) Applications for remittance of net remittable profits by the branches of foreign companies
other than banks, operating in Pakistan to their Head Offices abroad should be submitted on Form
‘M’ supported by the following information/documents: -

a) Audited Balance Sheet and Profit & Loss Account of the branch(es) in Pakistan.

b) Audited Consolidated Balance Sheet and Profit & Loss Account of the Head Office. If
they are not available at the time of making the applications, they should be submitted
subsequently.

c) Reconciliation of the Head Office Accounts.

d) Tax provision made during the year for (i) the current year and (ii) prior years alongwith
its computation.

e) A certificate from the auditors in Pakistan that tax provision in the accounts is sufficient
to meet all tax liabilities in Pakistan or copies of final assessment orders and forms duly
certified by the Income Tax Department.
f) Assessment orders for the previous years, if not submitted earlier.
g) Certificate from the auditors showing the liability for staff gratuity as at the close of
accounts and provision there against. If no provision has been made, reasons thereof.
h) Details of other/miscellaneous income.

i) Amount charged/claimed on account of Head Office expenses for the current year (if not
separately shown in the accounts) and the basis of its calculation alongwith Head Office
expenses claimed/allowed by the Income Tax Authorities for the preceding 3 years.

j) Full particulars of additions, if any, made to fixed assets in Pakistan, during the period
and the source of funds utilized for financing such additions.

k) The extent to which the proposed remittance will require bank finance.

l) In case the applicant is applying for the first time, documentary evidence to the
satisfaction of the State Bank that the applicant firm was in existence and conducting
business operations in Pakistan prior to 3rd October, 1963. In respect of those branches of
foreign firms and companies which were established in Pakistan on or after 3rd October,
1963, original or photocopy of the letter of the Investment Promotion Bureau/Board of
Investment, Government of Pakistan, granting them permission to conduct business
operations in Pakistan, should be submitted with the application alongwith other
documents.

(iii) A company other than a bank, insurance company, airline and shipping company desiring to
avail of the facility of making remittance of profit without prior approval of the State Bank, may
approach the Director, Exchange Policy Department (Investment Division), State Bank of Pakistan,
Karachi disclosing the name of its banker through whom it would like to make remittance. The State
Bank will authorize the bank concerned to effect remittance of profit to the Head Office abroad of the

23
company subject to verification of the remittable amount in the manner to be prescribed by it. While
reporting such remittances, the designated Authorized Dealers will enclose all the relevant documents
with the relative Form ‘M’.

16. Payment of Dividend to Non-Resident Shareholders.

(i) Authorized Dealers may allow remittance of dividends to non-resident shareholders

without the prior approval of the State Bank. For this purpose, each company will designate an
Authorized Dealer through whom it proposes to remit dividends to its non-resident shareholders.
No Authorized Dealer will effect remittance of dividends under this authority unless it has been
authorized by the State Bank to do so in respect of a particular company.

(ii) Each company which wants to avail of the facility of making remittance of dividends
without the prior approval of the State Bank, should advise the Director, Exchange Policy
Department (Investment Division), State Bank of Pakistan, Karachi the name of its bankers
through whom it would like to make remittance. On receipt of nomination of a bank from the
company, the State Bank will authorize the bank concerned to effect remittance of dividends,
whether interim or final, to the non-resident shareholders of the company without its prior
approval.

(iii) Before allowing remittance of dividends, Authorized Dealer must ensure:

a) that the shares are held by the non-residents (other than Indian nationals) under
the specific and/or general permission of the State Bank and are registered at their
foreign addresses,

b) that the shares in question were not acquired by the non-residents on the basis of
their undertaking that they will not claim remittance of dividend and,

c) that the application for remittance of dividend is net of Pakistan tax liability.
Authorized Dealers must also ensure that the auditor’s certificate to this effect on
the application is from a well-known firm of auditors.

(iv) The following documents must be seen by the designated Authorized Dealer before
allowing the remittance of dividends: -

a) Application in triplicate in the prescribed form (Appendix V-54) duly certified

by the company’s auditors. There will be one consolidated application in respect
of dividends due to all the non-resident shareholders. Where the company’s
auditors have not accepted the entitlement in respect of some shareholders, the
application may be certified with their reservation and entitlement of others
released pending reconciliation. Entitlement in respect of un-resolved cases may
be released through a supplementary consolidated application after the matter is
finalized.

b) Two certified copies of the audited Annual Profit & Loss Account and Balance
Sheet of the company concerned for the year to which the dividend application

24
 pertains or two copies of interim Profit & Loss Account for the period to which
interim dividend relates.

c) Certified true copy of the Shareholders’/Directors’ resolution declaring the

dividend.

d) In case tax exemption is claimed by them/any of the shareholders, a certificate to

this effect is invariably produced from the competent tax authorities.
(v) While reporting remittances allowed by them under the above authority in their monthly
Exchange Returns, the Authorized Dealers will enclose with the relative Form ‘M’ a copy of the
supporting application (Appendix V-54) together with one copy of audited Annual/Interim Profit
and Loss Account and Balance Sheet and certified true copy of the Directors’/ Shareholders’
resolution. In cases where shareholders are resident of different countries and remittances are
made in different currencies, the remittances will be reported on different ‘M’ forms under the
relative currency statements. Reference to the relative monthly currency statements should be
made in column 10 of the application (Appendix V-54) against remittances made in different
currencies and the application alongwith its supporting documents should be attached to any of
the ‘M’ forms. Duplicate copy of the application form will be retained by the Authorized Dealer
concerned for its record.

(vi) Authorized Dealers also have general permission to allow payment of dividends due to
non-residents (other than Indian) holding shares of companies incorporated in Pakistan on non-
repatriation basis, by credit to their private non-resident Rupee accounts maintained with them or
with other Authorized Dealers. To this end, Authorized Dealers making payment of dividends to
non-resident shareholders for credit to their non-resident accounts shall complete the prescribed
Form A-7 and forward the same alongwith the payment instruments to the Authorized Dealer
which maintains the non-resident Rupee account for credit to the account of the shareholders. The
receiving Authorized Dealer will report the transaction in its monthly Exchange Return.
22
(vii) Authorized Dealers are required to submit electronically monthly statement of
remittances of dividends/ profit and disinvestment to non-resident shareholders to the Statistics &
Data Warehouse Department of the State Bank of Pakistan on format (Appendix V- 54A) at
[email protected] by 5th of the following month. Further, Authorized Dealers should maintain
separate company-wise record of payment of dividends made to their non-resident shareholders
either by remittance or for credit to their non-resident accounts, as the case may be, under the
above general permission so as to facilitate their inspection by the State Bank’s Inspection Teams.
(viii) Authorized Dealers should note that it is one of the conditions prescribed in the
Investment Policy that foreign investor may temporarily hold 100% shares in the specified newly
opened sectors for foreign investment, pending disinvestments of the prescribed percent of
investment to residents, subject to the condition that remittance of dividend would be restricted to
their investment upto 60% only. They should ensure compliance with this restriction.

17. Export of Dividend Warrants.

22
EPD Circular Letter No. 14 Dated December 07, 2016

25
 Dividend warrants of companies incorporated in Pakistan can be freely exported to the
non-resident shareholders, provided the shares have been issued with the approval of the State
Bank and a statement of such non-resident shareholders has been filed with it.

18.(i) Foreign Articles in Pakistani Newspapers and Magazines.

Authorized Dealers may allow remittances at actuals, without prior approval of the State
Bank, in respect of articles contributed by non-resident foreigners for publication in Pakistani
Newspapers or Magazines, provided a demand note from the non-resident contributors is
produced by the publishers of the article to the Authorized Dealers while applying for remittance.
Advance remittance may also be allowed subject to the applicant’s undertaking to submit the
requisite documents in due course.
(ii) Remittances on account of News Feature, News Picture, Syndication Services,
Gambles, Comics, Puzzles, Book Reviews etc.
Authorized Dealers may effect remittances, without prior approval of the State Bank, at
the request of the publishers of Newspapers and Magazines of repute having large circulation or
by local agents of the foreign beneficiaries in Pakistan on account of News Feature Services, News
Picture Services, Syndication Services, Gambles, Comics, Puzzles, Book Reviews etc. published
in Pakistan Newspapers and Magazines. While effecting remittances, Authorized Dealers shall
ensure the following:-

a) Form ‘M’ has been duly signed by the applicant.

b) A formal letter of request for remittance has been received from the remitting agency
in Pakistan.
c) The invoices/demand notes etc. of the foreign beneficiaries are produced in original.

(iii) Remittances of salary/remuneration as well as Telex/Tele fax/Telegram/Telephone

Charges to the Overseas Correspondents of Pakistani Newspapers.

Authorized Dealers may allow remittances without prior approval of the State Bank, on
account of salary/remuneration as well as Telex/Telegram/Tele fax/Telephone charges in favour
of correspondents of Pakistani newspapers posted abroad on production of original demand
notes/bills/vouchers.

19. Advertisements in Newspapers and Magazines abroad.

Exchange facility is available to exporters for publishing advertisements in foreign

newspapers and magazines without any upper ceiling. Authorized Dealers may allow remittances
as indicated above for advertisement charges payable by exporters to newspapers, magazines, etc.,
abroad without the prior approval of the State Bank on production and examination of the
following documents:-

(i) Form ‘M’ signed by the applicant.

(ii) Invoice/Bill etc., of the beneficiary in original.

26
 (iii) Undertaking from the applicant concerned that he will produce relevant clippings
from the newspaper/magazine to them within a period not exceeding three months.
These clippings will be retained by the Authorized Dealers for inspection by State
Bank’s Inspectors.

While effecting the above remittances, Authorized Dealers will ensure that the
newspaper/magazine in which the advertisement is proposed to be inserted is of good standing
and repute and remittance is made only in the name of the concerned newspaper/magazine. In
cases of doubt, reference should be made to the State Bank before effecting the remittance.

20. Bank Charges and Sundries.

Authorized Dealers may, without prior approval of the State Bank, effect remittances to
their foreign correspondents etc., to cover payments due to them on account of bank charges, cost
of cables and other incidental charges arising in the normal course of authorized business other
than imports. All such remittances should be reported to the State Bank on Form ‘M’. In cases
where bank charges relating to exports are paid by the Authorized Dealers to their foreign
correspondents by deduction from the amount of the export bills, they should report the full
amount of the export bill as “Purchase” and simultaneously report the deduction as “Sale”.

21. Purchase of Tender Forms from abroad.

Authorized Dealers may allow remittances on account of fees for tender forms payable to
Government/Semi-Government agencies or a private company or a firm abroad without the prior
approval of the State Bank on receipt and examination of the following documents:

i) Form ‘M’ duly filled in and signed by the applicant.

ii) Newspaper clipping/Pakistan/Foreign Embassy’s letter or other supporting
documents evidencing floatation of tenders and the cost of tender documents.

22. (i) Registration of Patents and Trade Marks in Foreign Countries.

Authorized Dealers may allow remittances covering fees etc., for registration of patents
and trademarks in foreign countries by firms/companies etc., in Pakistan without prior approval
of the State Bank on receipt and examination of the following documents:

a) Form ‘M’ duly signed by the applicant.

b) Debit Notes of the patent attorney/solicitors etc., for the fees for registration of
patent/trade mark.
c) Undertaking from the remitter to produce within one month from the date of
remittance evidence to the effect that the patent/trade mark has been registered
abroad.

It will be the responsibility of Authorized Dealers to ensure that the requisite evidence for
registration of patent/trade mark is produced to them within the stipulated period.

27
 (ii) Registration of Exporters of Pharmaceutical products in Foreign Countries.

Authorized Dealers may allow remittances of registration fees by exporters of

pharmaceutical products in Pakistan for their registration with the Ministry of Health of a foreign
country, without the prior approval of the State Bank, on production of the following documents:

a) Form ‘M’ duly signed by the applicant.

b) Evidence from the Ministry of Health of the foreign country concerned demanding
payment of registration fee.
c) Undertaking from the remitter to produce within 1½ month from the date of
remittance, evidence to the effect that the applicant has been registered with the
Ministry of Health of the foreign country concerned.

23. Reporting of Remittances.

While reporting remittances to the State Bank allowed by them under paras 12, 18, 19,
20, 21 and 22 in their monthly Exchange Returns, Authorized Dealers will bunch the ‘M’ forms
under each category separately alongwith the supporting documents on the basis of which
remittances have been effected by them. The bunch of Forms ‘M’ with the relative documents
must have a covering statement in duplicate as per proforma given below:-

“Covering statement in respect of remittances

allowed during the month of ……………….
on account of ……………………………….
(State purpose)

Name and Amount

Name of Particulars
Sl. Address of remitted Equivalent Remarks
the of
No the in foreign in Rupees if any
Remitter document
beneficiary exchange

All documents on the basis of which exchange facility is allowed by Authorized Dealers
must invariably be stamped to indicate that the remittance has been allowed against them.

*********

28