All
Authorised Dealers
in Foreign Exchange,
Dear
Sirs,
AGREEMENTS
FOR TRANSFER OF TECHNOLOGY
PAYMENT OF ROYALTY/TECHNICAL FEE TO THE
FOREIGN COLLABORATORS:
In
suppression of the instructions circulated vide F.E. Circular
No.16 of 1992, it has since been decided by the Government
to abolish the 'Guidelines for Agreements for Transfer of
Technology' enclosed therewith.
2.
Accordingly, paragraph
10 (a), Chapter
XIV of the Foreign Exchange Manual, 1987 has been revised
as follows:-
"10
(a) I. Royalty and Technical Fee has been defined as under:-
-
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)".
-
Definition
of Technical Fee: It is a fee paid by the local
firm to the foreign collaborator in consideration
of:-
"i)
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 rights to avail of the
Technical/confidential information resulting form
continuous technical research and development etc;
and
ii)
Technical training of local personnel".
Note:
No technical fee shall be allowed on consumer goods or
for simple conventional process goods, which are being
produced in the country without foreign technical collaboration
-
Upon
execution of an agreement for transfer of technology
with foreign collaborator, the local firm engaged in
manufacturing will designate any of the Authorized Dealers.
(Banks) in foreign exchange in Pakistan through whom
payments under the agreement will be made and send an
authenticated copy of the agreement to the State Bank
of Pakistan, Foreign Exchange Department (Investment
Division), Central Directorate, Karachi through the
designated bank within 30 days from the date of its
execution. The State Bank will record the agreement
if it conforms to the foregoing definitions of Royalty/Technical
Fee and send an acknowledgement or return it if the
same is not in accord therewith.
-
Remittance
of Royalty/Technical Fee may be allowed by the Authorized
Dealer designated for the purpose, without the prior
approval of the State Bank subject to the following:-
-
Application
for remittance of Royalty/Technical Fee is submitted
by the firm concerned in the prescribed form (Appendix
V-52) in duplicate alongwith a copy of the acknowledgement
letter issued by the State Bank.
-
The
correctness of the information furnished in the application
(Appendix V-52) must be certified by the Auditors
of the firm in the space provided for the purpose.
An additional statement showing calculation of Royalty/Technical
Fee duly certified by the Auditors should also be
enclosed with the application."
Please
note Appendix V-52 is referring to the Sixth Edition (1987)
of the Foreign Exchange Manual. In the revised Seventh Edition
(1992) of the F.E. Manual, this particular Appendix has
been renumbered to Appendix V-58. The Corrected Appendix
is hyperlinked/used in the Updated F.E. Manual.
3.
Authorized Dealers may continue to allow remittance of Royalty
/ Technical Fee in respect of agreements already registered
with the State Bank / approved by the Government strictly
in accordance with the terms of their registration/approval.
4.
Please bring the above to the notice of your constituents
concerned.