Circulars/Notifications - Exchange Policy Department  
 F.E. Circular No. 62
July 04, 1992 

All Authorised Dealers
in Foreign Exchange,

Dear Sirs,


Attention of Authorized Dealers is invited to F.E. Circular No.60 of 24th June, 1992 regarding deduction of withholding tax on foreign exchange proceeds realized against export of goods.

2. We had sought certain clarification from the Central Board of Revenue. Our queries and clarifications thereto given by the Central Board of Revenue are appended for guidance of the Authorized Dealers:-

  State Bank of Pakistan’s Queries Central Board of Revenue’s clarifications


Whether withholding tax on the amount of export proceeds will be deducted at the time of crediting the same to exporters' accounts irrespective of the fact whether foreign Exchange is realized at some later date due to negotiation/usance period involved.

Yes, Tax on export proceeds will be deducted from all receipts on or after 1-7-1992 irrespective of the period.

ii Whether the tax is to be deducted on gross proceeds i.e. Bill amount or on such amount which is being credited to exporter’s account after deduction on account of (I) Discount/ agency commission paid or payable to foreign importer/ agents, (II) Foreign Bank charges, and (III) local  bank charges (other than interest). Tax is to be deducted from gross proceeds.
iii Exporters are permitted to retain certain portion of agency commission (not exceeding 5% of FOB value Realized) in their Foreign Currency Accounts maintained In Pakistan for export Promotional activities. Will the withholding tax be deducted on such commission credited to exporters’ Foreign currency accounts? Tax will be deducted from total proceeds and no reduction or deduction therefrom shall be allowed.
iv Payment for local supplies against international tenders qualifies for all export incentives. Is the withholding tax regime applicable on such receipts? Withholding tax regime shall be applicable to payments for local sales against International tenders.
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