Circulars/Notifications - Exchange Policy Department  
 FE Circular No. 04 of 2020

August 13, 2020

The Presidents/Chief Executives of all
Authorized Dealers in Foreign Exchange

Dear Sirs/Madam,

Remittances to Digital Service Provider Companies

        In order to further enhance ease of doing business for the companies in Pakistan, a new mechanism is being introduced for payments to globally recognized digital service provider companies against acquisition of digital services by local companies.


Accordingly, a new Para as 14A is added in Chapter 14 of Foreign Exchange Manual, as under:

14A. Remittances to Digital Service Provider Companies

Notwithstanding anything contained in Para 14, Chapter 14 of FE Manual, Authorized Dealers have general permission to release foreign exchange up to a maximum of USD 200,000/-, or equivalent in other currencies, per year, for each company/ firm/ sole proprietorship incorporated/ established in Pakistan on account of commercial payments, pertaining to digital services, in favor of digital service provider companies. This general permission is subject to following:


The ultimate beneficiary of remittances should only be the company (including their affiliates or associated entities) listed in the Appendix V 147. However, up to a maximum amount of USD 25,000/-, out of the total annual limit of USD 200,000/-, can be remitted to those digital service provider companies which are not listed in the Appendix V 147, against acquisition of digital services.


The remittances should only be made by an Authorized Dealer designated by the remitter for this purpose under acknowledgement to Foreign Exchange Operations Department (FEOD) SBP-BSC. No Authorized dealer will remit funds under this general permission unless it has been acknowledged as designated Authorized Dealer by the FEOD SBP-BSC.


All applications for acknowledgement shall be submitted to the Director, FEOD, SBP-BSC, through an Authorized Dealer, which the applicant wishes to be designated.


Authorized Dealer will ensure that it has satisfied itself with the genuineness and bonafides of the applicant, through appropriate CDD and customer risk profiling, specifically in light of AML/CFT regulations.


Authorized Dealer will forward the requests regarding designation of Authorized Dealer to the Director, FEOD, SBP - BSC for acknowledgment along with the applicant’s request letter and business profile.


Once acknowledged by FEOD, the designated Authorized Dealer may affect remittances after deduction of applicable taxes (if any) while ensuring that payments are within the prescribed limit.


The entity is required to submit the payment receipts (digitally or otherwise), showing the details of payment made and services received or to be received, to the designated Authorized Dealer within 7 working days, from date of receipt of amount by the beneficiary.


Authorized Dealers are advised to monitor these limits on real time basis and hold all future remittances of its customer, in case the customer could not submit the payment receipts within the defined timeline. The Authorized Dealer may resume affecting remittances of the customer upon submission of payment receipt along with plausible justification for delay. However, such resumption is only allowed twice in a year.


In case of change in the designated Authorized Dealer by an entity, previous Authorized Dealer is required to communicate the details of the limits utilized by the entity during the year to the new Authorized Dealer, within three working days from the date of request received from the entity through the new Authorized Dealer. The new Authorized Dealer will approach FEOD for acknowledgment of its designation, along with the customer’s request and communication issued by the previous designated Authorized Dealer regarding the limits utilized by the applicant during the year.


The applicant entity should be on FBR’s active tax payer list. In case exemption from taxes is claimed, the exemption certificate may be kept in lieu thereof. In case the entity is in its first year of establishment and not required to submit the tax returns as yet, the Authorized dealer will capture the relevant details i.e. proof of establishment date, NTN etc.

3. Authorized dealers may offer the digital channels to their clients, for making these payments, within the prescribed parameters.

4. All other terms and conditions related to the subject shall remain unchanged. Authorized Dealers are advised to bring the same to the notice of all their constituents, ensuring meticulous compliance of the above instructions.


Enclosed: Appendix V 147

Yours truly,


(Arshad Mehmood Bhatti)


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