ISLAMABAD, Nov 21: The Economic Coordination Committee of the cabinet on Thursday approved a policy framework for regulation of non-governmental organisations (NGOs) receiving foreign contributions to ensure transparent utilisation of funds and streamline their activities.

Presided over by Finance Minister Ishaq Dar, the meeting was informed that the Economic Affairs Division had been constrained to sign new memoranda of understanding with International Non-Governmental Organisations (INGOs), particularly those relating to ongoing operations.

“The objective of the government is to bring transparency to the working of the organisations receiving…foreign funding and remove any difficulty which these organisations may have been facing…[in absence of] such a framework,” said Mr Dar.

Under the policy framework, the memoranda with INGOs will be signed for a period up to five years. They will have to maintain a full disclosure of their activities, areas of work and sources and use of their funds.

The policy says the government encourages philanthropic activities and shall not restrict any INGO from working in Pakistan in case of any calamity. However, they will need to obtain approval from the government to carry on with their work.

The NGOs shall maintain local accounts for the execution of their activities and for opening and operating foreign currency accounts, they shall seek permission of the State Bank under the applicable rules.

The government will grant work permit to expatriate employees and entry permit to their families in accordance with the relevant Pakistani law and they will be allowed to open and maintain offices with prior approval subject to the concurrence of the provincial or local government.

The NGOs will be allowed to raise funds locally after getting prior approval from the government. Such local funds shall be exempted from income tax, subject to the provisions of Clause (58) of Part I of the second Schedule to the Income Tax Ordinance 2001.

The government will also allow the income of expatriate experts to be exempted from income tax, subject to fulfilment of the requirements of section 44 of the Income Tax Ordinance, 2001. It will allow them duty-free import of goods for consumption, subject to applicable laws and prior written approval of the Federal Board of Revenue and any other relevant agency.

The NGOs will be required to use money, goods and services emanating from foreign sources for its specified activities and provide complete information about it as and when required by the government. They will also be required to obtain prior concurrence of the government for any additional funding or different source of funding other than that specified in the MoU.

They would appoint a country representative or other senior management personnel to implement the projects and supervise the staff and maintain contact with the government.

The NGOs will employ foreign nationals against not more than 10 per cent of the total staff positions, and give preference to Pakistani nationals for key positions. The NGOs shall not employ expatriates who are in the country on any other visa and obtain prior permission from the government for visits to prohibited areas by expatriate personnel.

The NGOs shall ensure that all expatriate staff, as residents or visitors, shall follow the laws and regulations of Pakistan and respect religious injunctions and cultural norms of the country. They will ensure that all Pakistani staff pay taxes besides providing annually, or when required, written reports covering their activities.

The NGOs shall offer their accounts for annual audit by chartered accountants registered in Pakistan and shall not transfer, rent or lease out its possessions or allow their use for purposes other than those agreed upon in the MoU. They would also provide on yearly basis to the government independent or third party evaluation of its work and not indulge in distribution of any material or pamphlets causing, or likely to cause, religious resentment in the area of its activities.

The government will immediately terminate the MoU and cancel registration of an NGO in case of non-adherence to any provision of the MoU if its activities were considered detrimental to national interest, sovereignty and integrity of Pakistan or dubious in nature, or in violation of cultural and religious sentiments of people, or for providing false information or no reasonable activity in a year. However, the NGO will be given an opportunity of being heard before the cancellation of its registration.

The MoU shall come into force from the date of signatures and remain valid for a period of five years, extendable for further periods by mutual written consent.

TAX ROW: The ECC disposed of a dispute over duty and tax remission for export (DTRE) for ghee export to Afghanistan. The meeting faced a question regarding an earlier decision of ECC on fixing quantity and consumption time of inputs used in manufacture of ghee to be exported to Afghanistan under DTRE Scheme.

The ECC maintained that the manufacturer-cum-exporter of ghee can avail of DTRE approval for a quantity of 1,000MT at a time, which is to be consumed and exported within 90 days. Once such 1,000MT is consumed and exported, the manufacturer-cum-exporter can apply for another DTRE of the same quantity after 90 days.