KARACHI: The State Bank of Pakistan (SBP) has capped remittances against royalties, franchise and technical services at $250,000 for new companies.

However, existing businesses with foreign collaborations will be allowed to remit up to eight per cent of their sales. In a circular issued on Dec 19, the SBP revised instructions for the remittance of royalty, franchise and technical service (RFT) fees for entities operating in agriculture, social, infrastructure and services sector projects, including international food chains.

The central bank said the revisions were aimed at promoting ease of doing business and realigning instructions with market dynamics. The Foreign Exchange Manual (FEM) has been revised accordingly.

The circular has been issued to all authorised dealers, including banks and exchange companies.

Under the revised framework, entities in agriculture, social, infrastructure and services sectors, excluding the financial sector, may remit recurring payments of up to eight per cent of their net local sales after deducting sales tax and the cost of imported items under their respective RFT agreements.

Existing firms allowed remittances of up to 8pc of sales

Entities starting new operations may also remit an initial lump sum or one-time fee of up to $250,000 to their foreign collaborators providing RFT services.

However, the SBP clarified that this amount will be included within the 8pc of net sales limit and not treated as an additional payment. The lump sum will be adjusted over the term of the agreement from recurring fee payments once operations commence.

Requests exceeding $250,000 will be referred to the Board of Investment for a decision.

The duration of agreements for new operations, whether based on the $250,000 cap or the eight per cent of net sales limit, will be up to 10 years and may be renewed thereafter.

Bankers welcomed the decision, saying the cap would block excessive remittances under the guise of fees.

Others, however, termed the move potentially anti-investment, arguing it could further discourage foreign investors who are already hesitant to invest in the country.

Published in Dawn, December 21st, 2025