PAKISTAN, the fifth largest country in the world by population, has vibrant diaspora communities in nearly every economically developed country of the world. In almost every robust economy — like Saudi Arabia, UAE, UK, US, Oman, Qatar, Kuwait, Australia, Italy, Canada, Bahrain, Germany, France, Spain, Greece, Belgium, Ireland, Japan, Denmark, Sweden, Holland, Switzerland, Malaysia, Norway and China — the presence of our expatriates is a source of great pride for us. We are everywhere, thanks to our demographic resources.
The money remitted by these diaspora communities is one of the biggest sources of foreign exchange earnings for Pakistan. This year, in particular, has been historic in that overseas Pakistanis have sent unprecedented amounts of money back home. The State Bank has recorded more than $20bn in remittances within the first eight months of the fiscal year, representing growth of 7.6 per cent over the same period last year.
Through their remittances, Pakistanis expats support both the economy and their families. Their contributions are spent mainly on living expenses or invested in the purchase of property. Unfortunately, they face a painful ordeal when interacting with various public and private bodies over the course of making investments in Pakistan. Some examples include the challenges faced during the sale and purchase of immovable properties; protecting properties from illegal possession; declaring assets and sources of income to tax authorities; responding to tax notices, conducting banking transactions, etc.
More can be done to facilitate expats.
Policymakers have sought to attract remittances and foreign investments by providing various incentives and concessions for expatriates. Stakeholders from many departments, ministries and autonomous bodies are focusing on facilitating overseas Pakistanis in accessing the services provided by them. For instance, if an expat wants arms or driving licences, departments can provide them priority treatment in terms of protocol, special seating arrangements or special counters to facilitate them. They can also be facilitated by lowering the service fees, by giving them priority in service delivery, or by creating some other symbolic privileges.
In order to facilitate overseas Pakistanis, the State Bank has incentivised the use of formal banking channels through Roshan Digital Accounts and online utility bill payments, etc. Similarly, the Federal Board of Revenue, too, has created numerous privileges for overseas Pakistanis. If a non-resident Pakistani holds a Pakistan Origin Card, National Identity Card for Overseas Pakistanis or Computerised National Identity Card, and uses a Foreign Currency Value Account or NRP Rupee Value Account maintained with authorised banks in Pakistan, the person is entitled to many privileges.
For example, in the sale or transfer of immovable property, they have the privilege that the advance tax collected from them is considered the final discharge of their tax liability in lieu of capital gains earned by them, which are otherwise taxable from the property that is being sold. Second, when purchasing immovable property, the tax collected from overseas Pakistanis is considered the final discharge of their tax liability, which is otherwise deducted at 1pc of the fair market value of the property. Third, overseas Pakistanis can avail tax exemptions when any profit on debt is derived from a rupee account held with a scheduled bank in Pakistan and where the deposits in the said account are made exclusively from foreign exchange remitted into it.
Fourth, though every person whose income for the year is subject to final taxation is required to file tax returns, non-resident Pakistanis are not bound to do so. Fifth, non-resident Pakistanis are not required to follow the prescribed procedures for the registration of taxpayers. Lastly, expatriates are not liable to pay a 100pc increased rate of tax in case their name does not appear on the active taxpayers’ list, as others are bound to.
These incentives and privileges are well and good, but more can be done by FBR towards facilitating overseas Pakistanis. Due to compelling reasons, our expatriates have limited time to spend in Pakistan with their loved ones. They need facilitation, education and support for the faster, cheaper, convenient and efficient flow of remittances through normal banking channels as provided under the fiscal laws. They need awareness and knowledge regarding investment opportunities in Pakistan and their tax implications.
In order to adopt an institutional approach to facilitating overseas Pakistanis, why not reach this workforce of millions at the doorsteps of their workplace in their respective regions? The already established Pakistani missions and consular offices in various countries can be engaged in their facilitation, especially in financial matters, with the active involvement and support of the FBR.
The writer is a civil servant.
Twitter: @RashidJavedRana
rjranag@gmail.com
Published in Dawn, March 12th, 2022