The State Bank of Pakistan (SBP) Saturday announced the procedure for investment in "Government of Pakistan US Dollars Denominated Amnesty Bonds, 2018" under the tax amnesty scheme 2018. As per rules, approved by the caretaker cabinet on Friday, any citizen of Pakistan, who has declared his assets under the Government of Pakistan Foreign Assets (Declaration and Repatriation) Act 2018 and the Voluntary Declaration of Domestic Assets Act 2018, will be an eligible investor of the dollar-denominated bonds.
However, dollar-denominated bonds cannot be purchased against foreign exchange which represents sale proceeds of goods exported from Pakistan, earnings of residents on account of services or earnings or profits of the offices or branches of Pakistani firms, companies and bank working abroad.
Maturity of the bonds will be five years from the date of issuance and it will be issued in USD one thousand ($1,000) or multiples thereof with no upper limit on the investment amount.
The profit on the bonds will be three percent per annum to be paid on half-yearly basis. Redemption of principle and periodic profit payment will be paid in PKR at prevailing Interbank PKR-US dollar exchange rate (selling side) in the investor's nominated PKR account maintained with a bank in Pakistan.
In terms of Government of Pakistan (GoP) Gazette Notification No S.R.O.790(I)/2018 dated June 22, 2018, on Government of Pakistan's US Dollar Denominated Amnesty Bonds Rules, 2018, the SBP on Saturday issued detailed instructions for investment in the bonds.
As per the procedure for investment in the bonds through repatriation of foreign assets, upon receipt of funds to be invested in bonds and repatriation of liquid assets under Foreign Assets (Declaration and Repatriation) Ordinance, 2018, State Bank of Pakistan (SBP) will open a Subsidiary General Ledger Account (SGLA) of the taxpayer with the SBP.
Secondly, the SBP will issue scrip-less bonds for the US dollar amount (in multiples of $1,000), as advised by the taxpayer and credit the same in its SGLA and accordingly, will send an electronic confirmation to the taxpayer about SGLA number and details of its investment in the bonds issue date, amount, maturity date, etc, to the investor.
The SBP will advise the designated bank to manage the receipt of periodic profit and maturity/redemption payments on behalf of the taxpayer/customer in its designated bank account;
For profit payments, on periodic profit payment date, profit shall be paid in equivalent PKR at Weighted Average Customer PKR-US Dollar Exchange Rate (selling side) of the previous working day. The SBP will credit the designated bank's current account, maintained with the SBP, with profit amount after deducting income tax (if any), for onward credit to the customers' accounts.
As per operational instructions, on maturity payment date or premature encashment date, principal will also be paid in equivalent PKR at weighted average customer PKR-US dollar exchange rate (selling side) of the previous working day.
However, no encashment is allowed before the lapse of first year of investment in the bond. However, after one year the bond will be encashable at par in equivalent PKR at weighted average customer PKR-US dollar exchange rate (selling side) of one day before the date of encashment.
The date of encashment will be the date on which the request for premature encashment is received by the SBP. For premature encashment, the taxpayer will be required to forward the request to SBP along with copy of wire transfer, CNIC, NTN, Payment Slip ID and other documents submitted at the time of investment:
The SBP will credit the proceeds of encashment in the designated bank's current account within 02 (two) working days after receipt of request from the taxpayer.
After crediting the designated bank's account with profit, principal and encashment payments, SBP will instruct the designated bank for onward credit to taxpayers' PKR account.
The designated bank will credit the amount in taxpayer's PKR account latest by next working day as per the details provided by SBP and send a confirmation of the credit funds into taxpayer's account to the SBP.
In case of a holiday on periodic profit or principal payment date, the payment will be made on the next working day falling after the holiday. In such case, no profit shall be payable for the period of the holidays.
No profit will be payable for the broken period, ie, if the bond is encashed before the next six-monthly period, or for holding the bond beyond maturity.
In case of receipt of funds that are not in multiples of US$ 1,000, the broken amount (ie, less than USD$ 1,000) will not be invested in the bonds. Such broken amount will be converted into PKR and credited to the PKR account of the taxpayer
The SBP reserves the right to accept or reject the application if the necessary requirements under the Act, notification, or instructions are not complied with by the taxpayer.
In case of death of the taxpayer, the payment (principal and profit, if any), will be made to the legal heirs of the deceased taxpayer in accordance with a succession certificate issued by a court of competent jurisdiction.
As per the procedure for investment in bonds through domestic foreign currency accounts, after declaration of domestic assets and payment of taxes, the taxpayer will approach the bank maintaining its foreign currency account declared under the Voluntary Declaration of Domestic Assets Act, 2018, with Computerized Payment Receipt (CPR)/Payment Slip ID (PSID)
The amount will be invested in bonds from the domestic foreign currency account declared in Form A under section 7(1) of the Voluntary Declaration of Domestic Assets Act, 2018. The bank, before catering the request, must verify that the amount being requested by the taxpayer for investment in bonds is not more than the balance in the domestic foreign currency account as of 31st March 2018.
Subsequent to remitting the US dollar funds, the taxpayer will be required to provide a copy of wire transfer, or swift message, bearing necessary instructions including specification of the CNIC/NTN of the taxpayer in field 72 obtained from its bank, Form A and CPR/PSID (tax deposit evidence).
Certificate from its bank confirming the availability of balance in the foreign currency account as declared in Form A as on 31st March 2018 will also be submitted.
The amount in multiples of US$1,000, to be invested in the bonds and the details of PKR account (bank and branch name, account title, and IBAN) in which the taxpayer would like to have credit of periodic profit payments and maturity/redemption proceeds on the bonds to be purchased under the scheme.
The procedure for issuance of bonds, payment of periodic profit, maturity or premature encashment and general instructions for investment in bonds through domestic foreign currency accounts will be the same as for investment in bonds through repatriation of foreign assets.
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