How to Repatriate Profits Abroad from Pakistan – SBP & BOI Regulations Explained

How to Repatriate Profits Abroad – SBP & BOI Regulations
Introduction
For foreign investors and companies operating in Pakistan, the ability to repatriate profits abroad is one of the key advantages of investing through legitimate channels. Pakistan’s investment policy fully allows foreign entities to transfer profits, dividends, capital gains, and royalties outside the country — provided they comply with State Bank of Pakistan (SBP) and Board of Investment (BOI) regulations. Understanding this process ensures smooth fund transfers without facing unnecessary scrutiny or delays.

Legal Basis for Profit Repatriation
The right to repatriate profits is protected under the Foreign Private Investment (Promotion and Protection) Act, 1976, and supported by the Investment Policy 2023. According to these laws, foreign investors can freely remit profits and dividends through designated banks once all tax and legal obligations are fulfilled.
However, the remittance must pass through SBP-authorized channels and may require a BOI endorsement depending on the nature of investment or company structure.

Who Can Repatriate Profits Abroad?
The following categories of investors and companies are eligible:

• Foreign shareholders of Private Limited or Public Limited Companies registered with SECP.

• Foreign entities operating through Branch or Liaison Offices with BOI permission.

• Joint venture companies with mixed local and foreign ownership.

• Businesses in Special Economic Zones (SEZs) and Export Processing Zones (EPZs).

Types of Repatriable Funds
Foreign investors can repatriate multiple categories of income once taxes are paid and documentation is complete:

Step-by-Step Process for Profit Repatriation

1. Ensure BOI Approval (if applicable)
   If the company has foreign shareholding or operates under BOI registration (e.g., branch, liaison, or SEZ), verify that all investment details and profit-sharing structures are BOI-approved.

2. File Tax Returns with FBR
   All companies must file annual income tax returns and pay applicable taxes before declaring dividends. Non-filers cannot repatriate profits.

3. Declare Dividends or Profits
   The board of directors must officially declare dividends or profits, recorded in company minutes and audited financial statements.

4. Submit Remittance Request to Bank
   The company submits a remittance application to its authorized dealer bank, attaching supporting documents like:

   • Audited financial statements

   • Tax clearance certificate (FBR)

   • Dividend declaration resolution

   • SECP incorporation and shareholding proof

   • BOI approval letter (if applicable)

5. Bank Verification and SBP Approval
   The authorized dealer verifies documents and forwards them to SBP for approval. SBP checks compliance with exchange control and investment laws before approving the remittance.

6. Funds Transfer Abroad
   Once approved, the amount is transferred to the foreign shareholder’s account in their home country through official banking channels.

Role of the State Bank of Pakistan (SBP)
SBP plays a central role in monitoring and approving all foreign exchange remittances related to investments. It ensures that:

• The funds were brought into Pakistan via legitimate foreign investment routes.

• Taxes have been paid before repatriation.

• The remittance matches the declared profit or shareholding ratio.
  SBP approval ensures that the outflow is compliant with Pakistan’s Foreign Exchange Regulation Act (FERA), 1947.

Role of the Board of Investment (BOI)
The BOI facilitates and certifies foreign investments that are eligible for repatriation. In cases of branch or liaison offices, BOI’s annual renewal certificate and profit remittance permission are required.
For companies, BOI ensures the repatriation aligns with the original Foreign Investment Approval issued at the time of incorporation or capital injection.

Documentation Required for Repatriation
A typical profit repatriation request must include:

• Application on company letterhead.

• BOI permission or approval letter (for foreign investors).

• SECP certificate of incorporation.

• Audited balance sheet and profit & loss account.

• FBR tax payment certificate or clearance.

• Dividend declaration or board resolution.

• Proof of foreign investment remittance (bank receipt or SBP registration).

Taxation Rules Before Repatriation
Before profits can be repatriated, the company must pay:

• Corporate Income Tax – on total company profits.

• Withholding Tax on Dividends – typically 15% on payments to foreign shareholders.

• Sales or service taxes, if applicable.
  Only net profits after taxes can be remitted. Non-compliance with FBR tax laws can delay or block repatriation approval.

Repatriation by Branch and Liaison Offices
Branch and liaison offices operating under BOI approval can remit surplus funds once audited accounts are submitted. The BOI issues a Profit Repatriation Certificate, allowing the branch to remit earnings through an authorized dealer bank.
The amount remitted must match the profit shown in the audited balance sheet and be certified by a chartered accountant.

Special Economic Zones (SEZ) & Export Processing Zones (EPZ)
Foreign companies operating in SEZs and EPZs enjoy simplified repatriation procedures and tax exemptions. Profits can be remitted without prior BOI approval, provided the company’s SEZ registration and tax compliance are in order.

Common Mistakes That Delay Repatriation

• Missing BOI or SECP updates on shareholding records.

• Incomplete tax filings or outstanding FBR dues.

• Unregistered foreign investment at SBP.

• Failure to provide audited statements or bank verification of capital inflow.

Penalties for Non-Compliance
Companies attempting to remit funds without approval or through informal channels may face:

• Fines under the Foreign Exchange Regulation Act.

• SBP investigation and suspension of bank accounts.

• Loss of BOI and SECP credibility for future projects.

Final Thoughts
Repatriating profits from Pakistan is a straightforward process when done through official channels. By maintaining BOI registration, fulfilling SECP and FBR compliance, and routing funds through SBP-approved banks, foreign investors can freely transfer their earnings abroad. Pakistan’s current policies protect these rights while ensuring transparency in cross-border transactions — building investor trust and encouraging long-term business growth.