A company purchased equipment from Malaysia. The price of the equipment is $ 4,000. Now the company wants to make the payment. However, the company canât make payment through his bank because the company donât have a US$ account. Company can use private money exchanger but they canât make TT on behalf of the company. They can make TT on behalf of an individual.
So please let me know how can the company make payment to the above party? And what will be the rate of income tax (deduction at source)?
I shall be thankful for an early response.
Zia ur Rahman
Islamabad.
I think the banks allow the remittance of foreign currency even if the company does not have foreign currency account. WHT deduction shall not be required because it's payment against import.
Thank you very much for giving me a positive response.
Form M (if I remember correctly) is used to send foreign exchange outside Pakistan even if you do not have a foreign currency bank account. Talk to your bankers regarding this possibility.
Dear Zia,
It is little bit a complex matter. You have not told that whether the import was against documents acceptance through a bank or not? There is also a posibility that the equipment was brought by a person himself on credit and payment was to be made after testing etc and no banking channel is used.
Off course L/C is not compulsory for imports but at least a company has to accept the documents through some bank with a bill of exchange in case the import has been made otherwise than L/C.
In such case, if documents have been received through bank, simply send a request to the bank to debit your account with the required amount and make payment to the supplier in malasia through their banker's account.
If no documents have been received from bank and equipment was brought in person on credit terms (that is very very rare, you will have to contact money dealers (open market). There is no bar on remitting a TT in the name of a company. Rather, it is dificult to remit the amount in some individual's name due to anti-money laundering policies. You must consult some well reputed money dealers. Doing this will only cause you to pay hire foreign currency rate than the bank.
There is no requirement of duduction of tax at source.
Hope you will feel this post helpful.
Mahmood Sahib, Form M is used for making payments of commission to foreign agents against exports as per SBP regulations. I dont know whether or not it has some importance for such payments against imports.
Best regards,
Kamran.
AoA
Thank you very much to all of you. I really appreciate the response of Mr. Kamran.
Zia ur Rahman