Foreign Exchange Transfers Tax & Customs Issue

76-What is meant by the term "foreign exchange transfers"?

The term “foreign exchange transfers” refers to transfer of all sums resulting from the performance of a foreign investment and/or other sums to be transferred in the from of foreign exchange. Such transfers are categorized in two:

a. Capital transferssuch as dividends, principal capital, capital gain, sums pertaining to compensation for confiscation or expropriation of foreign capital;

b. Other foreign exchange transfers including those resulted from patent, technical know-how as well as engineering and technical assistance agreements, trade marks and name, and similar agreements.

77-Is there any restriction with regard to the volume of transferable funds?

No, there is no legal restriction with respect to the volume of transferable funds, neither annually nor totally.

78-How the foreign exchange required for such transfers is procured?

Foreign exchange required for transfers related to foreign investments shall be procured and made available by way of purchasing foreign exchange from the banking system or out of foreign exchange earnings resulted from the export of products and/or services of the foreign investment project, as the case may be. However, the mechanism for provision of foreign exchange transfers is specified in the investment license.

79-Which formalities are required for transfers related to a foreign investment?

Principally, any and all foreign exchange transfers shall be made upon formal application of the foreign investor or the joint venture company or investee firm on behalf of the foreign investor. All transfers, after deduction of legal dues, are payable to the foreign investor's account.

80-In case specific regulations or a government decision prohibits the export of products of the investment project, how the foreign exchange related to transfer of capital and profit is procured?

In exceptional cases where export is not so permitted, the foreign investor is authorized to sell his products in domestic market and to purchase, from the banking system, the required foreign exchange for such transfer(s). Obviously, the foreign investor may export other authorized goods instead, should he wish to do so.

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