At least $2-3 bn in annual earnings stashed abroad
The government is contemplating to amend Foreign Exchange Act No. 12 of 2017 with the aim of dealing with offenders of foreign exchange hoarding by parking monies overseas, official sources disclosed.
Some of these exporters, importers, businessmen and individuals used to stash money in overseas accounts using loopholes in the Act which has no provisions to impose punishment against such persons.
The country is still deprived of US$200-$ 300 million per month averaging $2.4 -3.6 billion per year due to the practice of stashing monies overseas, Finance Ministry data shows.
Amendments made in the Foreign Exchange Act No 24 of 1953 by repealing it in 2017 had eased restrictions on repatriation of foreign currency earnings.
A former top treasury official told the Business Times that lethargic action has been seen on the highly noticeable matter of dealing with offenders who are keeping monies (legitimate or criminal) in overseas accounts and investments.
The five most probable ways of hoarding foreign exchange overseas were over invoicing, under invoicing, transfer pricing, cross border transactions and profit parking.
The Central Bank has taken measures recently to crackdown on persons engaged in ‘undial’ and ‘hawala’ money transferring and persons who are keeping foreign currency more than the stipulated amount.
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