Foreign currency accounts are the transactional accounts denominated in the foreign currency other than the home currency such as USD, GBP, EUR etc. This account is maintained by the individuals, groups and companies. Individuals can maintain this account in their personal capacity as the salaried person or can have this account under the head of proprietorship as well. On the other hand, resident companies can also register in foreign currency accounts for their international clients of for the sake of doing business in the international market. To do the transactions in the international market you need foreign currency accounts to make and receive the payment. Moving on, there are many international companies which are operating in the host country, to transfer the dividends, profits and net income to the resident country they need foreign currency accounts to do the needful business.
The importance of the foreign currency accounts is evident from the above explanation and how crucial they are in regulating the economy and the business. With the growing entrepreneurial activity in Pakistan and Freelancing efforts along with the increasing foreign companies interest in registering their businesses abroad and having outsourced human capability in the home country, in all such scenario’s foreign currency accounts hold paramount importance to receive payments from clients in either USD, GBP or EURs. These accounts are not subject to WTH taxes on fund withdrawals, as imposition or abolishing of the tax on these accounts directly affects the functioning of those accounts and overall impact on the economy.