Revenue body’s intervention irks forex companies

KARACHI: Foreign currency dealers dislike the Federal Board of Revenue’s (FBR) poking its nose into their businesses, terming it as an aberration from the free market mechanism.  

“When there is a financial monitoring unit and the regulator SBP (State Bank of Pakistan) the FBR’s action was surprising,” President Exchange Companies Association Malik Bostan said, referring to the FBR’s inquiry into the sale of foreign currencies in the open market from foreign exchange companies.

“The notices sent by the FBR to exchange companies will discourage the inflows of official channels,” Bostan said. Last week, the Directorate General of Intelligence and Investigation, Inland Revenue of the FBR issued several notices to foreign exchange companies, asking them to provide transaction details of foreign currencies, including the US dollar. 

The action has been taken in order to curb illegal movement of foreign currency and prevent the local unit from a decline in the open market.

Recently, rupee value against dollar had hit the 108-level in the open market. The difference between open and interbank rates crossed Rs4/dollar. The finance ministry’s intervention and steps taken to curb the illegal dollar movement helped rupee touch the 106.50 mark in the open market.

Tax officials said notices were also sent to exchange companies, asking them to provide details of foreign currency’s sale of up to $250,000 along with the buyer identity.

Bostan, however, said no such notice was received by any member in Karachi. The members were asked to help the government agencies in their anti-money laundering drive. The currency dealer said the laws related to money changing business allow free market mechanism.“There should be amendments into the laws for the purpose of granting powers to the FBR,” he added.