In the past few years, we have seen PNG facing acute shortage of foreign currency and businesses are hard hit. In this month's write up, we have focused on Foreign Remittance process in PNG and ways to get around. For easy understanding we have used a Q&A approach
What is the process involved in making Foreign Remittance?
Foreign remittance is facilitated by commercial banks and can be done, either manually or electronically, using the banks process and system. Certain transactions may require tax clearance certificate (TCC), from Internal Revenue Commission (IRC)
Which transactions require TCC?
By Gazette notice number G334 dated 1 January 2018, Bank of Papua New Guinea has specified that remittance for the following transactions require TCC-
- Transfer of capital funds
- Repayment of loans or borrowings
- Transfer of funds towards sale, purchase, acquisition or disposition of securities, land or other property, in or outside PNG
- Payment towards royalty, license, management fee or expense of similar nature
- Transfer of funds to a trust fund created or established outside PNG
- Payments of dividends
- Transfer of funds pursuant to court order
- Payment towards non-trade related transactions i.e. not involving physical movement of goods
Payments of any amount to –Bahamas, Bermuda, British Channel Islands, British Virginia Islands, Gibraltar, Granada, Hongkong, The Isle of Man, Liberia, Liechtenstein, Luxembourg, Nauru, Netherlands, Antilles, Norfolk Islands, Panama, Solomon Island, Switzerland, Tonga, Vanuatu., towards above transactions require TCC
However, for countries, other than those listed above, TCC is only required for transfer of funds
exceeding K500,000, in any calendar year, towards all or above transactions, in relation to any payee.
What are the steps involved in foreign remittance?
Steps involved in foreign remittance are-
- Consider the nature of transaction and confirm if it requires a TCC
- If yes, then apply for TCC with IRC.
- Confirm currency availability and book a rate.
- Complete the prescribed foreign remittance forms, either online or over the counter.
- Lodge the invoices and completed BPNG prescribed forms.
- Follow-up with the Bank till payment is affected.
Tips and suggestion
- Project your foreign exchange payments for the calendar year and let your banker know
- Apply for TCC in the beginning of calendar year.
- Frequent meeting with your relationship manager will assist in managing expectation
- Having more than one bank account is a good option as it can allow more payment options
- Having a corporate online account may assist.
- Know the prescribed forms to complete.
- Aim to get it right the first time
Why should you contact us?
At Shishya, we have specialized consultants, who have in-depth experience in banking industry, with solid understanding of the process, share excellent working relationship with banks /IRC and suitably placed, to assist your business with your foreign remittances, in reasonable time frames.
Call us at 3202676 /3202677 or, email [email protected] , if you believe that we can be of assistance to your business.