Relaxation of Exchange Control Rules
01 Jun 2017
On 19 April 2017, an amended Currency and Exchange Manual for Authorised Dealers (“the Manual”) was issued to give effect to the further amendments released pertaining to the permissions and conditions applicable to foreign exchange transactions.
A highlight of the amendment in respect of the payment royalties and fees to non-residents is provided below.
Royalties and Fees payable to Non-Residents
Previously, the payment of royalties and fees to non-residents (related and unrelated parties) in respect of licence agreements involving the local manufacture of goods had to go through the following process before payments can be effected:
- The Department of Trade and Industry (“DTI”) had to assess the license agreement;
- The DTI would then forward its assessment to the Financial Surveillance Department (“FinSurv”) for approval;
- The Authorised Dealer would make an assessment and have to be satisfied that the payments fall within the terms of the agreement and where applicable, that it complies with any conditions laid down in the authority granted by the DTI and FinSurv; and
- Lastly, the Authorised Dealer would view the letter of approval from FinSurv.
The process is now more relaxed as the approval of FinSurv is no longer a requirement.
The abovementioned amendment has been implemented to give effect to the announcement in the 2017 budget speech pertaining to the relaxation of the exchange control rules.
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