Government Exempts Local NGOs From Signing MoU With EAD for Foreign Economic Assistance

The EAD has issued an office memorandum stated that in pursuance of powers conferred under clause-11 of Policy for Regulation of Organizations Receiving Foreign Contributions 2013, the Government of Pakistan has exempted local NGOs from signing of MoU with EAD to utilize foreign economic assistance, for a period not exceeding six (06) months with immediate effect.

This exemption will be applicable only to specific NGOs that have applied to the Economic Affairs Division for permission/signing of MoU. According to EAD, there are 92 NGOs whose documents are completed and have been circulated to stakeholders. Further, the same number of NGOs has signed MoUs with EAD so far.

According to the MoU draft which was required earlier for the NGOs to be signed with EAD and is now waived off, the government may allow NGOs to receive foreign contributions including funds, materials, and services, emanating from declared sources, through legal channels, subject to reporting requirements.

Further the government, according to the MoU draft, may allow NGOs to open, maintain and operate accounts for the execution of its work, provided that for opening and operating foreign currency accounts, the (Name of NGO) will seek the permission of the State Bank of Pakistan, under the applicable law and rules.

The government may allow NGOs to maintain its office and to open other offices, if required, with the prior written approval of the government, subject to the concurrence of the provincial government/local government and compliance with applicable law/rules.

NGOs may avail 100% tax credit subject to the provisions of the Section lOOC and approval of the Commissioner Inland Revenue concerned, under Section 2(36) of the Income Tax Ordinance 2001.

The organizations will receive foreign contributions through formal banking channels only. However, NGOs will comply with the Anti Money Laundering and other applicable laws as applicable in Pakistan.

They will not be allowed to retain foreign contributions in foreign exchange or in their foreign currency accounts but they will have to convert the same into Pak Rupees for utilization in line with the purpose(s) specified in MoU.

However, if there is a justifiable need to retain a part of the donation in foreign currency, the organization will have to obtain SBP’s prior approval. For this purpose, NGOs may approach the Exchange Policy Department of SBP along with the recommendations of EAD through concerned Authorized Sealer (Bank).

They will be allowed to use funds, materials, and services received as a foreign contribution or foreign economic assistance from declared sources, through legal channels, for its specified work, and provide complete information regarding the flow of such funds, materials and services and when required by the government.

The organization will not engage in any activity defined as an offense in Chapters 14 & 15 of the Pakistan Penal Code (Act XLV of 1860) or any other law prevailing in the country.

Further, it should not engage in money laundering, terrorist financing, weapon smuggling, anti-state activities and maintaining links with proscribed organizations.