Protection of Economic Reforms Act, 1992

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THE PROTECTION OF ECONOMIC REFORMS ACT, 1992 
 
 
 
CONTENTS 
 
1. Short title, extent and commencement 
2. Definitions 
3. Act to override other laws 
4. Freedom to bring, hold, sell and take out foreign currency 
5. Immunities to foreign currency accounts 
6. Protection of fiscal incentives for setting up of industries 
7. Protection of transfer of ownership to private sector 
8. Protection  of foreign  and Pakistani  investment 
9. Secrecy of Banking transaction 
10. Protection of financial obligation 
11. Rules 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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THE PROTECTION OF ECONOMIC REFORMS ACT, 1992. 
 
ACT No. XII OF 1992 
[23rd July, 1992] 
 
An Act to provide for furtherance and protection of economic reforms 
 
WHEREAS it is necessary to create a liberal environment for savings and investments; and 
other matters relating thereto; 
 
AND WHEREAS a number of economic reforms have been introduced and are in the process of 
being introduced to achieve the aforesaid objectives; 
 
AND WHEREAS it is necessary to provide legal protection to these reforms in order to create 
confidence in the establishment and continuity of the liberal economic environment created thereby; 
 
It is hereby enacted as follows:— 
 
1. Short title extent and commencement. — (1)This Act, may be called the Protection of 
Economic Reforms Act, 1992.  
 
(2) It extends to the whole of Pakistan. 
 
(3) It shall come into force at once. 
 
2. Definitions.— In this Act, unless there is anything repugnant in the subject or context,— 
 
(a)  “Government” includes   both  the  Federal  Government  and  any  
Provincial Government; 
 
(b)  “economic reforms ” means economic policies and programmes, laws 
and regulations announced, promulgated or implemented by the 
Government on and after the seventh day of November, 1990, relating 
to privatization of public sector enterprises, and nationalized banks, 
promotion of savings and investments, introduction of, fiscal incentives 
for industrialization and deregulation of investment,   banking, finance, 
exchange and payments systems, holding and transfer of  currencies; 
and 
 
(c)  all  other  expressions  used  in  this  Ordinance  shall  have  the 
meaning respectively assigned to them under the relevant laws. 
 
3. Act to Override other laws. The provisions of this Act shall have effect   notwithstanding   
anything   contained   in   the   Foreign   Exchange Regul ation Act, 1947 (VII of 1947), the Customs 
Act, 1969 (IV of 1969), the   Income Tax Ordinance, 1979 (XXXI of 1979), or any other law for the 
time being in force. 
 
4. Freedom to bring, hold, sell and take out foreign currency. — (1) All citizens of 
Pakistan resident in Pakistan or outside Pakistan and all other persons shall be entitled and free to 
bring, hold, sell, transfer and take out foreign exchange within or out of Pakistan in any form and 
 
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shall not be required to make a foreign currency declaration at any stage nor shall anyone be 
questioned in regard to the same. 
 
1[(2) Nothing in sub-section (1) shall apply to 
 
(a)  any foreign exchange borrowed under any general permission given by the 
State Bank of Pakistan under sub -section (1) of section 4 of the Foreign 
Exchange Regulations Act, 1947 (VII of 1947); 
 
(b)  any payment from abroad for good exported from Pakistan;  
(c)  proceeds of securities issued or sold to non-residents; 
 
(d)  any payment received from abroad for services rendered in, or from Pakistan; 
 
(e)   earnings  or  profits  of  the  overseas  offices  or  branches  of  Pakistani firm 
and companies including banks; and 
 
(f)  any foreign exchange purchased from an authorized dealer in  Pakistan for any 
purpose.] 
 
5. Immunities to foreign curren cy accounts. —(1) All citizens of Pakistan resident in 
Pakistan or outside Pakistan who hold foreign currency accounts in Pakistan, and all other persons 
who hold such accounts, shall continue to enjoy immunity against any inquiry from the Income Tax 
Department or any ot her taxation authority as to the source of financing of the foreign currency 
accounts 1[:] 
 
1[Provided that such immunity shall not be available to citizens of Pakistan residing in 
Pakistan and to firms, companies and other bodies registered or incorporated in Pakistan in respect of 
any new foreign currency account opened or deposits created on or after the 16 th day of December, 
1999 or to any incremental deposits thereafter in an existing foreign currency account]; and 
 
(2) The balances in th e foreign curr ency accounts and income there from shall continue to 
remain exempted from the levy of wealth -tax and income tax and compulsory deduction of Zakat at 
source. 1[:] 
 
1[Provided that such exemption shall not be available to citizens of Pakistan residing in 
Pakistan and to firms, companies and other bodies registered or incorporated in Pakistan in respect of 
any balance n a new foreign currency account opened or deposits created on or after the 16 th day of 
December, 1999 or to incremental deposits  created on or after the 16 th day of December, 1999 in an 
existing foreign currency account and income therefrom.] 
 
(3) The banks shall maintain complete secrecy in respect of transactions in the foreign 
currency accounts. 
 
1 Numbered, added and subs. by Ordinance 21 of 1999, ss.2 & 3. 
 
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(4) The State Bank of Pakistan or other banks shall not impose any restrictions on deposits in 
and withdrawals from the foreign currency accounts and restrictions if any shall stand withdrawn 
forthwith. 
 
6. Protection of fis cal incentives for setting -up of industries.  The fiscal incentives for 
investment provided by the Government through the statutory orders listed in the Schedule or  
otherwise notified shall continue in force for the term specified therein and shall not be altered to the 
disadvantage of the investors. 
 
7. Protection of transfer of ownership to private sector.  The ownership, management and 
control of any banking, commercial, manufacturing or other company, establishment or enterprise 
transferred by the Government to any person under any law shall not again be compulsorily acquired 
or taken over by the Government for any reason whatsoever. 
 
8. Protection of foreign and Pakistani Investment. No foreign, industrial or commercial 
enterprise established or  owned in any form by a foreign or Pakistani investor for private gain in 
accordance with law, and no investment in share or equity of any company, firm, or enterprise, and 
no commercial bank or financial institution established, owned or acquired by any  foreign or 
Pakistani investor, shall be compulsorily acquired or taken over by the Government. 
 
9. Secrecy of Banking Transaction.  Secrecy of bonafide banking transactions shall be 
strictly observed by all banks and financial institutions, by whosoever owned, controlled or managed. 
 
10. Protection of financial obligation.  All financial obligations incurred  including those 
under any instrument ,  or  any  financial  and contractual commitment made by or on behalf of the 
Government shall continue to rema in in force, and sh all not be altered to the disadvantage of the 
beneficiaries. 
 
11. Rules. The Federal Government may make rules for carrying out the purposes of this Act. 
___________ 
 
THE SCHEDULE 
 
(See section 6) 
 
1. Notification No. SRO 1283 (1)/90, dated the 13th December, 1990, issued under sub-
section (2) of section 14   of the Income Tax Ordinance, 
1979 (XXXI of 1979). 
 
2. Notification No. SRO 1284 (1)/90, dated the 13th December, 1990, issued under section 19 
of the Customs Act, 1969 (IV of 1969).