There are now approximately 9m Pakistanis living abroad and many of them maintain financial ties with Pakistan. Historically they have struggled to effectively move their money into Pakistan, take their money out of Pakistan, and manage their tax duties.<\/p>\n
<\/p>\n
However, with the introduction of the Roshan Digital Account (\u201cRDA\u201d<\/strong>) a number of these problems have been smoothed over.<\/p>\n In this article we outline how you can invest, buy a home, get car finance, and open a bank account as an overseas Pakistani.<\/p>\n The RDA is a government-backed initiative to encourage overseas Pakistanis to deposit and invest their money into Pakistan.<\/p>\n The design of the scheme is such to facilitate money flows into Pakistan and then channel them into long-term investments that mean that the money actually stays in Pakistan.<\/p>\n You can check out the detailed information on the State Bank\u2019s website here<\/a>.<\/p>\n The scheme looks like it is off to a great start \u2013 with $1.9bn invested into Pakistan through ~200,000 RDA accounts.<\/p>\n Only some of these banks offer the Islamic version of the RDA. Meezan Bank is probably the most prominent Islamic bank in Pakistan today.<\/p>\n You may have heard of financial products called Naya Pakistan certificates. As part of the RDA programme the government has also issued Naya Pakistan Certificates that offer very attractive annual returns. These are available to RDA account holders.<\/p>\n These certificates are denominated in PKR, GBP, EUR and USD \u2013 an attractive proposition for those worries about Pakistani inflation. The rates between the three types vary of course, with the highest the PKR version.<\/p>\n You can do a number of pretty useful things with an RDA. Some of the key ones include:<\/p>\n A key caveat to the home purchase option is that the money can only be released directly to the seller. You can then deposit the returns from that house back into your RDA and repatriate it to whichever country you\u2019re now based.<\/p>\n There is also a restriction for the first 3 years of repatriating above the amount you first invested. Again, the thinking is, the government doesn\u2019t want to inadvertently allow a leakage out of Pakistan (at least for the first 3 years).<\/p>\n The other important thing to bear in mind is that you are likely not going to be able to get a different bank\u2019s home financing product via the RDA of a different bank. So if that is your key intention, make sure you scope the market and rates out properly ahead of time.<\/p>\n You can\u2019t make deposits into your RDA from within Pakistan except those returns that arise out of your investments that you initially made via the RDA.<\/p>\n The thinking here is that the Pakistani government doesn\u2019t want the RDA to become a vehicle through which money leaks out of Pakistan.<\/p>\n Historically, the State Bank of Pakistan needs to approve all transactions going out of Pakistan above circa $10,000. (Hence, all those childhood memories of people carrying large amounts of cash through the airport on the way back to the UK. That, and mangoes.)<\/p>\n Let\u2019s say you make a profit on your property in Pakistan and sell it. You will have to pay Pakistani capital gains tax. Then you will also be due UK capital gains tax once you repatriate it.<\/p>\n However, as there is a double taxation treaty between the two countries (detailed here<\/a>), any taxes you have already paid in Pakistan will be deducted from the amount due in the UK.<\/p>\n So the net result is that you have to pay tax equivalent to the higher rate between the two countries \u2013 but thankfully you don\u2019t have to pay double the tax.<\/p>\n There are also clever ways to repatriate your capital gains from Pakistan into the UK and roll them into an investment that allows you to defer your CGT and avoid any future CGT on those investments.<\/p>\n These types of investment include investing in the AIM index<\/a> or investing in EIS-eligible startups<\/a>. Both types of investment are available via IFG.<\/p>\n The RDA is a very welcome addition to the Pakistani financial ecosystem and economically a clever move by the Pakistani government.<\/p>\n At IFG we are very excited about the potential in Pakistan and keen to support its progress.<\/p>\n Over the coming months we will be doing deep-dives into various aspects of investing into Pakistan as an expat. How does one invest in the Pakistani stock exchange, for example, and is it a good idea? What about the Pakistani property market?<\/p>\n To keep in the loop on all these articles \u2013 and more \u2013 please subscribe below.<\/p>\n If you\u2019d like us to cover any other Pakistan-related personal finance and investing topics \u2013 let us know in the comments below!<\/p>\n","protected":false},"excerpt":{"rendered":" Deep-dive into the Roshan Digital Account Introduction There are now approximately 9m Pakistanis living abroad and many of them maintain financial ties with Pakistan. Historically they have struggled to effectively move their money into Pakistan, take their money out of Pakistan, and manage their tax duties.<\/p>\n","protected":false},"author":24,"featured_media":6679,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","wds_primary_category":0},"categories":[13,8],"tags":[33],"acf":[],"_links":{"self":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts\/6678"}],"collection":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/comments?post=6678"}],"version-history":[{"count":0,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts\/6678\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/media\/6679"}],"wp:attachment":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/media?parent=6678"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/categories?post=6678"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/tags?post=6678"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What is the Roshan Digital Account?<\/h2>\n
The RDA is available from the following banks:<\/h3>\n
\n
Naya Pakistan Certificates<\/h3>\n
What can you do with a Roshan Digital Account?<\/h2>\n
\n
What can\u2019t you do with a Roshan Digital Account?<\/h2>\n
Tax and legal implications<\/h2>\n
Conclusions<\/h2>\n