PROTECTION OF ECONOMIC REFORMS ACT, 1992
ACT NO. XII OF 1992
An Act to provide for furtherance and protection of economic reforms
WHEREAS it is necessary to create a liberal environment for savings andinvestments; and other matters relating thereto;
AND WHEREAS a number of economic reforms have been introduced andare in the process of being introduced to achieve the aforesaid objectives;
AND WEHERAS 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 follow:––
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, andnationalized banks, promotion of savings and investments,introduction of, fiscal incentives for industrialization andderegulation of investment, banking, finance, exchange andpayments 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.–– This Act shall have effect notwithstanding
anything contained in the Foreign Currency Accounts (Protection) Ordinance, 2001
(L of 2001).
4. Freedom to bring, hold, sell and take out foreign currency.––(1) All citizens of Pakistan resident in Pakistan or outside Pakistan and allother persons shall be entitled and free to bring, hold, sell, transfer and take out
foreign exchange within or out of Pakistan in any form.
(2) Nothing in sub-section (1) shall apply to.––(a)any foreign exchange borrowed under any general permission givenby 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 goods exported from Pakistan;(c)

proceeds of securities issued or sold to non-residents;(d)any payment received from abroad for services rendered in, or fromPakistan;(e)earnings or profits of the overseas offices or branches of Pakistanifirms and companies including banks; and(f)any foreign exchange purchased from an authorized dealer, moneychanger or exchange company in Pakistan for any purpose.

(g)cross border or inland movement of foreign currencies in cash
exceeding US$ 10,000 or equivalent subject to such annual ceilingas may be prescribed by the State Bank of Pakistan.

5. Immunities to foreign currency accounts.––(1) All citizens of Pakistan
resident in Pakistan or outside Pakistan who hold foreign currency accounts inPakistan, and all other persons who hold such accounts, shall continue to enjoy
immunity against any inquiry from the Income Tax Department or any othertaxation authority as to the source of financing of the foreign currency accounts:

Provided that such immunity shall not be available to citizens of Pakistan
residing in Pakistan and to firms, companies and other bodies registered orincorporated in Pakistan in respect of any new foreign currency account opened ordeposits created on or after the 16th day of December, 1999 or to any incremental
deposits thereafter in an existing foreign currency account.

(2) The balances in the foreign currency accounts and income therefrom shallcontinue to remain exempted from the levy of wealth tax and income tax andcompulsory deduction of Zakat at source:
Provided that such exemption shall not be available to citizens of Pakistan
residing in Pakistan and to firms, companies and other bodies registered orincorporated in Pakistan in respect of any balance in a new foreign currency accountopened or deposits created on or after the 16th day of December, 1999 or toincremental deposits created on or after the 16th day of December, 1999 in anexisting foreign currency account and income therefrom.
(3) The banks shall maintain complete secrecy in respect of transactions in theforeign currency accounts [except as otherwise required under the Foreign
Exchange Regulation Act, 1947 (VII of 1947) or the Income Tax Ordinance, 2001
(XLIX of 2001).
(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:
Provided that no cash shall be deposited in an account of a citizen of Pakistan,
resident in Pakistan, unless the account holder is a filer as defined in the Income
Tax Ordinance, 2001 (XLIX of 2001):
Provided further that the Federal Government may make rules governing
deposits in and withdrawals from the foreign currency accounts.
6. Protection of fiscal 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 investor.
7. Protection of transfer of ownership to private sector.––The ownership,
management and control of any banking, commercial, manufacturing or othercompany, establishment or enterprise transferred by the Government to any person
under any law shall not again be compulsorily acquired or taken over by theGovernment 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 Pakistaniinvestor 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, shallbe 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, bywhosoever 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 remain in force, and shallnot be altered to the disadvantage of the beneficiaries.
11. Rules.––The Federal Government may make rules for carrying out thepurposes of this Act.

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