Economics

repatriable

What does repatriable mean?

Repatriation refers to the ability to transfer liquid financial assets from a foreign country to the investor’s country of origin.

key takeaways

  • Repatriation refers to the ability to transfer liquid financial assets from a foreign country to the investor’s country of origin.
  • The Foreign Account Tax Compliance Act (FATCA) and the Bank Secrecy Act (BSA) impose reporting requirements for foreign financial institutions (FFIs) and Americans regarding foreign financial accounts and foreign asset holdings.
  • Repatriable as a stand-alone term is uncommon in American financial dictionaries, except among English-speaking Indians.

Learn about repatriation

A repatriable financial asset is a financial asset that can be withdrawn from a foreign account and deposited into an account in the investor’s country of residence or nationality, and if the financial asset is currency, converted from foreign currency to domestic currency.

Repatriable describes something as capable of repatriation. Repatriation brings back what is brought back or acquired in a foreign country. Something is repatriable if both foreign and domestic laws allow and do not prevent their repatriation.

Repatriation laws may discourage or encourage foreign investment and cross-border currency flows. Repatriation from countries with strict repatriation currency borders and heavily regulated foreign investment is hindered. Repatriation to and from other countries that freely allow repatriation but is subject to taxation, surveillance or access, and time constraints is also restricted.

An example of surveillance regulations is in the United States. The Foreign Account Tax Compliance Act (FATCA) and the Bank Secrecy Act (BSA) impose reporting requirements for foreign financial institutions (FFIs) and Americans regarding foreign financial accounts and foreign asset holdings. The U.S. also taxes foreign income, albeit reduced through foreign tax credits. This tax discourages repatriation and prompts many U.S. companies and investors to park their overseas earnings abroad and abroad. Congress recently amended the U.S. tax code to provide tax changes that it hopes will encourage U.S. companies to repatriate parked funds to the United States.

Repatriable Dividends

Repatriable dividends are dividends that a foreign company is able to pay to a U.S. company. Foreign direct investment (FDI) in U.S.-controlled foreign companies, known as controlled foreign corporations (CFCs), may be subject to foreign taxes, but generally do not pay U.S. taxes until dividends are paid to their controlled U.S. parent companies, and they therefore deported. Repatriated dividends are then subject to (sometimes higher) U.S. tax rates less foreign tax credits.

NRI repatriable NRE and FCNR-B accounts in India

Repatriable as a stand-alone term is uncommon in American financial dictionaries, except for English-speaking Indians. India has enacted foreign direct investment (FDI) and repatriation laws to encourage the flow of investment, currency and assets into India, especially from citizens working abroad. These laws specifically allow non-resident Indians (NRIs) to open financial accounts with Indian financial institutions.

These NRI-only accounts are designated by law as either repatriable or non-removable. NRIs can choose between two types of repatriable deposit savings accounts: non-resident external accounts (NRE accounts) and foreign currency non-resident bank deposits (FCNR-B accounts). Funds in these accounts can be repatriated by transferring them back to the NRI country of residence or by exchanging them into any foreign currency. An NRI may also choose a Non-Resident Ordinary Rupee Account (NRO Account). An NRO account is a non-refundable account, which means its funds cannot be transferred back to the NRI’s country of residence and cannot be exchanged for any foreign currency.

Please note that under Indian law, both NRE and FCNR-B accounts accept foreign currency deposits, but any foreign currency deposits into the NRE account will be converted to Indian Rupees. Indian law also allows some of these accounts to be owned by a person of Indian origin (PIO) or jointly owned by an NRI with a PIO or a resident of India.

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