COLOMBO : Temporary foreign exchange restrictions are introduced by Gazette Notification No.2234/39 published on 2nd July 2021 for a period of six months from the date of the order. The order is issued by the Hon Prime Minister in his capacity as the Minister of Finance dated 30th June 2021
The previous Gazette Notification on temporary restrictions on foreign currency transactions ( Gazette Notification No. 2206/25) was issued on 18th December 2020 and was effective till 1st July 2021.
A synopsis of the restrictions stated in the newly issued Gazette notification (2234/39) are as follows.
1. Restrictions on Emigrants funds
- Suspend repatriation of funds under migration allowance out of funds received as monetary gifts by an emigrant from an immediate family member, beings funds realized from any asset in Sri Lanka
- Limit repatriation of funds under the migration allowance through the Capital Transaction Rupee Accounts (CTRA) by the emigrant who has claimed migration allowance under general permission, up to a maximum of USD 10,000 or equivalent in any other designated foreign currency, during the effective period of this Order ;
- Limit the eligible first-time migration allowance for the emigrants, up to a maximum of USD 30,000 or equivalent in any other designated foreign currency, during the effective period of this Order;
- Limit the repatriation of any current income or accumulated current income (including Employees Provident Fund (EPF), Employees Trust Fund (ETF), gratuity and pensions or any other retirement benefits) by the emigrants through the Capital Transaction Rupee Accounts (CTRA) or Emigrant’s Remittable Income Accounts (ERIA), under the general permission granted in the Regulations No. 3 of 2021, up to a maximum of USD 30,000 or equivalent in any other designated foreign currency, during the effective period of this Order
2. Persons with Temporary Residence Visa of another country
- Limit the outward remittances or issuance of foreign exchange for any Sri Lankan individual who resides in or outside Sri Lanka and has obtained Temporary Residence Visa of another country, up to a maximum of USD 20,000 or equivalent in any other designated foreign currency per person.
- Limit the issuance of foreign exchange for any person resident in Sri Lanka who intends to leave Sri Lanka under the Temporary Residence Visa of another country up to a maximum of USD 10,000 or equivalent in any other designated foreign currency per person.
3. Restrictions in investments outside via the Outward Investment Accounts (OIA)
Suspend making payments through Outward Investment Accounts for the purpose of making investments in overseas by persons resident in Sri Lanka under general permission granted in the Schedule of the Regulations No. 1 of 2021 published in the Extraodinary Gazette Notifications No. 2213/34 dated 03rd February, 2021, excluding :
(a) investments to be financed out of a foreign currency loan obtained by the investor from a person resident outside Sri Lanka under the provisions of the Foreign Exchange Act, or
(b) an additional investment to be made to fulfill the regulatory requirements in the investee’s country applicable on the investment already made in compliance with the provisions of the Act or repealed Exchange Control Act, in a company or a branch office in that country, or
(c) an additional investment/infusion of funds (as applicable) to be made by eligible resident companies in already established subsidiaries or branch offices in overseas incorporated/established subject to the provisions of the Act or repealed Exchange Control Act, up to a maximum of USD 15,000 or equivalent in any other designated foreign currency, for the purpose of working capital requirements of the investee, or
(d) the remittances for the purpose of maintenance of liaison, marketing, agency, project, representative or any other similar offices already established in overseas subject to the provisions of the Act or repealed Exchange Control Act, by eligible resident companies, up to a maximum of USD 30,000 or equivalent in any other designated foreign currency ;
provided that, the Head of Department of Foreign Exchange is satisfied with the fulfillment of such requirement.
4. Restrictions on capital transactions through Business Foreign Currency Accounts (BFCA)or/and Personal Foreign Currency Accounts (PFCA)
- Limit the outward remittances on capital transactions through BFCA or/and PFCA held by a person resident in Sri Lanka, up to a maximum of USD 20,000 or equivalent in any other designated foreign currency, during the effective period of this Order ;
5. Monetary Board to grant permission on Case by Case basis
The Monetary Board shall have the authority to grant permission in terms of the Section 7 (10) of the Foreign Exchange Act for the investments on case-by-case basis which exceeds the limits specified in the general permission granted in the Regulations No. 1 of 2021 provided that,
(a) the proposed investment is to be financed out of a foreign currency loan obtained by the investor from a person resident outside Sri Lanka under the provisions of the Foreign Exchange Act, or
(b) the proposed investment is to be made to fulfill the regulatory requirement in the investee’s country applicable on the investment already made in a company or branch office in that country in compliance with the provisions of the Act or repealed Exchange Control Act.
