Frequently Asked Questions

 
1. Migration Allowance
1.1 Who is eligible for the migration allowance?
 
  • Any individual adult (aged 18 years and above), who has obtained the permanent residency (PR) in another country.
1.2 How much can be taken out as the migration allowance?
 
  • An initial allowance of USD 150,000 per individual adult
  • An annual allowance of USD 20,000 per individual adult (the annual allowance can be obtained after a lapse of 12 months from the full utilization of the initial migration allowance)
1.3 What is included in the migration allowance?
 
  • Proceeds from movable and immovable property
  • Proceeds from tangible and intangible assets
  • Gifts received from parents and spouse
  • Assets including precious stones, precious metals, personal jewellery, etc.
1.4 Does an emigrant have to transfer/utilize the full migration allowance at once?
 
  • No. It can be utilized in smaller amounts until the total allowance is completed.
1.5 Do you need to obtain the prior approval from the Controller of Exchange in remitting the migration allowance outside Sri Lanka?
 
1.5.1 Emigrants who obtained the PR on or after 12th June 2013
  • Prior approval is not needed.
  • The allowance can be obtained through any licensed commercial bank in Sri Lanka.
  • The funds should be transferred through a Migrant Blocked Account opened in the name of the emigrant.
1.5.2 Emigrants who obtained the PR prior to 12th June 2013
  • Prior approval is needed from the Controller of Exchange
  • The funds should be transferred through a Non-Resident Blocked Account
1.6 What is the procedure to be followed in applying for the migration allowance (for emigrants who obtained the PR prior to 12th June 2013)?
 
i) A request letter addressed to the Controller of Exchange including the following details,
  • Emigrant’s name and address in full
  • Emigrant’s date of birth and civil status
  • Names of others who accompanied the emigrant (if any)
  • Date of obtaining the permanent residency (PR) and documents to prove the  PR
  • Emigrant’s bank details in Sri Lanka (the account no., bank and the branch) and abroad (account no., name and address of the bank, SWIFT code, etc.)
  • A certified copy of the Power of Attorney (if applicable)
ii) The following documents should be forwarded with the above request letter,
  • Evidence of source of funds
  • A balance confirmation from a non-resident blocked (NRBA) savings or current account (please note that the total sum to be remitted should be available in a single NRBA and fixed/term deposits are not accepted in this regard).
  • Original tax clearance certificate obtained from the Commissioner General of the Inland Revenue Department in Sri Lanka in respect of remittances exceeding Rs.1,000,000/-.
  • An affidavit duly stamped and attested by a Justice of Peace/Notary Public/Commissioner of Oaths declaring that no remittance has been made or will  be made in excess of the permitted initial allowance of USD 150,000 or the annual allowance of US$ 20,000/- as applicable. If any funds have been transferred before it should be declared. (link to specimen affidavit)
  • Photocopies of all pages of the emigrant’s Sri Lankan passports which was used at the time of migrating and subsequently held to date. if an emigrant is unable to submit any of the Sri Lankan passports in this regard, a declaration should be submitted stating the reasons for the inability to submit the passport/s.
  • [Note: if an applicant is unable to submit any Sri Lankan passport that he/she had at the time of getting the PR and held to date, he/she will not be eligible for USD 150,000 (instead the applicant will only eligible for the annual allowance of USD 20,000)].
1.7 Will the current income of emigrants be considered as a part of the migration allowance?
 
  • No. Current income including, interest, dividends, rent, lease rentals, etc. are freely remittable apart from the migration allowance of the emigrants.
1.8 Can an emigrant convert the migration allowance into dollars and save in Sri Lanka?
 
  • Yes. An emigrant can transfer the migration allowance or the remittable current income into an Non-Resident Foreign Currency (NRFC) Accounts held by them in Sri Lanka
 
2. Non-Resident Blocked Accounts (NRBA)
2.1 Who is eligible to open a NRBA?
 
  • Non-residents including emigrants (those who were born in Sri Lanka and subsequently obtained the PR in another country) and non-nationals are eligible to open NRBA
2.2 What are the types of accounts that can be opened as NRBA?
 
  • Savings, Current and fixed deposits
2.3 Is the prior approval needed to open a NRBA?
 
2.3.1 Emigrants
  • Do not need the prior approval in opening an NRBA
2.3.2 Non-Nationals
  • Need to obtain the approval from the Controller of Exchange
  • The applicant should make a request to the Controller of Exchange specifying the bank and the branch in which he/she intends to open the account, along with a copy of the passport
2.4 What are the permitted credits to the NRBA?
 
  • Locally derived funds (both capital and current in nature)
2.5 Can the account holder withdraw funds locally?
 
  • Funds can be withdrawn by the account holder to meet local expenses within Sri Lanka
2.6 Can cheques be issued from a NRBA?
 
  • Cheque books are not allowed
 
3. Migrant Blocked Account (MBA)
3.1 What is an MBA?
 
  • It is a special type of NRBA that an emigrant (who obtained the PR after 12th June 2013) is required to open with a licensed commercial bank, in order to transfer funds from Sri Lanka.
3.2 Who is eligible to open an MBA?
 
  • An emigrant who has obtained the PR after 12th June 2013 and is eligible to apply for the migration allowance can open this account
3.3 Can an emigrant have several MBAs with a number of different banks?
 
  • No. An emigrant can only have one MBA with any given licensed commercial bank in Sri Lanka
3.4 What type of accounts can be opened as MBA?
 
  • Only savings accounts are allowed
3.5 Does the emigrant need to obtain the prior approval from the Controller of Exchange in order to open the MBA?
 
  • No, the emigrant does not need to obtain the approval from the Controller of Exchange
  • However the bank (in which the emigrant decides to open the MBA) shall obtain a special registration number from the Exchange Control Department prior to opening an MBA
3.6 What is needed to open the MBA?
 
  • The emigrant needs to take his/her passport and a copy of the PR visa in order to open an MBA
 
4. Sale of property by non-residents
4.1 When a resident outside Sri Lanka wants to sell a property he/she owns in Sri Lanka should the seller or buyer obtain the approval from the Controller of Exchange?
 
  • No. a general permission has been granted in this regard
4.2 How can the sales proceeds be transferred outside Sri Lanka?
 
4.2.1 By Emigrants
  • If the property was an inheritance or was acquired by the emigrant while residing in Sri Lanka the outward transfer is subject to the existing migration allowances
  • If the property was acquired by way of inward remittances sent to Sri Lanka, the sales proceeds are freely remittable apart from the migration allowance, provided there are documentary evidence to prove the inward remittances
4.2.2 By non-nationals
  • The sales proceeds (including the capital gain) can be remitted outside Sri Lanka, provided that the seller has documentary evidence to prove that funds were remitted to Sri Lanka to acquire the property
 
5. Authorized Money Changers and their Business
5.1 Who is an Authorized Money Changer (AMC)?
 
  • AMC means a company/entity permitted by the Controller of Exchange to sell and/or purchase and exchange foreign currency notes and encash travellers cheques under the section 5 (1) (a) read with Section 48 of the Exchange Control Act (ECA).

However, certain Money changers have been permitted by the Central bank for both purchase and sale of foreign currency.

5.2 Who are the AMCs?
 

Following companies/entities can become an AMC.

  • Limited Money Changing Companies (LMCCs);
  • Licensed Specialized Banks (LSBs);
  • Licensed Finance Companies (LFCs);
  • Specialized Leasing Establishments (SLEs); and
  • Hotels registered as tourist hotel with the Sri Lanka Tourism Development Authority.

Besides LMCCs, other companies/entities are granted money changing permit under concessionary terms.

5.3 What is the procedure of obtaining a Permit for money changing business?
 
  • Any party interested in obtaining a permit to engage in money changing business should send their written requests to the Exchange Control Department, Central Bank of Sri Lanka.
5.4 What are the basic requirements to be fulfilled to become an LMCC?
 
  • It should be a Limited Liability company incorporated in Sri Lanka with an issued and paid up share capital of at least Rs. 10 Million.
  • One of the primary objectives of the company should be “carrying on money changing business”.
  • At least two of the directors of the proposed money changing company should be income tax payers, paying tax of not less than Rs. 60,000 per annum and documentary evidence confirming their latest tax payments should be produced.
  • Its place of business should be conducive for money changing business and operations relating to money changing business should be carried out at a separate counter, which is used exclusively for the said business and physically separated from all other businesses. This business should not be integrated with any other business of the business place.
  • CCTV cameras should be installed at the place of business.
  • The directors, substantive shareholders, ultimate beneficial owners and employees of the company should be fit and proper persons to conduct money changing activities in terms of their educational qualifications, business experience and past record in relation to foreign exchange transactions. 
  • In the event the company is eligible to be granted the money changing permit, the company shall maintain a minimum annual turnover (foreign currency deposits with Authorized Dealers) of US$ 1.5 Mn. or its equivalent in any other foreign currency and average monthly turnover of US$ 125,000 or its equivalent in any other foreign currency, in order to be considered to grant the permit for the following year. 
  • The company should submit a bank guarantee of Rs.500, 000/- on calendar year basis, in favour of the Controller of Exchange when all the requirements are fulfilled.
  • The Central Bank of Sri Lanka reserves the right to impose any other terms and conditions other than that are mentioned above.
5.5 Can an existing company engages in the money changing business?
 
  • Yes. Any company which fulfills the requirements listed under  5.4 above can apply for a money changing permit.
5.6 Whether foreign companies which have registered branches in Sri Lanka could engage in money changing business in Sri Lanka?
 
  • Yes, the applications are considered on case by case basis.
5.7 Whether any AMC is permitted to open up branches?
 
  • Yes.  All AMCs are permitted to open up branches once the permit is issued and remain valid.
  • However, LMCCs, can only apply up to two (02) branches within the minimum capital requirement of Rs. 10 Million, provided only one (01) shall be established with in the Western Province.  But, if the company wishes to apply for more than two branches, an additional capital of Rs. 5 Mn. is required for each and every branch.
5.8 What are the permitted activities of the AMC?
 
  • Purchase foreign currency against Sri Lanka rupees
  • Encash travellers’ cheques
  • Exchange foreign currency for any other foreign currency; and
  • Sell foreign currency against Sri Lanka rupees (applicable only AMCs who are authorized to SELL foreign currency)
5.9 Who can accept foreign currency?
 
  • A general permission has been granted for persons resident in Sri Lanka to accept payments in foreign currency in respect of goods and services supplied to a person resident outside Sri Lanka subject to several terms and conditions by the Government Gazette Notification No. 1791/16 dated 01.01.2013.
5.10  What is the maximum amount of foreign currency notes permitted to be sold by an AMC for Sri Lankans traveling abroad?
 
  • AMCs permitted under the concessionary terms can sell up to US$ 5,000 per person per travel except National Savings Bank (NSB).
  • NSB can sell up to US$ 10,000 per person per travel.
  • Other LMCCs are permitted to sell only US$ 2,000 (applicable only LMCCs who are authorized to sell foreign currency).
5.11 What is the period of validity of the Permits issued to AMC?
 
  • The Permits to AMCs will be issued for one year period. However, such Permits could be renewed before the date of expiry subject to compliance of the conditions of the permit.
5.12 What are the conditions applicable on AMCs when renewing Permits?
 
  • For any LMCC permitted to purchase foreign currency notes required to have total foreign currency purchases over and above US$ 1.5Mn during the year for renewal of their permits for further period. This will apply for any of their branch as well.
  • For any LMCC which is permitted to sell foreign currency should have their total foreign currency purchases over and above US$ 4 Mn to renew their permit to sell foreign currency for further period.
  • However the AMCs permitted under the concessionary terms are exempted from the said turnover requirements.
5.13 Whether AMCs can sell trvallers’ cheques?
 
  • AMCs are not permitted to sell trvallers’ cheques and permitted only to encash travellers’ cheques.
5.14 Are there limits for currency purchases by AMCs?
 
  • There are no limits with regard to amount of foreign currency purchase by AMCs from the public.
5.15 Are AMCs permitted to endorse the passports of persons when sales of foreign currency?
 
  • Yes
5.16

What are the documents AMCs should look for at the time of sales and purchases of currencies?

 

At the time of sales of foreign currency, public will have to produce the following:

  • Passport
  • Air Ticket
  • Copy of the Visa and relevant documents in proof of the purpose of the travel and other document in proof of the purpose of the travel

At the time of purchases of foreign currency,

  • National Identity Card or Passport.
5.17

Whether the persons should produce a Custom Declaration Form to the Money Changers when they encash foreign currency notes?

 
  • In terms of the present Exchange Control regulations, any person who brings foreign currency in excess of US$ 15,000 or its equivalent in any other foreign currency into the country requires to declare that amount of foreign currency to the Sri Lanka Customs in the form specified by the Customs for that purpose.
  • Therefore, any person who wants to encash more than US$ 15,000 or its equivalent in any other foreign currency requires to show the copy of the declaration made to the Sri Lanka Customs for examination by the AMC who purchases the foreign currency.
5.18 Can a person purchase foreign currency notes from a bank as well as from a Money Changer per travel?
 
  • Any licensed commercial bank and NSB could release foreign currency notes up to US$   10,000 or its equivalent in other foreign currency per person per travel while LFCs and Sanasa Development Bank could release foreign currency notes up to US$ 5,000/- or its equivalent in any other foreign currency.
  • If any licensed commercial bank or any other AMC has already issued foreign currency notes up to US$ 2,000 or its equivalent in any other foreign currency for a foreign travel, LMCCs are not permitted to issue foreign currency notes again for the same travel.
  • However, the maximum amount of foreign currencies in the form of foreign currency notes can be taken by any person per travel from all sources (i.e. from commercial banks and AMCs) shall not exceed US$ 10,000/-.
5.19

Whether AMCs can buy or sell any type of foreign currencies?

 
  • AMCs are permitted to deal only with the foreign currencies which are accepted by their depositing bank/s.
5.20 How do AMCs obtain the exchange rate that they should purchase or sell foreign currency?
 
  • AMCs can obtain the exchange rates from licensed commercial banks.
5.21 Whether customer can ask a receipt from the AMC for his transaction?
 
  • At the time of any currency sale or purchase, AMCs should issue a receipt to the customer. Public has a right to ask for the receipt which include the information such as name of the AMC, address and the details of the transaction etc.
5.22 How does a person identify as an authorized AMC?
 
  • All AMCs permitted to sell and/or purchase foreign currency should display a name board in front of their business premises which should indicate the Permit number assigned to them by the Central Bank and the following logo has to be displayed at the place of business too.

click this

 

5.23

Whether customers can complain to the Central Bank with regard to any misconduct of the business by any AMC?

 
  • Yes. They can lodge any complaint to the Controller of Exchange, Exchange Control Department, Central Bank of Sri Lanka, Colombo 01 with regard to misconduct of the business by any AMC.
5.24 Who are the existing Money Changers?
 
  • Addresses and contact details of the Authorized Dealers (ADs) and AMCs as at  31.10.2016 are given below. Please note that in cases of ADs and the AMCs permitted under concessionary terms, only the details of their head offices are included.

Click here to view Contact Details of Authorized Money Changers permitted to purchase, exchange and sell foreign currency as at 31.10.2016 

Click here to view Contact Details of Authorized Money Changers permitted only to purchase and exchange (NOT permitted to SELL) foreign currency as at 31.10.2016.

 
6. RFC, NRFC and Other Foreign Currency Accounts and their Operations
6.1 Can a Company open an RFC account?
 
  • A company can’t open an RFC account. RFC account could be opened by resident individuals only.
6.2 Can I transfer funds from my RFC account to my NRFC account?
 
  • Such transfers are not permitted.
6.3 Can I transfer Funds from my NRFC account to my RFC account?
 
  • Yes
6.4 Can I transfer funds in my NRFC account to another NRFC account?
 
  • Yes.
6.5 Can I transfer funds in my RFC account to another RFC account?
 
  • Yes'
6.6 Can I transfer funds from my NRFC account to an account maintained overseas?
 
  • Debits to NRFC accounts are freely allowed.
6.7 Can I open an NRFC account from funds, which I’m getting from my sister who is living overseas?
 
  • NRFC accounts could be opened in the name of Sri Lankan Nationals or non-nationals who had at any time been a Sri Lankan national, while they are resident abroad or within 90 days of their return to Sri Lanka after employment abroad. Therefore, to open an NRFC account, you have to fulfill the eligibility criteria.

    Therefore, you can’t open an NRFC account with funds received from your sister who is living overseas.
6.8 Can I invest my NRFC funds in Sri Lanka?
 
  • NRFC account holders who are living outside Sri Lanka whether Sri Lankan nationals or non nationals can invest their NRFC funds in shares of companies incorporated in Sri Lanka, Treasury bills/bonds, units in unit trusts and debentures througn a Securities Investment Account (SIA) maintained in your name.
6.9 What is the minimum amount, which I need to open an RFC account?
 
  • US$ 100 or its equivalent in other designated foreign currency.
6.10 Can any person deposit foreign currency to the credit of an NRFC account in Sri Lanka?
 
  • Account holders and the immediate family members of them are permitted to deposit any amount of designated foreign currency to an NRFC Account.
6.11 Can we re-deposit money to NRFC account which has been withdrawn from the account?
 
  • Local disbursement from the account should be in rupees. So, you can’t re-deposit the money you have withdrawn from the account.
6.12 Can we use funds in the NRFC accounts as Exchange Allowances when we travel abroad?
 
  • Yes, you can. Foreign currency notes should be restricted to US$ 5,000 or its equivalent in other convertible foreign currency and balance in bank drafts/travel cards.
6.13 I was informed by a foreign institution that I am eligible for a prize of a Lottery. For that I need to remit US$ 10. Can I get the approval from the Exchange Control Department to remit US$ 10 to that institution?
 
  • Approval of the Controller of Exchange cannot be granted for remittances to get a winning prize of a Lottery. However, if you are the winner, we have no objection for your receiving such money into a RFC/rupee account opened in your name.
6.14 I have an RFC account. I received 100 USD from one of my relatives. Can I deposit that money in to my RFC account?
 
  • Yes, Authorized Dealers are now permitted to accept any amount of designated foreign currencies as subsequent deposits to the credit of RFC accounts without Customs confirmation on passport or Customs Declaration Card.
6.15 Can I maintain more than one RFC account?
 
  • We have no objection for maintaining any number of RFC accounts by eligible account holders.
6.16 Can I maintain more than one NRFC account?
 
  • We have no objection for maintaining any number of NRFC accounts by eligible account holders.
6.17 Can I open an NRFC account in the name of my child who is a minor?
 
  • Opening of NRFC accounts for minors is permitted by crediting inward remittances received from their guardians/parents who are non-residents or transferring funds from existing NRFC accounts of such guardians/parents.
6.18 Can I open an RFC account in the name of my child who is a minor?
 
  • Opening of RFC accounts for minors is permitted by crediting inward remittances received  from their guardians/parents who are non-residents or transferring funds from existing  RFC accounts of such guardians/parents.
6.19 Can I obtain a loan against the funds in my NRFC account?
 
  • If you are a Sri Lankan employeed abroad and having an NRFC account, you can obtain lonas as follows.
  • I.    A loan can be obtained against the pledge of the NRFC balances up to 90% of the funds, to be utilized for any purpose in Sri Lanka.
  • II.   Loans also can be obtained for constructions or purchase of residential houses in Sri Lanka subject to certain conditions.
  • III.  Loans in Sri Lanka rupees can be obtained to be utilized for any purpose in Sri Lanka.
 
7. Investments in Sri Lanka by persons resident outside Sri Lanka (Non-Residents)
7.1 What are the investments permitted to be made in Sri Lanka by Non-residents?
 
7.1.1 Non-resident investors are permitted to invest in Sri Lanka in following areas.
  • Securities
  • Opening of a place of business
  • Bank Deposits (SFIDA)
  • Immovable Property
  • Granting loans to resident companies
7.1.2 Permitted Securities are as follows;
  • In the shares (ordinary and preference)  of Sri Lankan companies (listed and non-listed)
  • Sri Lankan Government Treasury Bonds and Treasury Bills.
  • Sri Lanka Development Bonds (SLDBs)
  • Units in Unit Trusts including Exchange Traded funds.
  • Listed Corporate Debentures
7.2 How can a non-resident investor invest in Sri Lanka?
 
  • Open an account titled Securities Investment Account (SIA) in a licensed commercial bank in Sri Lanka which can be maintained in any designated foreign currency or Sri Lanka Rupees.
  • Send funds for investment purposes in foreign currency into SIA.
  • After that the rupee value of the investments specified at 7.1can be transferred from the SIA.
7.3 How can the non-resident investors repatriate the benefits of their investments?
 
  • All benefits earned out of investments in 7.1above could be credited into the same SIA and remit out the same provided that the initial investment has been made through the same SIA.
7.4 Who are the eligible non-resident investors to invest in the shares in Sri Lankan companies?
 
  • Foreign Institutional Investors including country funds, regional funds or mutual funds
  • A corporate body incorporated outside Sri Lanka
  • Citizens of foreign states whether living in Sri Lanka or outside Sri Lanka
  • Non-resident Sri Lankans
7.5 Are there any restrictions for foreign investments in Sri Lanka?
 
7.5.1 Foreign investments in a Sri Lankan company proposing to carry on or carrying on any of the following businesses are totally prohibited.
  • Money lending (other than the business of providing of credits to investors to purchase securities of a listed company by a registered margin provider)
  • Pawn broking
  • Retail trade with a capital of less than One Million US Dollars.
  • Coastal fishing
  • Security Services including security management, assessment and consulting to individuals or private organizations.
7.5.2 Foreign investments in shares in a company carrying on or proposing to carry on any of the following businesses are limited only upto 40% of the issued capital of such company, or if approval has been granted by the Board of Investment of Sri Lanka for a higher percentage of foreign investment in any company, only upto such higher percentage.
  • Production of goods where Sri Lanka’s exports are subject to internationally determined quota restrictions;
  • Growing and primary processing of tea, rubber, coconut, cocoa, rice, sugar and spices;
  • Mining and primary processing of non-renewable national resources;
  • Timber based industries using local timber;
  • Fishing (deep sea fishing);
  • Mass communications;
  • Education;
  • Freight forwarding;
  • Travel agencies;
  • Shipping agencies.
7.5.3 Foreign investors can acquire the shares of a company carrying on or proposing to carry on any of the businesses set out below only up to the percentage of the issued capital of the company for which percentage either general or special approval has been granted by the Government of Sri Lanka or any legal or administrative authority set up for the approval of foreign investment in such businesses.
  • Air transportation;
  • Coastal shipping;
  • Industrial undertaking in the second schedule of the Industrial Promotion Act. No. 46 of 1990, namely
    • Any industry manufacturing arms, ammunitions, explosives, military vehicles and equipment aircraft and other military hardware;
    • Any industry manufacturing poisons, narcotics, alcohols, dangerous drugs
      and toxic, hazardous or carcinogenic materials;
  • Any industry producing currency, coins or security documents;
  • Large scale mechanized mining of gems;
  • Lotteries.
7.6 Who are the eligible non-resident investors to invest in Government securities i.e. Treasury Bonds and Treasury Bills?
 
  • Foreign Institutional Investors including country funds, regional funds or mutual funds
  • A corporate body incorporated outside Sri Lanka
  • Citizens of foreign states whether living in Sri Lanka or outside Sri Lanka
  • Non-resident Sri Lankans
7.7 How can a foreign company / no-resident individual do a business in Sri Lanka
  There are two ways.
  • Incorporating a subsidiary company in Sri Lanka subject to conditions in 7.5 above.
  • Opening of a place of business in Sri Lanka.

    - They need to first register as an overseas company under Companies Act No. 07 of 2007.

    - A sum of USD 200,000 shall be credited to the rupee account of the overseas company out of the SIA of the parent company if the overseas company is  undertake trading, commercial or industrial activity.
 
8. Special Foreign Investment Deposit Account (SFIDA)
8.1 Who are the eligible investors to open SFIDA?
 
  • Citizens of foreign states, Sri Lankan citizens resident outside Sri Lanka, corporate bodies incorporated outside Sri Lanka and foreign institutional investors such as country funds, mutual funds and regional funds.
8.2 Can an SFIDA be opened and maintained jointly?
 
  • Yes. SFIDA may be held jointly with two or more eligible investors in the form of time deposits or savings deposits in designated foreign currencies or in Sri Lanka Rupees.
8.3 What are the permitted credits to SFIDA?
   
i) Proceeds of inward remittances received from abroad through banking system for the purpose of invest in such deposits.
ii) Foreign currency in the form of travellers’ cheques, bank drafts or currency notes brought into the country by the account holder on declaration to Sri Lanka Customs as applicable during his temporary visits to Sri Lanka and tendered in person to the Authorized Dealer, provided that the travellers’ cheques have been issued outside Sri Lanka and the bank drafts endorsed in the name of the account holder.
iii)

Interest accruing on the funds held in the account.

It is to be noted that an SFIDA can be opened by transferring funds from the SIA into the SFIDA of the same account holder, in which can interest and maturity proceeds of the SFIDA can be credited into the same SIA for reinvestment purposes.

8.4 What are the permitted debits to SFIDA?

  • Outward remittances, transfers to other SFIDAs, disbursements of the account holder in Sri Lanka and relevant statutory payments.

8.5Whether, funds in existing foreign currency accounts such as NRFC,RFC, RNNFC, etc., can be transferred to SFIDA? 

  • An SFIDA can be opened with funds routed through an SIA which in turn could be funded by NRFC, NRNNFC, RNNFC accounts and accounts maintained in the offshore banking unit of a licensed commercial bank by the same account holder. However, direct investment of funds in NRFC, RFC, NRNNFC, OBU or RNNFC accounts in SFIDA is not permitted.
 
9. Investments made outside Sri Lanka by persons resident in Sri Lanka (Residents)
9.1 What is the procedure involved in foreign investments by Sri Lankan residents?
 
  • A General Permission has been granted by the Hon. Minister of Finance by an Order published in the Gazette No. 1686/50 of 01.01.2011 for Companies, Partnerships and Individuals to invest in shares of foreign companies incorporated outside Sri Lanka and sovereign bonds issued by foreign governments and governmental organizations, subject to the following limits;
    • Listed Companies – up to USD 500,000 p. a
    • Unlisted Companies – up to USD 100,000 p. a
    • Individuals / partnerships – up to USD 100,000 for life time
    A general permission has also been granted by the Controller of Exchange by an Order published in the Gazette No. 1686/52 of 01.01.2011 for Resident investors other than the individuals resident in Sri Lanka to make payments to persons resident outside Sri Lanka in respect of setting up an maintenance of Branch, Liaison, Marketing, Agency, Project, Representative offices or other similar offices (hereinafter referred to as “Overseas Offices”) outside the country.
    All such investments should be made through a special account called Outward Investment Account (OIA) opened in the name of the investor.
    Any overseas investment which exceeds the above limits should be made upon obtaining the prior permission of the Minister of Finance.
9.1.1 OIA- Permitted Credits
  • Rupee proceeds of the eligible resident investor converted into foreign currency, up to the investment requirement, subject to the stipulations set out in the above Gazette Notifications and conditions of this direction
  • Transfers from foreign currency accounts (except the foreign currency accounts specially permitted by the Controller of Exchange) of the Resident Investors.  
  • Proceeds of a loan obtained from a foreign source with the prior permission from the Controller of Exchange in order to finance an overseas investment.
  • Inward remittances received as dividend payments in connection with the overseas investment.
  • Proceeds of sale and maturity of sovereign bonds.
  • Profits, margins and surplus funds received from the Overseas Offices.
  • Inward remittances received as management fees, consultancy fees and commissions related to the investments made through this account.
  • Inward Remittances received as sale proceeds of shares including capital gains and liquidation proceeds in the case of a liquidation of the overseas company and proceeds realized by closure of an Overseas Office.
  • Interest earned on funds lying to the credit of the account.
9.1.2 OIA-Permitted Debits
  • Payments for acquisition of shares in overseas companies and sovereign bonds.
  • Setting up and maintenance costs of Overseas Offices
  • Bank charges, broker fees, commissions related to the investments made through the OIA.
  • Payments in foreign currency outside Sri Lanka for current transactions.
  • Withdrawals in Sri Lanka Rupees.
9.2 How should the request be made for special permission from the Hon. Minister of Finance?
  The request should be made in accordance with the booklet on ‘Checklist and Guidelines on Overseas Investments’.

9.3 What are the criteria that CBSL would look for?
  The financial track record and foreign exchange earnings of the investing company, its expertise in the proposed business activities, feasibility of the proposed investment, regulations in the country of investment, benefits to the country, recovery period/ payback period of the investment etc.

9.4 Who are the eligible Sri Lankan residents to invest abroad?
  Companies incorporated in Sri Lanka, Individuals and partnerships will be permitted to invest abroad.

9.5 Are Sri Lankan individuals permitted to invest abroad through employee share option schemes?
 

Individuals, who are employees of Sri Lankan subsidiaries/branch offices of the foreign entities, would be permitted to invest abroad through Employee Share Option Schemes (ESOS) offered by such foreign parent entities subject to a limitation of USD 100,000 per resident employee in the above mentioned general permission.

An Employer, whose employees would be making an acquisition under an  ESOS exceeding the above limit should obtain the prior written approval of the Minister of Finance, prior to make an investment on behalf of the employees.

9.6 What are the types of overseas business establishments that would be considered for permission?
  Fully owned subsidiary companies, Joint venture companies, Liaison offices, representative office, marketing office, project office and Branch offices.
 
10. Acquisition of Immovable Property by persons resident outside Sri Lanka
10.1 Can foreigners acquire immovable property in Sri Lanka?
 
  • Person resident outside Sri Lanka may purchase immovable property in Sri Lanka subject to the regulations stipulated by the Government of Sri Lanka from time to time. The funds necessary to acquire the property shall be received as an inward remittance from abroad through an SIA maintained with an LCB.
10.2 Can they repatriate the funds if such properties are sold subsequently?
 
  • In the event of a sale of immovable property, the total amount shall be credited to an SIA and shall be freely repatriated, provided that the acquisition was made out of the funds of the SIA. If the property has been acquired by a direct inward remittance, an LCB shall establish the inward remittance and permit outward remittance of the sale proceeds.
 
11. Guarantees
11.1 Can Bank guarantees in foreign currency be issued in favour of person resident outside Sri Lanka?
  Yes. Bank Guarantees in foreign currency may be issued in favour of a person resident outside Sri Lanka subject to the following terms and conditions;
  • Guarantees issued on behalf of a person resident in Sri Lanka to a person resident outside Sri Lanka may be issued up to USD 1 million.
  • Guarantees issued on behalf of a person resident in Sri Lanka to a person resident outside Sri Lanka who undertakes a project in Sri Lanka may be issued up to USD 500,000.
  • Guarantees may be issued on behalf of a person resident outside Sri Lanka to a person resident in Sri Lanka in connection to a contract obtained in Sri Lanka for the purpose of enabling their borrowing after obtaining a counter guarantee by LCB from the person resident outside Sri Lanka on identical terms from a reputed international bank outside Sri Lanka with a rating acceptable to the LCB.
  • Guarantees may be issued by companies in Sri Lanka on behalf of their associates/subsidiaries and branches incorporated/established abroad to enable such entities outside Sri Lanka to raise facilities from financial institutions in the country where such entities are established, subject to the following limits:
    • For a company incorporated outside Sri Lanka, up to a limit of USD 250,000
    • For a branch office, up to a limit of USD 100,000
11.2 Is Exchange Control permission required for that?
 
  • There is no requirement to obtain permission from the Controller of Exchange for bid, performance and advance payment bonds/guarantees and for the guarantees issued up to the above mentioned limits. However, if the value exceeds the above mentioned limits, a special permission shall be obtained from the Controller of Exchange.
 
12. Obtaining of Foreign Currency Loans
12.1 Is Exchange control permission required to obtain a foreign currency loan from a foreign source?
 
  • There is no requirement to obtain the permission of the Controller of Exchange, if you are borrowing under the External Commercial Borrowing Scheme (ECBS).
12.2 What is ECBS?
 
  • ECBS is a general permission that has been granted by the Controller of Exchange for a company incorporated under the Companies Act, No. 07 of 2007 to borrow from a person resident outside Sri Lanka, under the External Commercial Borrowing Scheme (ECBS), commencing 01.01.2013 to 31.12.2015.

    However, this permission shall not apply to a company limited by guarantee or an offshore company.
12.3 What is the maximum amount a company can borrow under the ECBS?
 
  • A borrower may obtain USD 30 million or its equivalent value in any other foreign currency under the ECBS provided that the maximum amount of borrowing per company per each calendar year shall be USD 10 million or its equivalent value in any other foreign currency.

    Any company which intends to borrow above the said limits shall obtain a special permission from the Controller of Exchange.
12.4 How should the request be made to obtain special permission?
 
  • The request should be made in accordance with the Guideline on ‘obtaining Exchange Control approval for Sri Lankan firms to borrow from foreign sources<insert link> along with the following information and documents;
    • An Application form in the manner described by the Controller of Exchange.
    • The Latest audited financial statements
    • A confirmation by the LCB of the applicant on its foreign exchange earnings
    • A copy of the Certificate of Incorporation and Articles of Association of the company
    • Evidence with regard to the lending party
    • A certified copy of the draft loan agreement
    • A statement cum analysis of the business performance
12.5 What are the criteria that ECD would look for?
 
  • A loan approval committee comprising the Controller of Exchange, Deputy Controller of Exchange and two senior staff officers will assess the applications considering the salient features of the loan i.e. interest rate, repayment period, financial strength of the borrower, etc.
12.6 How long will it take for the approval process?
 
  • ECD will convey the decision within two weeks from the date of receipt of the complete application.
12.7 Is Exchange control permission required to obtain a foreign currency loan from a domestic bank?
 
  • The following categories can obtain a foreign currency loan from a domestic bank without the permission of the Controller of Exchange.
    • Holders of Foreign Exchange Earners’ Account (FEEA)
    • Holders of NRFC who are employed abroad
  • The FEEA holder shall establish, to the satisfaction of the LCB, that it receives regular cash flows in foreign exchange during its normal course of business to serve the loan in full on time.
  • Further, Sri Lankans employed abroad are permitted to obtain foreign currency or Sri Lanka rupee loans for any purpose in Sri Lanka against the balance in the NRFC accounts which are released in rupees and repayable out of their foreign currency earnings.
 
13. Electronic Fund Transfer Card (EFTC) operations
13.1 Can a credit card holder whose son is studying abroad, pay his son’s tuition fees by using his credit card?
 
  • No. Credit card holder should obtain a supplementary card from the Bank to enable his son to pay his tuition fees. Total expenses can be settled by the father in Sri Lanka rupees.
13.2 Is there a limit for the expenses of medical treatment for which credit card holder is required to be paid while he is staying abroad?
 
  • According to the Gazette notification No: 1789/34 of 20.12.2012, there is no limit on credit card for the payment of medical expenses abroad. However, it is limited according to ceiling imposed on the credit card by the issuer.
13.3 Can a person going abroad for employment use his credit card to pay his expenses there?
 
  • No, he can’t use his credit card abroad. It should be handed over to the bank before leaving the country.
13.4 Can an employee of a company settle his company’s bill by using his own credit card?
 
  • No. He can’t use his own credit card to make payments for commercial purposes.
13.5 Can I pay my registration fee and examination fee for foreign professional/educational institution like CIMA by using my credit card or debit card?
 
  • Yes, you can pay your registration and examination fees by using your credit card or debit card.

    Likewise you can pay your registration fees, tuition fees, examination fees and annual subscription for any foreign educational or professional institution using your credit card or debit card.
 
14. Payment for Import of Goods
14.1 What is the regulation that specifies permitted payment terms for import of goods and related terms and conditions?
 
  • “Special Import License and Payment Regulations – 2011” (SILPR2011) published in Gazette extraordinary No. 1739/6 dated 02nd January 2012, under Import and Export (Control) Act No. 01 of 1969.
14.2 Is the Controller of Exchange/Exchange Control Department of the Central Bank of Sri Lanka the direct authority of the above regulations published under Import and Export (Control) Act?
 
  • No. Controller of Import and Export/Import and Export Control Department is the direct authority for the “Special Import License and Payment Regulations – 2011”
14.3 Is the office of the “Import and Export Control Department” located at the same Exchange Control Dept/Central Bank premises?
 
  • No. Import and Export Control Department is part of neither Exchange Control Dept nor Central Bank.
    Address and the contact Nos. of the Controller of Import and Export are as follows;

    Import and Export Control Department
    No. 75, 1/3, 1st Floor,
    Hemas Building
    York Street,
    Colombo 01.
    Tel: +94 11 2326774
    Fax: +94 11 2328486
    Web: http://www.imexport.gov.lk
14.4 Who are the eligible persons to Import goods in to Sri Lanka?
 
  • In terms of the Schedule II of “Special Import License and Payment Regulations – 2012”, the following persons are eligible for Import of Goods;
    • An individual, or an individual trading in his own name or under a business name, who shall be a citizen of Sri Lanka;
    • A firm, partnership or any other entity which shall be registered in Sri Lanka;
    • Public companies and private companies which are incorporated in Sri Lanka under Companies Act, No. 7 of 2007;
    • Non-nationals who hold a valid visa to reside in Sri Lanka
14.5 According to the “Special Import License and Payment Regulations – 2011”, what are the permitted terms of payment under which goods can be imported for commercial purposes?
 
  • Permitted terms of payment for commercial imports are;
    • Document against Payment (D/P),
    • Document against Acceptance (D/A)
    • Letter of Credit (L/C)
    • Advance Payment (Cash-in-Advance)
    • Consignment Account basis
    • Open Account basis.
      (and any combination of above)
14.6 Can I import a motor vehicle under any of above payment terms?
 
  • No. Under the regulation 16 of  SILPR2011, importation of motor vehicles falling under HS Code No's 87.02, 87.03, 87.04 and 87.05 should be made only by Letters of Credit (L/C's).
14.7 What is the maximum amount permitted to be made on Advance Payment?
 
  • There is no maximum amount specified, when you make the advance payment out of any foreign currency account* maintained with any commercial bank in Sri Lanka.
    (*which is allowed outward payment for current international transactions).

    However, in case the Advance payment made out of rupee (LKR) account, permitted amount of advance payment limited to USD 50,000/- (CIF) or equivalent in any other currency, if you are unable to submit a bank guarantee/Standby Letter of Credit from a reputed foreign bank or a bank guarantee issued by a commercial bank in Sri Lanka where such guarantee is issued against counter guarantee issued by a reputed foreign bank. (Sub regulation 6(1)(b) of SILPR2011)
14.8 Can I make an appeal on permitted amount of Advance Payment?
 
  • Yes, can forward your appeal to the Controller of Import and Export/Import and Export Control Department.
14.9 What is the period permitted to import goods when payments are made on Advance payment terms?
 
  • Within 180 days from the date of remittance, importers are required to import goods in to the country.

    However, in case the good imported under advance payment terms is “Machinery and Heavy Equipments” or payment made under a combination of L/C and Advance Payment, the goods can be imported in to the country within 365 days from the date of remittance.
14.10 What I could do if my supplier is unable to comply with above time-frame (180/365 days)? Is there any option available to get extended it?
 
  • Yes. In terms of the Sub regulation 8(3), you can cover such period not exceeding 730 days from the date of advance remittance, subject to submission of a Bank Guarantee/Stand-by-Letter of Credit (issued on behalf of the supplier)
14.11 Is there any time frame applicable to settle D/A bills?
 
  • No. However, in terms of regulation 9(1) of SILPR2011, no payment should be made on unpaid import bills relating to the goods imported under D/A  (D/A bills) after 180 days from the date of maturity of such bills, without the prior written permission obtained from the Controller of Import and Export.
14.12 What is the maximum amount permitted for personal imports which are not in commercial quantity?
 
  • Import of goods for personal use (not in commercial quantities) is permitted up to the maximum limit of USD5,000/- or equivalent in any other currency.
14.13 Is there a limit for importation of goods without payment in foreign exchange out of Sri Lanka (NFE basis)?
 
  • At present, import of goods where aggregate value of such goods does not exceeds USD5,000/- or its equivalent in any other convertible currencies could be imported without payment in foreign exchange out of Sri Lanka (NFE basis).

    However, importing of goods exceeding the value of USD5,000/- imported under NFE basis, may release by Director General of Customs upon being satisfied with the purpose/reason of such importation.
14.14 If I fully comply with the provisions of SILPR2011, do I still need any other approval from the Exchange Control Dept in respect of Import of Goods?
 
  • No.
 
15. Export of Merchandise and Export Proceeds
15.1 Is it compulsory for Exporters to repatriate export proceeds within 6 month period?
 
  • Since 1994, Exporters are exempted from the requirement of repatriate/surrender export proceeds to Sri Lanka. Hence exporters have following three (3) alternative options;
    • Repatriate export proceeds to Sri Lanka and credited to any rupee account
    • Repatriate export proceeds to Sri Lanka and credited to an Exporters Foreign Currency Account (EFCA)
    • Retain export proceeds abroad in any commercial bank, subject to that such funds are not used for acquisition of capital assets.
15.2 Can export proceeds credited to any NRFC or RFC account?
 
  • No, it is not allowed to credit export proceeds to NRFC & RFC accounts.
15.3 Can I retain export proceeds abroad, if I have already obtained any banking facility against such export order/shipments?
 
  • No. You are required to repatriate proceeds of the exports to Sri Lanka and settle the bank facility obtained.
15.4 I have already repatriated export proceeds to Sri Lanka and credited to my EFC A/c. Can I remit “Commission” to  an agent abroad
 
  • Yes. A reasonable percentage of FOB value of the export, which has been repatriated to Sri Lanka, can be remitted to agents abroad.
15.5 Can I settle any claims made by foreign buyers in respect of quality and quantity of the goods exported?
 
  • Yes. A reasonable sum on claims by foreign buyers can be remitted, where the export proceeds have been repatriated to Sri Lanka, by furnishing required documents to the bank.
15.6 What is Entrepot trade?
 
  • Entrepot Trade means a facility for a country to import manufactured or un-manufactured goods from a party of other country free of custom duty and other levies, for re-exports to a third party of any country, as imported or after simple processing (i.e. re-packing, re-labeling … inside the customs bonds) and with a value addition.
 
16. Requirements for Airline/Shipping Agencies and Freight Forwarding Companies
16.1 Can an Airline/Shipping Agent maintain a foreign currency account?
 
  • Yes. Airline/Shipping Agent can maintain a Foreign Currency Account for Agents of Foreign Shipping/Air Line (FCAASA) as well, on behalf of their principal, only with same commercial bank (in domestic banking unit) with whom the rupee account is maintained.
16.2 Who are the eligible parties to pay 'freight' in foreign currencies to the credit of FCAASA?
 
  • Eligible to pay freights to the credit of FCAASA against funds lying in FEEA or any account maintained at Offshore Banking Unit of a LCB by holders of such accounts.
16.3 Is there any document/report to be submitted to Exchange Control Dept., by shipping agents?
 
  • Yes, shipping agents are required to furnish monthly disbursement accounts/statements along with the supportive documents to Exchange Control Dept., in respect of each month before last working day of the following month. Soft copies of the summery statements could be submitted by e-mail - This email address is being protected from spambots. You need JavaScript enabled to view it.
    (specimen soft copy/excel format could be obtained on request)

    Apart from the monthly reporting, the following details/documents need to be submitted in order to obtain “recommendation/no objection letter from Exchange Control Dept” which is a requirement when applying for License from Office of the Director General of Merchant Shipping (DGMS), before 5th October each year.
    • Details of shareholders
    • Details of Bank accounts
    • Copy of the Shipping Agency License issued by DGMS  
      (A guideline has been issued to shipping agencies specifying formats and procedure to furnish such details. Soft copies of “Forms/format” could be obtained from ECD on request)
16.4 Is there any minimum agency commission to be charged on foreign shipping lines?
 
  • Yes.
16.5 Is registration of freight forwarding companies with Exchange Control Department is mandatory?
 
  • Yes. In terms of the Gazette extraordinary No.641/15 of 20/12/1990.
16.6 What would be the registration fees to be paid in respect of registering my company with Exchange Control Dept?
 
  • No registration fee is charged by the Exchange Control Department of Central Bank.
16.7 What are the information and documents that should be submitted to register as a Freight Forwarder?
 
  1. A formal Letter of request for register your company as a freight forwarder.
  2. A Confirmation that the company does not have foreign assets or maintain Bank Account abroad.
  3. An undertaking confirming your agreement to furnish monthly statements referred to in schedules iii, iv, v and vi of the Gazette Notification 41/15 dated 20.12.1990 before the 15th” day of the following month together with evidence of the receipt/ memos of inward remittances of monies due to you from clients/ principals abroad.
  4. A letter of recommendation from Sri Lanka Freight Forwarders Association. If you are not a member of this Association, two letters of recommendation from Air Line / Shipping Lines operating in Sri Lanka from whom you propose to obtain Master  Airway Bills/ Master Bills of Lading in respect of the freight forwarding business.
  5. Certified copy of the Certificate of Incorporation under the Companies Act  No. 7 of 2007 .
  6. Certified copy of the Memorandum/Articles Association.
  7. Certified copy of Agency Agreement entered into with foreign Principal/ Agent.
  8. Certified copy of the Form 1 / Form 20 (details of the directors)
  9. Audited Financial statement at least for the last two years.
  10. The latest share capital details (Issued/Stated capital) with allotment of shares an each shareholder (please indicate residential status of each shareholder) certificated by the Chartered accountants/auditors.
16.8 What are the documents that should be forwarded to the Controller of Exchange  and the period permitted for them to submit these information to the Exchange Control Department?
 
  • Specimens are available in Gazette No.641/15 of 20/12/1990
16.9 What is maximum amount of shares can be issued to foreign parties in companies engaged in Shipping agency business and Freight Forwarding Business?
 
  • Shares not exceeding 40% of the issued share capital of the company.

    For further details and clarifications contact:

      Contact Numbers
    Emigration and allied other matters +94 11 2398641
    Sale of Property of Non Residents +94 11 2398641
    Authorized Money Changers and Their Business +94 11 2477245 / +94 11 2477249
    Foreign Currency Acceptance Permits +94 11 2477245 / +94 11 2477249
    Credit/Debit/Travel cards and its operations +94 11 2477249
    Foreign Currency Accounts Such as RFC, NRFC and its Operations +94 11 2477508
    Guarantees +94 11 2477506 / +94 11 2477358
    Foreign Investments in Sri Lanka and Eligibility Criterion +94 11 2477506 / +94 11 2477358
    Investments in Sri Lanka by Non-resident Sri Lankans +94 11 2477506 / +94 11 2477358
    Investments abroad by Sri Lankan residents +94 11 2477506 / +94 11 2477358
    Obtaining of foreign currency loans from foreign sources +94 11 2477506 / +94 11 2477358
    Acquisition of residential property by foreigners in Sri Lanka +94 11 2477506
    Payment on Current International Transactions (Goods/Services) +94 11 2477252
    Advance payment on Import of Goods +94 11 2477252
    Export of Goods and Entrepot Trade +94 11 2477252
    Airline/Shipping Agency Transactions +94 11 2477252
    Registration of Freight Forwarding Companies +94 11 2477252