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Agency Functions
Foreign Exchange Management

Facilities to Non Residents
The categories of non-residents are defined in the Government Gazette No. 15007 dated 21st April 1972. (“A Guide to Foreign Exchange Transactions”)-Page 43
CURRENT INTERNATIONAL TRANSACTIONS
Non-residents are permitted to enter into current international transactions with residents.

The following transactions are permitted through Authorized Dealers:
  • Import and export of goods and services
  • Income remittances
    Repatriations of Investment income including capital, profit and income which includes dividends, interest, rent and profits, wages, salaries and other benefits paid by employers in terms of their employment contracts

CAPITAL TRANSACTIONS
Foreign exchange transactions relating to acquisition/sale of real and/or financial assets are classified as capital transactions. The following capital transactions are permitted for non-residents.

  • Foreign Direct Investments in Sri Lanka
    Share investments

    Issuance of shares by resident companies to foreign investors (non residents) are permitted without prior approval of the ECD in terms of a general permission granted in Gazette Notification No.1232/14 of 19/04/2002 and 1248/19 of 08/08/2002 subject to certain exclusions and limitations. In the areas of investment, movement of funds of such transactions will be through a scheme of account titled, “Share Investment External Rupee Account” (SIERA). The SIERA should be credited by inward remittances received in convertible foreign currencies from the investors and the dividends and sale proceeds realized on this investment are remittable through this account.
    When foreign investors (non-residents) do not make their investments in resident companies through a SIERA, the resident company should obtain approval from the ECD for the issuance of shares in favour of the foreign investors.  To obtain the required approval, the company is required to make an application to ECD along with documentary evidence/bank confirmation with regard to the funds remitted by the foreign investor to the company.  Resident companies should also obtain approval from ECD for the issuance of bonus shares to their non-resident shareholders. The areas of exclusions, limitations for non-resident investments are as follows.

  • The areas of exclusion for non-resident investment
    1. Money Lending
    2. Pawn Broking,
    3. Retail Trade with a capital of less than one Million U.S. Dollars,
    4. Coastal Fishing.

    The areas of limitation for non-resident investment:

    (Limitation is up to 40 percent of total share capital)
    1. Production of goods where Sri Lanka’s exports are subject to internationally determined quota restrictions;   
    2. Growing and primary processing of Tea, Rubber, Coconut, Cocoa, Rice, Sugar and Spices;
    3. Mining and primary processing of non-renewable national resources;   
    4. Timber based industries using local timber;
    5. Fishing (deep sea fishing);
    6. Mass communications;
    7. Education;
    8. Freight forwarding;
    9. Travel agencies
    10. Shipping agencies

    Limitations upto permitted share of total share capital

    The permission hereby granted shall apply in respect of 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 permission had 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 -
    1. Air transportation;  
    2. Coastal shipping;
    3. Industrial undertaking specified in the second schedule of the Industrial Promotion Act, No.46 of 1990 namely- 
      any industry manufacturing arms, ammunition, explosives, military vehicles, equipment aircraft and other military hardware;
      any industry manufacturing poison, narcotics, alcohol, dangerous drugs and toxic, hazardous or carcinogenic materials;
      any industry producing currency, coins or security documents;
    4. Large scale mechanised mining of gems;
    5. Lotteries.
  • Sri Lanka Development Bonds 
    Dollar denominated government bonds, titled Sri Lanka Development Bonds (SLDBs), were permitted to be issued by the Government of Sri Lanka in 2001 and exchange control permission was granted to designated agents (commercial banks and Primary Dealers) to market such bonds to the categories of non resident persons and entities given below.
    1. Citizen of foreign states whether resident in Sri Lanka or outside Sri Lanka
    2. Citizens of Sri Lanka who have made their permanent abode outside Sri Lanka
    3. Citizens of Sri Lanka who have proceeded outside Sri Lanka to take up employment or to set up business or engage in a profession and are residing abroad
    4. Citizens of Sri Lanka who have dual citizenship, provided that those citizens substantiate that permanent place of abode outside Sri Lanka. 
    5. Bodies corporate or un-incorporate established under the laws of a country other than Sri Lanka
    6. Companies who have entered into agreements in terms of Section 17 of the Board of Investment (BOI) of Sri Lanka Act No. 4 of 1978 with full exemptions from the provisions of the Exchange Control Act (ECA) provided that all purchases of SLDBs are made against debits to foreign currency accounts maintained only for the purpose of crediting earnings from exports of such companies.
    7. Companies registered to carry on insurance business in Sri Lanka under the provisions of the regulation of Insurance Industry Act No. 43 of 2000 provided that all purchases of SLDBs are made against debits to Special Foreign Currency Accounts maintained with commercial banks in terms of the approval of the Controller of Exchange.
    8. Authorized Dealers appointed in terms of Section 4 of the Exchange Control Act.
    9. Primary Dealers appointed by the Monetary Board under the registered Stocks and Securities Ordinance No. 7 of 1937 and the Local Treasury Bill Ordinance No. 8 of 1923.
  • Foreign currency loans to Sri Lankans employed abroad
    Sri Lankans employed abroad are permitted to obtain foreign currency loans which are released in rupees but repayable out of their foreign currency earnings for the purpose of construction or purchase of residential houses in Sri Lanka. Such persons are also permitted to borrow in foreign currency for any purpose against the pledge of their NRFC deposits. These loans should also be released in rupees but are repayable in foreign currency out of the foreign currency earnings of the borrower.

  • Rupee credits facilities to companies controlled by Non residents
    Authorized dealers in foreign exchange are permitted to grant rupee loans and advances to companies incorporated in Sri Lanka with a majority of non-resident shareholders.

  • Capital transfers to emigrants and other facilities available
    Capital transfers :The maximum value is equivalent to USD 150,000 per family or per individual not accompanying a family at the time of departure.
    This maximum value includes funds legally acquired from all sources and expected to be remitted consequent to emigration including proceeds of any real or financial assets, amount of claim or income received in Sri Lanka and the value of personal effects including personal jewellery exported by emigrants.
  • Other Facilities :
    • Remittance of any funds after the emigrant's departure from Sri Lanka requires the prior approval of the Controller of Exchange.
    • Remittance of funds equivalent to a maximum of USD 20,000 per annum out of capital or any income derived by blocked account holders from all sources such as investments in real and financial assets, superannuation benefits, claims on insurance policies and rent received etc..

    Remittance of any other funds after the emigrant’s departure from Sri Lanka requires the prior approval of the Controller of Exchange


  • Blocked Accounts (Non Resident Blocked Accounts)
    Any payments made to the credit of an emigrant must be to a blocked account only, and payments to a blocked account would be good discharge to persons from whom payments are due to an emigrant. All residual funds from capital transactions after remitting out of the emigrant’s entitlements must be maintained in a blocked account. Interest is payable on such blocked accounts and this interest is remittable. Funds in a blocked account shall be dealt with only as directed by the Controller of Exchange.
    • Funds in NR Blocked Accounts may be used for local disbursements of the account holder
    • Pension, income tax refunds, rent received in favour of the account holder and profits and dividends earned from local investments may be permitted to be credited to a NR Blocked Account.
    • Outward remittance of funds equivalent to a maximum of USD 20,000 per annum out of the funds available in blocked accounts are permitted.

  • Acquisition and Disposal of fixed assets by non-residents
    In the disposal of property by persons resident outside Sri Lanka, the remittance of sales proceeds is permitted without prior approval of ECD to the extent of investment made in foreign exchange for the purchase and development of the property, while any capital gain realised should be placed in a blocked account. In respect of foreign citizens who are not emigrants, remittance of blocked funds is permitted up to a limit of Rs. 350,000.

  • Contracts in Sri Lanka by non residents
    Foreign companies and foreign personnel engaged in contracts with the government or private organizations in Sri Lanka are permitted to maintain Resident Current Accounts which may be credited with inward remittances and payments made in respect of the contract. Debits to the account may be made in respect of local disbursements, and outward remittances relating only to the maintenance of dependants abroad.  

RUPEE ACCOUNTS FOR NON - RESIDENTS
Commercial banks are permitted to open and maintain the following rupee accounts for non-residents:
  1. Non-Resident Rupee Accounts (NRRA)
  2. Share investment External Rupee Accounts (SIERA)
  3. Rupee Account for Non Resident Sri Lankan Investment (RANSI)
  4. Resident Guest Rupee Current Accounts (RGRCA)

1. Non-Resident Rupee Accounts (NRRA)

Non residents rupee accounts may be opened for foreign nationals resident outside Sri Lanka, companies and firms registered outside Sri Lanka, Sri Lankan nationals resident outside Sri Lanka (other than emigrants), foreign banks, which do not carry on banking activities in Sri Lanka.
Permitted credits and debits to Non Resident Rupee Accounts (NRRA) held by foreign nationals resident outside Sri Lanka and companies and firms registered outside Sri Lanka are the following.

  • Credits: Proceeds of inward remittances received in favour of the account holder and permitted local credits other than funds derived from capital transactions
  • Debits: Outward remittances in respect of current account transactions and local disbursements

Permitted credits and debits to NRRA held by Sri Lankan nationals resident outside Sri Lanka are the following.
  • Credits: Proceeds of inward remittances in favour of the account holder and local credits
  • Debits: Outward remittances in respect of current account transactions
NRRAs in respect of foreign banks may be operated without any restrictions

2. Share investment External Rupee Accounts (SIERA)
Permitted credits and debits to SIERA are given below. However Authorized Dealers should examine documentary evidence to determine the source of these credits/debits.
  • Permitted Credits to SIERA
    1. Inward remittances
    2. Transfers from NRFC/off shore accounts
    3. Sale proceeds of shares and dividends earned on shares
    4. Commissions relating to transactions of shares
    5. Fees and any corporate benefits received by a non resident lender in respect of shares lent   to a borrower under the Stock Borrowing and Lending Scheme (SBL)
    6. Cash to be credited to the lender in the event of any failure to transfer shares by the borrower under the SBL scheme
  • Permitted Debits to SIERA
    1. Expenses for the purchase of shares
    2. Remittances of dividends of shares
    3. Remittances of sale proceeds of shares
    4. Local expenses of the account holder
    5. Payments to stockbrokers or commercial banks as commissions
    6. Fees and funds required to pay corporate benefits to the security lender on shares borrowed by a non resident borrower under the SBL scheme
    7. Any cash collateral to be provided by a non-resident borrower
  • Other issues with regard to investment in Sri Lanka through a SIERA
    Authorized Dealers may enter into contracts with foreign investors for the purchase of foreign exchange forward, for settlement of payments in respect of shares purchased on their behalf up to a period calculated in accordance with the rules laid down by the Colombo Stock Exchange (CSE) for buyers’ settlements. The duration of such contracts is limited to a period from the date of transaction to the date of settlements i.e. trade plus five market days.
    Foreign currency remitted by the foreign investors as subscription for primary shares may be held in an off shore-banking unit and upon allotment of shares, to the SIERA of the investor. Authorised Dealers are permitted to approve applications for export of share certificates issued by companies in the CSE in respect of shares purchased by SIERA account holders out of the funds in the account.

  • 3. Rupee Accounts for Non Resident Sri Lankan Investment (RANSI)
    Non-resident Sri Lankans, that is Sri Lankan citizens who have proceeded abroad to take up employment or to set up a business or engage in a profession and continue to live abroad, and citizens of Sri Lanka who have made their permanent place of abode outside Sri Lanka, are exempted from all exchange control restrictions applicable to non resident investment provided that they remit foreign exchange earnings for investment through a Rupee Account for Non Resident Sri Lankan Investment (RANSI). Funds channeled through this account may be invested in shares, government securities, debentures, units in Unit Trust and in real assets such as land and building.  (The exclusions and restrictions applicable to non-resident investment in terms of the Government Gazette Notification 1232/14 of 19.04.2002 do not apply for investments under the RANSI scheme.) Payments for investment under the scheme have to be made by bank drafts purchased out of funds in a RANSI account.
    All income from investments such as interest, dividends, profits and rental income could be credited to the RANSI account. Funds realized on the sale and liquidation of investment could also be credited to the RANSI account. There are no exchange control restrictions on remittance abroad of funds lying to the credit of a RANSI account.

    4. Resident Guest Rupee Current Account
    RGRCA – Investors
    These accounts may be opened with a minimum deposit of US$35,000 or equivalent in other convertible foreign currency brought into the country and converted into Sri Lanka Rupees, after obtaining prior approval from the Controller of Exchange:

              Credits
    1. Rupee proceeds of foreign currency brought into the country by the investor for his living expenses and that of his dependants;
    2. Interest paid on funds held in the investor’s Resident Guest Foreign Currency Account (RCFCA) having converted into Sri Lanka Rupees.
    3. Incomes from investment (dividends, profits), sale proceeds of shares received from the investments made out of funds from the RGFCA.

              Debits
    1. Local expenses of the investor and his dependents:
    2. Investment in approved projects.
    3. Outward remittances for payments for current international transactions of the investor and/or his dependents resident in Sri Lanka.
    Withdrawals for any purpose other than those mentioned in items (i), (ii) and (iii) above should be with the prior approval of the Controller of Exchange which will be granted with the concurrence of the Implementing Agency of the scheme.

    Resident Guest Rupee Current Account
    RGRCA – Professionals
    These accounts may be opened in the name of foreign professionals with a minimum deposit of US$2,000 or any other convertible foreign currency brought into the country and converted into Sri Lanka Rupees, after obtaining prior approval from the Controller of Exchange.

              Credits
    1. Rupee proceeds of foreign currency brought into the country for the living expenses of the account holder and of his dependents; and
    2. Salary, consultancy fees, etc. received for the provision of professional services in Sri Lanka by the account holder.

             Debits
    1. Local expenses of the account holder and his dependents; and
    2. Outward remittances for payments on account of current international transactions of the professional and/or his dependents resident in Sri Lanka.
    Withdrawals for any purpose other than those mentioned in (i) and (ii) above should be with the approval of the Controller of Exchange which will be granted with the concurrence of the Implementing Agency of the Scheme

    1. Pension
    2. Investment in Rupee denominated treasury bond by foreign investors
    3. Investment in treasury bills by foreign investors
    4. Special foreign investment deposit account
    5. Investment in rupee denominated Treasury Bonds and Treasury Bills by Sri Lankan Diaspora and Migrant Workers
    • Pensions
      Pensions drawn by a Sri Lankan living abroad on migration or temporarily may be remitted through an Authorized Dealer on production of documentary evidence of residence outside Sri Lanka.

    • Investment in Rupee denominated treasury bonds by foreign investors
      Foreign country funds, regional funds or mutual funds approved by the Securities and Exchange Commission of Sri Lanka, Corporate bodies incorporate outside Sri Lanka and Citizens of foreign states are permitted to purchase hold and transfer rupee denominated Treasury Bonds through both primary and secondary markets utilizing existing public debt system.
      Foreign investor who purchased such a T bond is in a position to sell or transfer this T bond to any person, whether a resident in Sri Lanka or a resident outside Sri Lanka, in the secondary market without any holding period.

      To facilitate foreign investors, Treasure Bond Investment External Rupee Accounts (TIERA) has been introduced
    Credits
    • Inward remittances of the foreign investor and/or transfers from Share Investment External Rupee Account (SIERA) opened by foreign investor for investment in shares.
    • Sale proceeds of T-bonds and principal received on the maturity date.
    • Payment of interest on T-bonds held by the account holder
    Debits
    • Payments for investments in T-Bonds.
    • Transfers to SIERA of the foreign investor.
    • Payments for primary dealers and bank charges.
    • Local expenses of the foreign investor
    • Repatriation of sale proceeds of T-bonds.
    • Repatriation of interest earned on T-bonds.
    • Investment in treasury bills by foreign investors
      Citizens of foreign states, Corporate bodies incorporated outside Sri Lanka and foreign investors such as foreign country funds, mutual funds and regional funds are permitted to purchase sell or transfer Treasury Bills.(TIERA-2)
    • Special foreign investment deposit account (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 are permitted to open and maintain Time and Savings deposits in designated foreign currency or in Sri Lanka Rupees. The minimum amount of a deposit should not be below US$ 10,000 or its equivalent in other designated foreign currency or Sri Lankan Rupees at Domestic Banking Units of licensed commercial banks and the total deposit liabilities on SFIDAs of an authorized dealer should not exceed 20 per cent of total deposit liabilities of its Domestic Banking Unit. Further, SFIDA accounts are exempted from the income tax, withholding of income tax and debit tax.
      Accounts may held jointly with two or more eligible investors.
    Credits
    • Proceeds of Inward remittances received from abroad through banking system for the purpose of investment in such deposits
    • Foreign currency in the form of travellers' cheques, bank drafts or bank notes brought in to the country by the account holder on the declaration to Sri Lanka customs as applicable during his temporary visits to Sri Lanka and tendered in person to the Authorised Dealer, provided that the travellers' cheques have been issued outside Sri Lanka and the bank drafts endorsed in the name of the account holder.
    • Interest accruing on the funds held in the account.
    Debits
    • Outward remittances,
    • Transfers to other FIDAs,
    • Disbursements of the account holder in Sri Lanka and relevant statutory payments (eg:- debit tax)
  • Investment in rupee denominated Treasury Bonds and Treasury Bills by Sri Lankan Diaspora and Migrant Workers (TIERA - D)
    Sri Lankans living abroad including migrant workers/businessmen; Sri Lankan professionals living in Sri Lanka and abroad who earn foreign exchange; Sri Lankan citizens with dual citizenship irrespective of their country of residence and banks acting in fiduciary capasity on behalf of the above categories, are permitted to purchase, hold and sell Rupee denominated Treasury Bonds and Treasury Bills with any maturity period.
  • Credits
    • Inward remittances received through banking system;
    • Sales proceeds realized out of sale or maturity proceeds of T-bonds/T-bills and any income realized by way of capital gain thereof;
    • Interest received on T-bonds
    Debits
    • Payments for investment in T-Bonds/T-Bills;
    • Payments for lead managers appointed by the Central Bank of Sri Lanka for this purpose and bank chargers;
    • Transfers to any other account maintained in foreign currency or Sri Lanka rupees by the account holder;
    • Payments of local expenses of the account holder;
    • Outward remittances of sales proceeds, maturity proceeds and interest of T-bonds/T-bills or any income realized by way of capital gain thereof.
    It is not permitted to utilize funds available in NRFC or RFC accounts or any other foreign currency accounts in Sri Lanka to purchase T-bonds/T-bills under this scheme.

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