Sri Lanka allows forex accounts for overseas service providers, employees

May 07, 2010 (LBO) – Sri Lankan companies providing a range of international services and their employees earning foreign exchange income can open foreign currency accounts at commercial banks from Friday, the central bank said. Companies and individuals providing the following categories of international services and their employees can open foreign currency accounts:

Accountancy, tax services, services of a draftsman, engineering services, software development, advertizing outside Sri Lanka, research work and report writing; photography, publishing outside Sri Lanka, beauty culture, hairdressing and modeling outside Sri Lanka, services of a sports person, an artist, valuer or an auctioneer, a plumber, a mason or a carpenter, a quantity surveyor, healthcare services and management agricultural property outside Sri Lanka. The new measures will entitle international services providers and their employees to make use of income tax exemptions, it said in a statement.

The accounts can be current, savings or term deposits and the move further liberalizes the capital account.

They can hold only proceeds on international services received from abroad through banking channels, wages paid out of foreign currency received by an employer and interest on the funds held in the account.

“Employers can make payments in foreign currency in the form of bank transfers to their employees who are directly involved in the projects carried out by the employer by debiting the account,” the statement said.

Account holders can make foreign exchange payments outside Sri Lanka for “permitted transactions”, but local withdrawals will have to be in rupees.