Issues in new forex laws
I write as a practising Chartered Accountant, with reference to the Foreign Exchange Act No 12 of 2017. Under Section 8 (3) of the Act, a blanket “amnesty” has been sneaked into the Act permitting foreign exchange to be remitted into the country up to US$1 million without the payment of any taxes. Amounts in excess of $1 million will attract a tax of only 1 per cent.
While the merits and demerits of such an amnesty can be debated extensively, I wish to focus on a different point. The window for utilizing the above amnesty closed upon the passing of the Foreign Exchange Act in Parliament. Therefore, the only notice to the public of this Amnesty was the Foreign Exchange Bill released in March 2017.
However, a Bill by its very nature is simply a draft of a legislation which is subject to debate and subsequent amendments. Therefore, no one can take decisions with certainty based only on draft legislation, especially in light of the constitutionality of recent Bills being challenged in the country’s highest court.
It is very clear that this legislation has been passed only for the benefit of a select privileged few – those in the know, who were responsible for introducing this legislation, and those within their inner circle. This appears to be an opportunity to purify ill-gotten gains, while being shielded from the Prevention of Money Laundering Act, No. 5 of 2006 (Section 8 (5) of the Foreign Exchange Act No 12 of 2017). A further icing on the cake is that there is no restriction for the funds remitted to Sri Lanka, to be sent out of Sri Lanka; thus negating the only perceived benefit of this legislation of bringing much needed foreign exchange into Sri Lanka. The above is further evidence of how this Government, which came into power preaching “Good Governance”, has taken the people for a ride.
I.K. Ahamed
Colombo