The Inland Revenue Department of Sri Lanka (“IRD“) by way of Circular No. SEC/2022/E/06 dated 23rd December 2022 (“Circular”) has updated the instructions pertinent to the requirement of obtaining a Tax Clearance Certificate (“Certificate“) for foreign outward remittances transactions.
As per sections 6 (3) and 7 (6) of the Foreign Exchange Act, No. 12 of 2017 (as amended), any person who wishes to conduct outward foreign exchange transactions are required to provide information/documents to Authorized Dealers to facilitate such foreign remittances.
Accordingly, consequent to making Withholding Tax payments to the IRD in connection with any Investment Returns, Advance Income Tax, Advance Personal Income Tax, Service Fees, Contract Payments and Payments to a Non-Resident Person as required in sections 83A, 84, 84A, and 85 of the Inland Revenue Act, No. 24 of 2017 (as amended), such a person will be issued with a Certificate for the purpose of making any outward remittances.
However, a Certificate will not be required in relation to any outward remittances outlined in the Negative List stated in the said Circular. The said Circular shall be effective with effect from 1st January 2023 and further information with regard to the Negative List can be found on http://www.ird.gov.lk/en/publications/Circulars_Circulars/SEC_2022_E_06.pdf
Please do not hesitate to get in touch with us should you require any clarifications in this regard.
Samanthi Dias
Foreign Legal Advisor (Sri Lanka)
The content of this blog post is not intended to be exhaustive, and does not constitute a complete analysis of the laws relating to this complex area. Its content, therefore, should not be construed to constitute legal advice. Please contact us if you require any further assistance.