Conflicting claims on remittance tax
The government budget proposal to impose a 15% tax on foreign exchange remittances will have no bearing on Non Resident Foreign Currency (NRFC) account holders except for those who earn foreign currency through short term assignments, banking sources said yesterday.

The tax will be imposed only on those who serve in assignments such as consultant services, which last for less than one year. "The tax will not at all affect the migrant workers," Finance Minister K.N. Choksy told The Sunday Times yesterday.

"It will only cover persons on short-term assignments," he said. However, The Sunday Times learns that the government initially planned to impose the tax on all those earning foreign currency but subsequently withdrew it following representations made by the Foreign Employment Bureau of Sri Lanka.

Treasury Secretary Charitha Ratwatte explaining the position said that at present any person who is not permanently employed overseas, or has been outside the country less than 365 gets taxed at 35 per cent when he sends money from abroad because that is the normal income tax rate.

As this discourages people from sending money back to Sri Lanka the Government proposes to tax them only 15 per cent on such remittances.

But Hatton National Bank Chief Rienzie Wijetilleke said this 15% had to be deducted by the bank, and it created practical problems for the banking sector as it was difficult to distinguish between individuals who served short term assignments and those who worked for more than one year.

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