Finance Minister issues Gazette prohibiting open account for imports except export sector


Finance Minister Ali Sabry

Finance Minister Ali Sabry issued a new Official Gazette effective May 20 prohibiting the use of the open account for imports except by the entire export sector, including indirect exporters.

In accordance with the new Gazette, open account payment terms or consignment account terms will only be permitted to:

(a) Exporters, who settle payments for the importation of goods, which are necessary for their export purposes, from the export proceeds into their corporate foreign currency account or foreign currency account offshore, and (b) local suppliers, who supply goods for such exporters, receiving payment in the foreign currency and effecting payment for the importation of goods for such supply using the foreign currency so received in its foreign currency account foreign trading or its offshore foreign currency account.

From May 20, an importer will need to adhere to the following procedures when clearing imported goods from Sri Lanka Customs;

a) The importer must obtain an endorsement on the commercial invoice from their approved bank stating that the importer has the foreign currency in their corporate foreign currency account or offshore foreign currency account to settle this payment

b) The endorsed Commercial Invoice must be submitted to Sri Lanka Customs at the time of clearance of such goods

In addition to Regulation No. 10 of the Special Regulation on Import Licensing and Payments, No. I of 20 II, published in Official Gazette No. 1739/3 of January 2, 2012, in the case of conditions of documents against payment ( DP) and documents against acceptance (DA), any importer, except those mentioned in Regulation No. 4 above, who intends to import goods under DP or DA conditions, must make prior arrangements with his approved bank and obtain endorsement on his pro forma invoice before the date of shipment on board the bill of lading and such endorsed pro forma invoice must be submitted to the Director General of Sri Lanka Customs at the time of customs clearance of the said goods with other documents.

All authorized banks, which settle payments under Open Account Payment Terms or Consignment Account Terms, must share a copy of the details of such payment settlement in electronic format with the Director General of Sri Lanka Customs on each customs declaration (CUSDEC) basis.

The Comptroller General of Imports and Exports will issue appropriate “Operational Instructions” to the Director General of Customs and licensed banks for effective implementation of these regulations.

The Director General of Customs will act in accordance with the provisions of the Customs Ordinance on any importation made in violation of the above Regulations.

The Comptroller General of Imports and Exports must be consulted in the event of any problem relating to the interpretation of this regulation.

The new “Import Control Regulations on Terms of Payment No. 07 of 2022” applies to goods arriving by sea and airport in Sri Lanka from 20 May.

The impending move was first announced by Central Bank Governor Dr. Nandalal Weerasinghe on April 29.

He said new regulations will help reduce the gray foreign exchange market as well as unofficial remittance channels such as Hawala or Undiyal, which are a source of funding for imports made under the open account method. It was pointed out that given the demand for currency from those involved in open account imports, the gray market has flourished with the help of the Hawala/Undiyal channels. This also encourages a higher premium for foreign currencies via this option.


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