If the country is to move forward from a low to middle income earning country to a high income earning one, it must move from exchange control to exchange management and become liberalized, tax consultant N.R. Gajendran said.
Free movement of income is necessary for such to take place, he highlighted. When queried about the recent Panama Papers leak, he added that if the names of holders of public office are mentioned in the Panama Papers leak, there is and will be a greater obligation and responsibility for public accountability.
The Alternate Chairman of the Faculty of Taxation of the Institute of Chartered Accountants of Sri Lanka and Chairman of the Sri Lanka Branch of the International Fiscal Association noted that for any wrongdoing to take place regarding offshore financial deposits, such would have to constitute an offence under existing laws of the country like the Prevention of Money Laundering Act and the Exchange Control Act or a violation of regulations imposed on exchange, or would have to involve the evasion of tax regulations. “Drug money is found to be laundered. There are situations permissible for the holding of foreign currency. Some names have appeared and been mentioned in relation to the Panama Papers leak. Some holding public offices including leaders of countries have been castigated,” he said.
He said that while European countries have a more liberated environment, Sri Lanka was more of a restrictive country. “Due to exchange controls, we were insulated from the global financial crisis of 2007 and 2008. Yet, at present there is negative growth, zero interest rates, and crashing stocks elsewhere,” he added.
“We must move towards a liberalized control of exchange. Investors including foreigners must be able to do business and go about their affairs,” he remarked.