Inland Revenue Act 2017 · As enacted · Part I
26. Foreign currency and financial instruments
Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk
Official translationFrom Department of Government Printing, unchanged
Subject to subsections (4) and (5), this section shall apply to a person who is a financial institution where, under the provisions in Division II or IV of Chapter II, that person shall include an amount or may deduct an amount in relation to a financial instrument in calculating income from a business or investment.
The time at which the amount is to be included or deducted shall be determined in accordance with generally accepted accounting principles. Those principles also determine to whom the amount shall be allocated, its quantum and its character.
In particular, generally accepted accounting principles apply even if they require the inclusion or deduction of an amount on a fair value accounting (mark-to-market) basis irrespective of –
the other provisions of this Division;
whether or not the amounts have yet been derived, incurred or realised; and
whether or not the amounts are of a capital or revenue nature.
With the prior written approval of the Commissioner-General a person may include an amount or deduct an amount in relation to a financial instrument in calculating income from a business or investment –
when realised;
using a specified treatment relating to the character and timing of the amount, including where the financial instrument has been entered into for hedging purposes; and
where the amount is in a currency other than
Sri Lankan Rupees, using a specified translation method such as requiring that the amount must be translated to Sri Lankan Rupees at the exchange rate applying between the foreign currency and
Sri Lankan Rupees on the date the amount is taken into account for the purposes of this Act.
The Commissioner-General may specify the extent to which this section applies to another person or class of persons.
In the absence of an applicable specification by the
Commissioner-General under subsection (5), an amount taken into account under this Act shall be expressed in Sri Lankan
Rupees and, if an amount is in a currency other than Sri
Lankan Rupees, the amount shall be translated to Sri Lankan
Rupees at the Central Bank of Sri Lanka exchange rate applying between the foreign currency and Sri Lankan
Rupees on the date the amount is taken into account for the purposes of this Act.