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| Tuesday, 13 July 2004 |
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Lanka-US Double Taxation Avoidance Convention The Convention between the Government of Sri Lanka and the Government of the United States for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and a subsequent Protocol amending the Convention came into force on July 12 in Colombo, a media release from the Ministry of Finance said. Dr. P. B. Jayasundera, Secretary to the Ministry of Finance and Jeffrey J. Lunstead, the Ambassador of the United States of America to Sri Lanka exchanged the Instruments of Ratification on behalf of their respective governments, at the Ministry of Finance. Foreign Minister Lakshman Kadirgamar had earlier signed the Instrument of Ratification on behalf of the Government of Sri Lanka. The Convention which was signed in Colombo on March 14, 1985 and amended by a Protocol which was signed in Washington on September 20, 2002, formally came into force on the exchange of Instruments of Ratification. Double Taxation Treaties stimulate the flow of capital, technology and personnel from one country to another, particularly from capital exporting countries to developing countries, by eliminating the burden of taxation in both countries and thereby creating a more attractive investment climate. Thus, the treaty mechanism is a useful tool in harmonising the tax laws of the host country with those of the home country of foreign investors. It is anticipated that the Sri Lanka - US Double Taxation Avoidance Convention will induce substantial capital inflows and technology transfers from the US. It provides for reduced rates of taxation and investors of both countries would be entitled to tax credit in respect of the tax paid in the host country against taxes payable in their home country. The coming into force of this Convention is of particular significance at the present stage of economic development of Sri Lanka as large investments are expected from the USA involving advanced technology, which will accelerate the pace of industrialisation and overall economic growth in Sri Lanka. It is a significant step in the enhancement of bilateral relations between the United States and Sri Lanka, the release said. |
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