Lanka, Luxembourg conclude avoidance of double taxation negotiations

The Government of Sri Lanka and the Government of the Grand Duchy of Luxemburg have concluded negotiations on an agreement for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income and on capital.

Following four days of deliberations held in Luxembourg, the texts were initialled on May 20, by Commissioner General of the Department of Inland Revenue of Sri Lanka K M S Kandegedara and Head of the International Relations Division, Direct Tax Administration of Grand Duchy of Luxembourg Georges Bruch, in the presence of Sri Lanka’s Ambassador to Belgium, Luxembourg and the EU Ravinatha Aryasinha.

This agreement will come in to effect with the completion of necessary procedural and protocol formalities by both Governments.

The necessity for having such an agreement was highlighted during the Regular interaction with the Luxembourg business community by the Embassy, including during visits to Luxembourg by the Benelux Business Council of the Ceylon Chamber of Commerce in June 2010, the visit by representatives of financial and service sector companies who joined the Belgian Economic Delegation visit to Sri Lanka in November 2010 and the visit of Central Bank Governor Ajith Nivard Cabraal to Luxembourg in March 2011.

Luxembourg being a major financial hub in Europe has a strong financial and services sector which accounts for over 86 percent of the economy.

Luxembourg companies have so far invested over US $ 6 million in six projects in Sri Lanka and the conclusion of this agreement would serve as catalyst in stimulating greater flow of capital, technology and personnel between Sri Lanka and Luxembourg.

It will also contribute to the tax stability and facilitate Mutual cooperation. It is Sri Lanka 43rd such agreement negotiated and the Second such agreement negotiated with a South Asian country by Luxembourg, the other being India.