US-Sri Lanka Tax Treaty Comes Into Force

by Glen Shapiro, LawAndTax-News.com, New York

26 July 2004

The US Treasury Department on Thursday welcomed the entry into force of the income tax treaty between the United States and Sri Lanka on July 12, 2004.

The new tax treaty is designed to eliminate tax barriers to cross-border trade and investment between the two countries, and includes provisions addressing the taxation of cross-border payments of business profits, investment income, and other types of income and gains.

The agreement also contains administrative provisions, including mechanisms for the resolution of disputes.

The United States and Sri Lanka signed the original tax treaty in Colombo on March 14, 1985 and signed an amending protocol in Washington on September 20, 2002. The US Senate approved the treaty and amending protocol on March 25, 2004. The treaty, as amended by the protocol, entered into force with the exchange of instruments of ratification in Colombo on July 12, 2004.

According to the Treasury, the provisions relating to withholding taxes will be effective for amounts paid or credited on or after September 1, 2004. The provisions relating to other taxes will be effective for taxable periods beginning on or after January 1, 2005.

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