[DOCID: f:td009.108]
From the Treaty Documents Online via GPO Access
[wais.access.gpo.gov]
108th Congress Treaty Doc.
SENATE
1st Session 108-9
_______________________________________________________________________
PROTOCOL AMENDING TAX CONVENTION WITH SRI LANKA
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
PROTOCOL AMENDING THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED
STATES OF AMERICA AND THE GOVERNMENT OF THE DEMOCRATIC SOCIALIST
REPUBLIC OF SRI LANKA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED AT
COLOMBO ON MARCH 14, 1985, TOGETHER WITH AN EXCHANGE OF NOTES, SIGNED
AT WASHINGTON ON SEPTEMBER 20, 2002 (THE ``PROTOCOL'')
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October 28, 2003.--Treaty was read the first time, and together with
the accompanying papers, referred to the Committee on Foreign Relations
and ordered to be printed for the use of the Senate
LETTER OF TRANSMITTAL
----------
The White House, October 28, 2003.
To the Senate of the United States:
I transmit herewith, for Senate advice and consent to
ratification, the Protocol Amending the Convention Between the
Government of the United States of America and the Government
of the Democratic Socialist Republic of Sri Lanka for the
Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income signed at Colombo on
March 14, 1985, together with an exchange of notes, signed at
Washington on September 20, 2002 (the ``Protocol''). I also
transmit, for the information of the Senate, the report of the
Department of State concerning the Protocol.
The Protocol would amend the Convention to make it similar
to tax treaties between the United States and other developing
nations. The Convention would provide maximum rates of tax to
be applied to various types of income and protection from
double taxation of income. The Convention, as amended by the
Protocol, also provides for resolution of disputes and sets
forth rules making its benefits unavailable to residents that
are engaged in treaty shopping.
I recommend that the Senate give early and favorable
consideration to this Protocol in conjunction with the
Convention, and that the Senate give its advice and consent to
ratification.
George W. Bush.
LETTER OF SUBMITTAL
----------
Department of State,
Washington, August 26, 2003.
The President,
The White House.
The President: I have the honor to submit to you, with a
view to its transmission to the Senate for advice and consent
to ratification, the Protocol Amending the Convention Between
the Government of the United States of America and the
Government of the Democratic Socialist Republic of Sri Lanka
for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income Signed at
Colombo on March 14, 1985, together with an exchange of notes,
signed at Washington on September 20, 2002 (the ``Protocol'').
The proposed Protocol updates the Income Tax Convention
signed with Sri Lanka on March 14, 1985, which was transmitted
to the Senate on October 2, 1985 (S. Treaty Doc. 99-10), to
conform with the U.S. Model Income Tax Convention, as modified
by certain provisions applicable to developing countries.
Many provisions of the proposed Protocol relate to
amendments to the U.S. Internal Revenue Code that have occurred
since the Convention was signed in 1985. For example, Article 1
of the proposed Protocol extends to former long-term residents
the tax regime now applicable to former U.S. citizens who
renounce their citizenship for tax-avoidance reasons. Most
other provisions of the proposed Protocol update the language
of the Convention to account for changes in U.S. treaty policy
that have occurred since the Convention was signed. For
example, Article 6 of the proposed Protocol provides a source-
country exemption for income from the use, maintenance, or
rental of shipping containers.
The exchange of notes resolves two important issues
regarding interpretation of the Convention. First, Article 8 of
the Convention, as amended by Article 6 of the Protocol, states
that Sri Lanka will provide to the United States most-favored-
nation treatment with respect to shipping income. Sri Lanka has
provided an exemption to the United Kingdom and Poland in Sri
Lanka's existing income tax conventions with those countries.
Sri Lanka has agreed in the notes to extend this exemption to
the United States on a most-favored-nation basis.
Second, Sri Lanka has agreed in the notes to exchange
information from Sri Lankan financial institutions. The issue
of information exchange was responsible for a ten-year delay in
our concluding the Protocol. The repeal of Sri Lanka's bank
secrecy legislation and Sri Lanka's agreement last year to
provide tax information from financial institutions was
critical to our ability to reach agreement on the Protocol.
The proposed Protocol, like the 1985 Convention, is subject
to ratification. It will enter into force upon the exchange of
instruments of ratification. The 1985 Convention and the
Protocol are expected to be brought into force at the same
time. The Protocol will have effect in accordance with Article
29 of the 1985 Convention. Thus, it will have effect with
respect to taxes withheld at source on the first day of the
second month next on which the Convention enters into force.
The effective date for other types of taxes is for taxable
periods beginning on or after the first day of January of the
year in which the Convention enters into force.
The Department of the Treasury and the Department of State
cooperated in the negotiation of the Protocol and the exchange
of notes. They have the full approval of both Departments.
Respectfully submitted.
Colin L. Powell.
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