President George W. Bush has sent a communication to the US Senate seeking ratification of the amendment to Sri Lanka-US Double Taxation Agreement.

The Protocol amending the Convention between the Government of Sri Lanka and the Government of the United States of America for the Avoidance of Double Taxation and Prevention of Fiscal Evaluation with respect to Taxes on Income (1985) was signed on 20 September 2002 in Washington D.C. The Hon. Milinda Moragoda, Minister of Economic Reform, Science & Technology and the Hon. Christina B. Rocca, Assistant Secretary of State for South Asia signed the Agreement on behalf of their respective Governments.

The text of the new Protocol, which has been long outstanding was finalized at official level discussions during the visit of Hon. Prime Minister Ranil Wickremesinghe to Washington D.C. in July 2002. The protocol reflects changes in the laws and policies of both countries, since the signing of the Double Taxation Convention in 1985. It contains provisions to facilitate investment between the two countries by addressing the issues of taxation of cross-border payments, investment income, business profits, capital gains and other types of income.

Ambassador Devinda R. Subasinghe, said that "the implementation of the Protocol to the US Double Taxation Convention would generate greater confidence in US investors contemplating to investment in Sri Lanka. It also would further strengthen existing legal framework for the promotion of US investment including Bilateral Investment Promotion and Protection Treaty and Trade and Investment Framework Agreement (TIFA), which was concluded during the Prime Minister's visit to Washington D.C. in July 2002."

Following is the text of the communication addressed by President George W. Bush to the US Senate seeking the ratification of the protocol.

"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
THE WHITE HOUSE, "

Embassy of Sri Lanka
Washington DC
USA

30 October 2003