U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

29–112

" SENATE ! 108TH CONGRESS

1st Session 

TREATY DOC. 

2003

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’’)

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


E:\Seals\Congress.#13
(III)

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.

(V)

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 informaVerDate jul 14 2003 14:51 Oct 29, 2003 Jkt 029112 PO 00000 Frm 00005 Fmt 7633 Sfmt 7633 E:\HR\OC\TD009.XXX TD009
VI

tion 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. 

(1)


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