Australian Tax Treaties
Sri Lankan Agreement
AGREEMENT BETWEEN AUSTRALIA AND 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
ARTICLE 23
Methods of Elimination of Double Taxation
(1)
Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Sri Lanka tax paid under the law of Sri Lanka and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Sri Lanka (including, in the case of a dividend paid by a company which is a resident of Sri Lanka and is not a resident of Australia to a company which is a resident of Australia and which controls directly or indirectly at least 10 per cent of the voting power of the first-mentioned company, the Sri Lanka tax paid by the company in respect of profits out of which the dividend is paid) shall be allowed as a credit against Australian tax payable in respect of that income.
(2)
(a) For the purposes of paragraph (1), Sri Lanka tax paid shall include an amount equivalent to the amount of any Sri Lanka tax forgone.
(b) For the purposes of the law of Australia relating to Australian tax, an amount of income referred to in paragraph (3) shall be increased by the amount of any Sri Lanka tax forgone in respect of that income.
(3)
For the purposes of paragraph (2), the term " Sri Lanka tax forgone " means an amount which, under the laws of Sri Lanka and in accordance with this Agreement, would have been payable as Sri Lanka tax on income but for any exemption from, or reduction of, Sri Lanka tax on that income in accordance with those provisions of the law of Sri Lanka relating to Sri Lanka tax which are agreed in letters exchanged from time to time between the Treasurer of Australia and the Minister of Finance and Planning of Sri Lanka for the purposes of this paragraph.
(4)
Paragraphs (2) and (3) shall apply only in relation to income derived in the first five years of income in relation to which this Agreement has effect by virtue of subparagraph (a)(ii) of Article 27 and in any later years of income that may be agreed by the Contracting States in letters exchanged for this purpose.
(5)
Subject to the provisions of the law of Sri Lanka regarding the allowance as a credit against Sri Lanka tax of tax payable in a country outside Sri Lanka (which shall not affect the general principle hereof), Australian tax payable under the law of Australia and in accordance with this Agreement, whether directly or by deduction, on income derived by a person who is a resident of Sri Lanka from sources within Australia shall be allowed as a credit against any Sri Lanka tax payable on such income, such tax being an amount computed before the credit is given. Where such income is a dividend paid by a company which is a resident of Australia to a company which is a resident of Sri Lanka and which owns not less than 10 per cent of the voting shares of the company paying the dividend, the credit shall take into account Australian tax payable by that company in respect of its income out of which the dividend is paid.
(6)
Where a resident of one of the Contracting States derives income which, in accordance with the provisions of this Agreement shall be taxable only in the other Contracting State, the first-mentioned State may take that income into account in calculating the amount of its tax payable on the remaining income of that resident.
Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Sri Lanka tax paid under the law of Sri Lanka and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Sri Lanka (including, in the case of a dividend paid by a company which is a resident of Sri Lanka and is not a resident of Australia to a company which is a resident of Australia and which controls directly or indirectly at least 10 per cent of the voting power of the first-mentioned company, the Sri Lanka tax paid by the company in respect of profits out of which the dividend is paid) shall be allowed as a credit against Australian tax payable in respect of that income.
(2)
(a) For the purposes of paragraph (1), Sri Lanka tax paid shall include an amount equivalent to the amount of any Sri Lanka tax forgone.
(b) For the purposes of the law of Australia relating to Australian tax, an amount of income referred to in paragraph (3) shall be increased by the amount of any Sri Lanka tax forgone in respect of that income.
(3)
For the purposes of paragraph (2), the term " Sri Lanka tax forgone " means an amount which, under the laws of Sri Lanka and in accordance with this Agreement, would have been payable as Sri Lanka tax on income but for any exemption from, or reduction of, Sri Lanka tax on that income in accordance with those provisions of the law of Sri Lanka relating to Sri Lanka tax which are agreed in letters exchanged from time to time between the Treasurer of Australia and the Minister of Finance and Planning of Sri Lanka for the purposes of this paragraph.
(4)
Paragraphs (2) and (3) shall apply only in relation to income derived in the first five years of income in relation to which this Agreement has effect by virtue of subparagraph (a)(ii) of Article 27 and in any later years of income that may be agreed by the Contracting States in letters exchanged for this purpose.
(5)
Subject to the provisions of the law of Sri Lanka regarding the allowance as a credit against Sri Lanka tax of tax payable in a country outside Sri Lanka (which shall not affect the general principle hereof), Australian tax payable under the law of Australia and in accordance with this Agreement, whether directly or by deduction, on income derived by a person who is a resident of Sri Lanka from sources within Australia shall be allowed as a credit against any Sri Lanka tax payable on such income, such tax being an amount computed before the credit is given. Where such income is a dividend paid by a company which is a resident of Australia to a company which is a resident of Sri Lanka and which owns not less than 10 per cent of the voting shares of the company paying the dividend, the credit shall take into account Australian tax payable by that company in respect of its income out of which the dividend is paid.
(6)
Where a resident of one of the Contracting States derives income which, in accordance with the provisions of this Agreement shall be taxable only in the other Contracting State, the first-mentioned State may take that income into account in calculating the amount of its tax payable on the remaining income of that resident.
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