Sri Lanka, India to ink new agreement to prevent double taxation and tax evasion

Sri Lanka and India are set to enter into a fresh agreement for or the avoidance of double taxation and the prevention of evasion of tax on income, in line with minimum standards of Organisation for Economic Cooperation and Development (OECD) / G-20 Base Erosion and Profit Shifting Project (BEPS).

Beyond securing revenues by realigning taxation with economic activities and value creation, the OECD/G20 BEPS Project is aimed at creating a single set of consensus-based international tax rules to address BEPS, and hence to protect tax bases while offering increased certainty and predictability to taxpayers.

In 2016, the OECD and G20 established an Inclusive Framework on BEPS to allow interested countries and jurisdictions to work with OECD and G20 members to develop standards on BEPS related issues and review and monitor the implementation of the whole BEPS Package.

Both Sri Lanka and India have been members of the BEPS Project and both countries are bound to implement minimum standards of the active plan of G-20 for OECD.

“Therefore, a requirement has arisen to amend the agreement signed in the year 2013 for avoidance of double taxation and prevention of evasion of tax on income,” the Government Information Department said.

Accordingly, President Anura Kumara Dissanayake this week in his capacity as the Minister of Finance, Planning, and Economic Development, is to sign the amended protocol and present the signed protocol as per section 75(1) of the Inland Revenue Act No. 24 of 2017 to the Parliament. 

The concurrence of the Ministry of Foreign Affairs, Foreign Employment & Tourism, and clearance of the Attorney General has been received for the amended protocol and it was prepared with the required amendments.