The Sri Lankan Cabinet of Ministers has approved a proposal by the Minister of Finance to sign a convention with Austria aimed at preventing double taxation, tax evasion, and avoidance of public finance. The agreement will apply to taxes on income and capital between the two countries.
The convention has been drafted and signed at the official level following discussions between the tax authorities of Sri Lanka and Austria. As per the agreement, a tax rate not exceeding 10 percent of the gross amount will be charged on interest and goodwill.
The proposal, presented by the President in his capacity as the Minister of Finance, Economic Stabilization, and National Policy, was approved for formal signing at the government level. Once signed, the convention will be submitted for approval under the provisions of the Inland Revenue Act No. 24 of 2017.
According to the Inland Revenue Department (IRD), double tax treaties are crucial for eliminating or mitigating double taxation and preventing fiscal evasion in international trade. These agreements are especially beneficial for developing countries like Sri Lanka as they encourage foreign investment, the transfer of expertise, and modern technology.
As of January 2024, Sri Lanka had signed similar agreements with 46 countries, including a multilateral treaty with the South Asian Association for Regional Cooperation (SAARC) in 2005.