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The Double Taxation Relief Agreement between Sri Lanka and Iran came into force on December 26, 2001. According to Article 28 of the Agreement its provisions are applicable in Sri Lanka for the year of assessment commencing April 1, 2002 and for subsequent year. “This Agreement falls broadly within the pattern of the Agreements that Sri Lanka has concluded with other countries and provides incentives to stimulate foreign investments and transfer technology into the country’, the Finance Ministry said in a statement issued Thursday. The Agreement also provides for ‘tax sparing credit’ in terms which an investor would be given credit in his home country not only for the taxes that he actually paid in the other country, but also for the taxes “spared” by the other country. With regard to airline profits, complete exemption has been provided in the country of source but shipping profits are charged to tax in the source country subject to a reduction of the tax so charged by 50%. The Agreement also provides for the exchange of information between Sri Lanka and Iran to facilitate the enforcement of the provisions of the Agreement and to assist in the prevention of fiscal evasion with respect to income tax.
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