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CONVENTION
BETWEEN
THE GOVERNMENT OF THE KINGDOM OF THAILAND
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 TAXES ON INCOME

 

 

            The  Government  of the Kingdom of Thailand and the Government of the  Democratic Socialist Republic of Sri Lanka,

 

            Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

 

            Have agreed as follows :

 

 

ARTICLE 1
PERSONAL SCOPE

            This Convention shall apply to persons who are residents of one or both  of the Contracting States.

 

 

ARTICLE 2
TAXES COVERED

1.         This Convention shall apply to taxes on income imposed on behalf of  each Contracting State, or of its local authorities irrespective of the manner  in which they are levied.

 

2.         There  shall  be regarded as taxes on income all taxes imposed on  total  income,  or  on  elements  of income, including taxes on gains from the  alienation  of  movable  or  immovable  property,  as well as taxes on capital  appreciation.

 

3.         The existing taxes to which this Convention shall apply are:

            (a)        in Sri Lanka-the income tax, including the income tax based

                         on the turnover  of  enterprises  licensed  by  the  Greater 

                         Colombo  Economic  Commission,

                         (hereinafter referred to as “Sri Lanka tax”);

            (b)        in Thailand-

                         (i)         the income tax; and

                         (ii)        the petroleum income tax,

                                     (hereinafter referred to as “Thai tax”).

 

4.         This Convention shall also apply to any identical or substantially 

similar  taxes on income which are imposed after the date of signature of this  Convention  in  addition to, or in place of, the existing taxes. The competent  authorities of the Contracting States shall notify each other of any important  changes which have been made in their respective taxation laws.

 

 

ARTICLE 3
GENERAL DEFINITIONS

1.         In this Convention, unless the context otherwise requires:

            (a)        the term "Sri Lanka" means the Democratic Socialist

                         Republic of Sri Lanka, including any area outside the

                         territorial sea of Sri LanKa which in  accordance  with 

                         international  law has been or may hereafter be designated,

                         under the laws of Sri Lanka concerning the Continental

                         Shelf, as an area within             which the rights of Sri Lanka

                         with respect to the waters, sea bed and subsoil and the

                         natural resources may be exercised;

            (b)        the term "Thaliand" means the Kingdom of Thailand and

                         includes any area adjacent to the territorial waters of the

                         Kingdom of Thaliand which by  Thai legislation,  and in

                         accordance with international law, has been or may hereafter

                         be designated as an area within which the rights of the

                         Kingdom of Thailand with respect to the sea bed and subsoil

                         and their natural resources  may be exercised;

            (c)        the  terms  "a Contracting State" and " the other Contracting

                        State" mean Sri Lanka or Thailand as the context requires;

            (d)        the term "person" includes an individual, an estate, a

                         company  and any other body of persons which is treated as

                         an entity for tax purposes ;

            (e)        the term "company" means any body corporate or any entity

                         which is treated as a body corporate for tax purposes;

            (f)         the terms "enterprise of a Contracting State" and "enterprise

                        of  the  other  Contracting State" mean respectively an 

                        enterprise carried on by a resident of a Contracting State 

                        and  an enterprise carried on by a resident of the other

                        Contracting State;

            (g)       the term "international traffic" means any transport by a ship

                       or aircraft operated by an enterprise of a Contracting State,

                       except  where  the ship or aircraft is operated solely between 

                       places in the other Contracting State;

            (h)        the term “national” means:

                       (i)         all individuals possessing the nationality of a

                                   Contracting State,

                       (ii)        all legal persons, partnerships, associations and any

                                   other entities  deriving  their status as such from the

                                   laws in  force in a Contracting State;

            (i)         the term “competent authority” means :

                        (i)         in the case of Sri Lanka, the Commissioner-General

                                     of Inland Revenue,

                        (ii)        in  the  case of Thailand, the Minister of Finance or his

                                     authorized representative;

            (j)         the term “tax” means Sri Lanka tax or Thai tax, as the context 

 

2.         As regards the application of this Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the  meaning which it has under the laws of that Contracting State relating to  the taxes which are the subject of this Convention.

 

 

ARTICLE 4 
RESIDENT

1.         For  the  purposes  of  this  Convention, the term “resident of a  Contracting State” means any person who, under the laws of that State, is liable  to  tax therein by reason of his domicile, residence, place of incorporation,  place of management or any other criterion of a similar nature.

 

2.         Where by reason of the provisions of paragraph 1 of this Article any  individual is a resident of both Contracting States, then his status  shall be determined as follows:

            (a)        he shall be deemed to be a resident of the Contracting State

                         in which  he  has  a permanent home available to him. If he

                         has a  permanent home available to him in both Contracting

                         States, he  shall be deemed to be a resident of the

                         Contracting State with  which his personal and economic

                         relations are closer (centre of  vital interests);

            (b)        if  the Contracting State in which he has his centre of vital 

                        interests cannot be determined, or if he has not a permanent

                        home available to him in either Contracting State, he shall be 

                        deemed to be a resident of the Contracting State in which he

                        has an habitual abode;

            (c)        if  he has an habitual abode in both Contracting States or in 

                         neither  of  them,  he shall be deemed to be a resident of the 

                         Contracting State of which he is a national;

            (d)        if he is a national of both Contracting States or of neither of

                         them, the competent authorities of the Contracting States

                         shall settle the question by mutual agreement.

 

 

3.         Where by reason of the provisions of paragraph 1 of this Article a person other than an individual is a resident of both Contracting States, then  the competent authorities of the Contracting States shall settle the question by mutual agreement.

 

 

ARTICLE 5
PERMANENT ESTABLISHMENT

1.         For  the  purposes  of  this  Convention,  the  term  "permanent establishment" means a fixed place of business through which the business of an  enterprise is wholly or partly carried on.

 

2.         The term "permanent establishment" shall include especially:

            (a)        a place of management:

            (b)        a branch;

            (c)        an office;

            (d)        a factory;

            (e)        a workshop ; and

            (f)         a  mine,  an  oil  or  gas  well,  a quarry or other place of 

                         extraction of natural resources.

 

3.         The term "permanent establishment" likewise encompasses:

            (a)        a building site, a construction, assembly or installation

                         project, but only  where such site, project or activities

                         continue for a period of more than 183 days;

            (b)        the furnishing of services, including consultancy services, by

                         an enterprise through employees or other personnel engage

                         by the enterprise for such purpose, but only where

                         activities of that nature continue (for the same or a connected

                         project) within the country for a period or periods aggregating

                         more than 183 days  within any 12 month period.

 

4.         Notwithstanding the preceding provisions of this Article, the term  "permanent establishment" shall be deemed not to include:

            (a)        the  use  of  facilities solely for the purpose of storage or

                         display of goods or merchandise belonging to the

                         enterprise;    

            (b)        the maintenance of a stock of goods or merchandise

                         belonging to   the enterprise solely for the purpose of storage

                         or display;

            (c)        the maintenance of a stock of goods or merchandise

                         belonging to  the  enterprise  solely  for the purpose of 

                         processing by another enterprise;

            (d)        the  maintenance of a fixed place of business solely for the 

                         purpose  of  purchasing goods or merchandise or of

                         collecting  information, for the enterprise;

            (e)        the  maintenance of a fixed place of business solely for the 

                         purpose of carrying on, for the enterprise, any other activity of

                         a preparatory or auxiliary character;

            (f)        the  maintenance of a fixed place of business solely for any 

                        combination of activities mentioned in sub-paragraphs (a) to 

                       (e), provided  that  the  overall  activity  of the fixed place of 

                       business resulting from this combination is of a preparatory

                       or auxiliary character.

 

5.         Notwithstanding the provisions of paragraphs 1 and 2 of this Article, where a person-other than an agent of an independent status to whom paragraph 7 of  this  Article  applies-is  acting  in a Contracting State on behalf of an  enterprise  of the other Contracting State, that enterprise shall be deemed to have  a  permanent  establishment  in the first mentioned Contracting State in respect  of any activities which that person undertakes for the enterprise, if  such a person:

            (a)         has and habitually exercises in the first-mentioned

                          Contracting State an authority to contracts on behalf of the

                          enterprise, unless his activities are limited to the purchase

                          of goods or, merchandise for the enterprise; or

            (b)         habitually maintains in the first-mentioned Contracting State

                          a stock of goods or merchandise belonging to the

                          enterprise or to merchandise belonging to the enterprise or

                          to other enterprises which are controlled by it or have a

                          controlling interest in it, from which he regularly fills orders

                          or makes deliveries on behalf  of the enterprise; or

            (c)         habitually secures orders in the first-mentioned State wholly

                          or almost wholly for the enterprise or for the enterprise and

                          other enterprises which are controlled by it or have a

                           controlling interest in it.

 

6.         Notwithstanding  the  preceding  provisions  of  this Article, an  insurance  enterprise  of  one  of  the  States shall, concept in regard to re -insurance, be deemed to have a permanent establishment in the other State if it collects premiums in the territory of that other State or insures risks situated  therein through a person other than an agent of an independent status to whom  paragraph 7 applies.

 

7.         An enterprise of a Contracting State shall not be deemed to have a  permanent establishment in the other Contracting State merely because carries on business in that State through a broker, general commission agent or any other agent of an independent Status, where such persons are acting in the ordinary course  of  their  business. However, when the activities of such an agent are  devoted  wholly  or almost wholly on behalf of that enterprise, he will not be  considered an agent of an independent status within the meaning of this paragraph, if it is shown that the transactions between the agent and the enterprise were not made under arms length conditions.

 

8.         The fact that a company which is a resident of a Contracting State  controls  or  is  controlled  by  a  company  which is a resident of the other  Contracting  State,  or which carries on business in that other State (whether  through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of the other.

 

Last updated: 08.12.2011