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. |