Foreigners in Sri Lanka Treasury bonds may not have to pay tax

ECONOMYNEXT – Foreign investors in Sri Lanka’s rupee bonds may not have to pay taxes after April 2018, Deputy Central Bank Governor Nandalal Weerasinghe said, amid some uncertainty in markets how a new Inland Revenue law will be interpreted.

Sri Lanka lifted a 10 percent withholding tax government bonds from April 2017 which was earlier paid up front and a tax credit was available for domestic investors.

Deputy Governor Weeresinghe said generally the principle was to tax residents of a country. Taxes are usually paid in the country of residence, he said.

Central Bank Governor Indrajit Coomaraswamy said he understood that authorities were looking at the issue.

Tax experts earlier said foreign investors may have to open tax accounts in Sri Lanka to pay capital gains and income tax.

In general investors from one country who invests in another country with which it has a double taxation agreements can claim tax credits.