Treaty detail
United States - Sri Lanka tax treaty
A practical treaty page built around the official treaty text, key withholding categories, permanent-establishment rules, and article-level summaries.
Signed
1985-03-14
Effective
2004-01-01
Articles seeded
6
Withholding snapshot
Dividends
Individual rate: 15% · Corporate rate: 15%
The Sri Lanka treaty applies a single 15 percent dividend ceiling without a separate reduced parent-subsidiary rate. Article-level review is required because Sri Lankan domestic withholding rules interact with the treaty.
Interest
Rate: 10%
IRS Treaty Table 1 reflects a general 10 percent ceiling on qualifying interest, with government and central-bank carve-outs. Beneficial ownership and documentation matter for reliance.
Royalties
Rate: 10%
The Sri Lanka treaty applies a 10 percent royalty ceiling, with article-level review controlling for software, patent, and copyright classification.
Permanent establishment
Construction threshold: more than 183 days
Dependent-agent analysis remains important where a person habitually exercises authority to conclude contracts on behalf of the enterprise under the treaty wording.
Other treaty flags
Pension treatment is article-specific, with government-service pensions and private pensions handled under distinct provisions.
Seeded article summaries
Article 4
Residence
Defines treaty residence and the gateway to reduced withholding or treaty protection.
Residence under the Sri Lanka treaty matters for the relatively small but growing group of U.S. professionals and IT contractors with Sri Lankan ties. Tie-breaker rules apply where domestic rules would otherwise produce dual residence.
Article 5
Permanent Establishment
Sets the business-presence threshold that permits source-country taxation of business profits.
The Sri Lanka treaty includes a 183-day threshold for construction and supervisory activities and a service-PE provision. These thresholds can create source-country exposure earlier than under classic OECD-style treaties.
Article 7
Business Profits
Generally reserves business profits to the residence state unless a permanent establishment exists in the other state.
This article matters for U.S. firms with Sri Lankan IT outsourcing or apparel operations. PE analysis in Article 5 should be completed before relying on Article 7 protection.
Article 10
Dividends
Provides a 15 percent treaty ceiling on source-country dividend withholding.
The dividend article applies a flat 15 percent ceiling without a reduced parent-subsidiary rate. Practitioners should compare this to domestic Sri Lankan withholding to confirm whether the treaty produces an actual reduction.
Article 11
Interest
Limits source-country withholding on qualifying interest.
The treaty does not eliminate interest withholding outright. The 10 percent ceiling provides meaningful reduction in many cases, with beneficial-ownership analysis controlling practical reliance.
Article 12
Royalties
Limits source-country withholding on qualifying royalties.
The royalty article applies a 10 percent ceiling. Software classification under Sri Lankan law and the article text's treatment of mixed payments can affect the outcome for IT licensing.
Official text
Other treaties involving these jurisdictions
Computed from the cross-reference graph. Links open the related entity on this site.
This entry cites
- TreatyUS–GB treaty
- TreatyUS–CA treaty
- TreatyUS–DE treaty
- TreatyUS–FR treaty
- TreatyUS–JP treaty
- TreatyUS–NL treaty
- TreatyUS–AU treaty
- TreatyUS–KR treaty
Primary sources
- Sri Lanka treaty documents pageVerified 2026-05-20
- Official U.S.-Sri Lanka treaty PDFVerified 2026-05-20
- IRS Tax Treaty Table 1Verified 2026-05-20
- Treasury treaties in force listVerified 2026-05-20
Important disclaimer
This library is for general tax education only. Always verify filing obligations, due dates, and tax consequences against the cited primary source or with a qualified tax professional.