The Double Taxation Relief (Taxes on Income) (Turkey) Order 1988

Made: 25th May 1988

At the Court at Buckingham Palace, the 25th day of May 1988 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 788 of the said Act, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Turkey) Order 1988.

2

It is hereby declared—

• (a) that the arrangements specified in the Agreement set out in the Schedule to this Order have been made with the Government of the Republic of Turkey with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Turkey;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Turkey concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasiOn with respect to those taxes; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE — AGREEMENT BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE REPUBLIC OF TURKEY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The United Kingdom of Great Britain and Northern Ireland and the Republic of Turkey;

Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains:

Have agreed as follows:

ARTICLE 1 — Personal scope

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

ARTICLE 2 — Taxes covered

ARTICLE 3 — General definitions

ARTICLE 4 — Residence

ARTICLE 5 — Permanent establishment

ARTICLE 6 — Income from immovable property

ARTICLE 7 — Business profits

ARTICLE 8 — International transport

ARTICLE 9 — Associated enterprises

ARTICLE 10 — Dividends

ARTICLE 11 — Interest

ARTICLE 12 — Royalties

ARTICLE 13 — Capital gains

ARTICLE 14 — Independent personal services

ARTICLE 15 — Dependent personal services

ARTICLE 16 — Directors' fees

Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17 — Artistes and athletes

ARTICLE 18 — Pensions

ARTICLE 19 — Government service

ARTICLE 20 — Students, apprentices and trainees

A student, business apprentice or trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training shall be exempt from tax in that State on:

ARTICLE 21 — Teachers

ARTICLE 22 — Other income

Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement, other than income paid out of trusts, shall be taxable only in that State.

ARTICLE 23 — Elimination of double taxation

ARTICLE 24 — Non-discrimination

ARTICLE 25 — Mutual agreement procedure

ARTICLE 26 — Exchange of information

ARTICLE 27 — Diplomatic agents and consular officers

ARTICLE 28 — Entry into force

Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. The Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect:

ARTICLE 29 — Termination

This Agreement shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Agreement by giving notice of termination, through the diplomatic channel, at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:

Signed

G I de Deney — Clerk Of the Privy COuncil

Explanatory note

(This note is not part of the Order)

The Agreement with the Republic of Turkey is set out in the Schedule to this Order.

Provision is made for business profits not arising through a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7). Profits from international transport are to be taxed only in the country of residence of the enterprise (Article 8). The Agreement includes rules for determining taxable profits when a company in one country is related to a company in the other (Article 9).

Income arising from immovable property and capital gains from the alienation of that property may be taxed in the country in which the property is situated (Articles 6 and 13).

The rate of tax on dividends in the source country is not to exceed 15 per cent of the gross amount of the dividends flowing to the other country, if the beneficial owner controls directly or indirectly at least 25 per cent of the voting power of the paying company, and 20 per cent in all other cases (Article 10). An additional tax at a rate not exceeding 15 per cent may be charged on the profits of a permanent establishment in one country of a company which is a resident of the other.

The rate of tax on interest imposed in the source country is not to exceed 15 per cent of the gross amount of interest flowing to the other country. However, the country of source will exempt from tax interest payable to and beneficially owned by the Government or a local authority of the other country or any agency of the Government or a local authority (Article 11). Interest arising in the United Kingdom and beneficially owned by the Central Bank of Turkey will be exempt in the United Kingdom.

The rate of tax on royalties in the source country is not to exceed 10 per cent of the gross amount flowing to the other country (Article 12).

Income of an enterprise of one country in respect of professional or similar services performed in the other country may be taxed in that other country if the enterprise performs the services through a permanent establishment there or the services are performed for more than 183 days in any 12 months. The enterprise may elect that the income be taxed on a net basis (Article 14).

The earnings of temporary business visitors (Articles 14 and 15) are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence. Income derived by entertainers and athletes from their personal activities may be taxed in the country in which those activities are exercised. Where, however, the activities performed in one country are supported by public funds of the other country, the income is taxable only in that other country (Article 17). Government service salaries and pensions are normally to be taxed by the paying Government only (Article 19) while other pensions are to be taxed only in the country of the taxpayer’s residence (Article 18). The remuneration of visiting teachers (Article 21) and certain payments made to visiting students, business apprentices and trainees (Article 20) are, subject to certain conditions, to be exempt from tax in the country visited.

Where income continues to be taxable in both countries relief from double taxation is to be given by the country of the taxpayer’s residence. The credit to be given in the United Kingdom for tax payable in Turkey includes credit for tax spared under certain provisions of Turkish law (Article 23).

There are provisions to safeguard nationals and enterprises of one country against discriminatory taxation in the other (Article 24) and for consultation and the exchange of information between the competent authorities of the two countries (Articles 25 and 26).

The Agreement is to enter into force on the date of the later of the notifications by each country of the completion of its procedures for the bringing into force of the Agreement. The Agreement takes effect in Turkey for any fiscal year beginning on or after 1st January and in the United Kingdom for any financial year beginning on or after 1st April for corporation tax, or, for income tax and capital gains tax, any year of assessment beginning on or after 6th April in the calendar year next following that in which the Agreement enters into force (Article 28).

Footnotes

[^f00001]: 1988 c. 1; section 788 is extended by section 10 of the Capital Gains Tax Act 1979 (c. 14)