Turkey: Rights to taxation under income tax treaties | KPMG | GLOBAL

Turkey: Rights to taxation under network of income tax treaties

Turkey: Rights to taxation under income tax treaties

Guidance published in the official gazette in late September 2017 concerns Turkey’s network of income tax treaties for the avoidance of double taxation and includes explanations regarding the tax rules with respect to individuals or enterprises that are residents of a treaty-contracting country, income from professional services, and other activities of an “independent character” in Turkey.

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The ability of a treaty partner-country to tax income derived from professional service income derived by individuals and enterprises generally is subject to Article 14 “Independent professional services” of Turkey’s income tax treaties and to Article 5 “Permanent establishment” and Article 7 “Business income” of the treaties. In some treaties, provisions regarding these articles may be subject to additional rules contained in Protocols to the treaty.

The September 2017 guidance (referred to as a “communiqué”) clarifies measures that require attention on determining the taxing right of Turkey with respect to professional service income of non-residents, or the taxation of such income in accordance with the provisions of domestic legislation. There are also measures that address required documentation and the refund mechanism for taxes that were collected and were subject to a refund claim. 

 

Read a September 2017 report [PDF 281 KB] prepared by the KPMG member firm in Turkey

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