Double Tax Treaties in Turkey

Are you interested in the provisions of the double taxation treaties signed by Turkey? This article provides information on this topic. Feel free to explore it and then send your inquiries if you want support in company formation in Turkey and the application of these treaties for your firm.

What is the purpose of a double taxation treaty signed by Turkey?

• to avoid paying the same taxes twice as a company owner or individual,
• to reduce tax evasion and offer significant assurance for taxpayers in Turkey.

How are double tax treaties known in Turkey?

• DTTs,
• Double taxation agreements – DTA,
• Double taxation avoidance agreements – DTAA.

Who can benefit from protection through the DTTs signed by Turkey?

Enterprise holders and natural persons.

How many DTTs has Turkey signed?

About 93 are already in force.

What institution manages the application of DTAs in Turkey?

The Turkish Revenue Administration.

What are the key provisions of DTTs signed by Turkey?

• income and corporate taxes are protected by the double tax treaties signed by Turkey,
• taxpayer residency is established and explained through DTTs,
• around 5%-15% is the withholding tax (WHT) on dividends,
• about 10%-15% is WHT imposed on interest,
• most treaties limit the WHT on royalties at a 10% tax rate.

What are the incomes covered by the double tax treaties signed by Turkey?

• Dividends,
• Interest,
• Royalties,
• Employment income,
• Business income,
• Pensions,
• Real estate revenue, etc.

What is the credit method through DTTs signed by Turkey?

The credit is offered if the taxes have been paid abroad by Turkish resident companies/individuals.

What is the Mutual Agreement Procedure?

The Mutual Agreement Procedure, or MAP, is a mechanism designed for taxpayers through which tax litigation can be solved. This method applies between the Turkish tax authorities and the foreign ones if conflicts are involved.

We invite you to watch the video below for information on Turkey’s double taxation agreements:

Is there a specific tax convention applicable in Turkey?

Yes. Turkey respects the OECD Model Tax Convention.

How can I determine which tax avoidance methods are suitable for my business in Turkey?

• it depends on the residency and the local laws,
• if there is an agreement signed between Turkey and a specific country,
• if eligibility criteria are met, etc.

Where are business income and employment salaries levied?

They are taxable in the country where they are generated.

What documents are solicited for the application of a DTT signed by Turkey?

• the Certificate of Tax Residence,
• income evidence,
• beneficial ownership, etc.

Are there any precautions regarding DTTs signed by Turkey?

• it is recommended to pay attention to the domestic laws referring to taxation in Turkey,
• DTTs in Turkey restrict tax advantages for foreign firms,
• holding companies are severely examined when DTT applications are made,
• limitation of benefits – LOB – applies through specific double taxation agreements, just like the one signed between Turkey and the US.

Ready to explore more about the double taxation treaties before opening a company in Turkey? Please address your inquiries to our team of agents and request information about the services we provide to businessmen. Contact us today and get your offer.