DT19172 - DT: Turkey: double taxation agreement, Article 23: Elimination of double taxation
(1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof):
(a) Turkish tax payable under the law of Turkey and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains from sources within Turkey (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Turkish tax is computed.
(b) In the case of a dividend paid by a company which is a resident of Turkey to a company which is resident in the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Turkish tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the Turkish tax payable by the company in respect of the profits out of which such dividend is paid.
(2) For the purposes of paragraph (1) of this Article, the term `Turkish tax payable` shall be deemed to include any amount which would have been payable as Turkish tax for any year but for an exemption from, or reduction of, tax granted for that year or any part thereof under any of the following provisions of Turkish law:
(a)
(i) Additional Articles 1 to 6 of Chapter VIII of the Income Tax Law (Law No. 193 of 31 December 1960, as amended);
(ii) Paragraph 9 of Article 8 of Chapter 1, Part 11, of the Corporation Tax Act (Law No. 5422 of 3 June 1949, as amended);
so far as they were in force on, and have not been modified since, the date of signature of this Agreement, or have been modified only in minor respects so as not to affect their general character; or
(b) any other provision which may subsequently be made granting an exemption from, or reduction of, tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character.
Provided that relief from United Kingdom tax shall not be given by virtue of this paragraph in respect of income from any source if the income arises in a period starting more than ten years after the exemption from, or reduction of, Turkish tax was first granted in respect of that source.
(3) Subject to the provisions of the law of Turkey regarding the allowance as a credit against Turkish tax of tax payable in a territory outside Turkey, United Kingdom tax payable under the law of the United Kingdom and in accordance with this Agreement in respect of income (including profits and chargeable gains) derived by a resident of Turkey from sources within the United Kingdom shall be allowed as a deduction from the Turkish tax on such income. Such deduction, however, shall not exceed the amount of Turkish tax, as computed before the deduction is made, attributable to such income.
(4) For the purposes of paragraphs (1) and (3) of this Article, profits, income and capital gains derived by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Agreement shall be deemed to arise from sources in that other Contracting State.
