Double Taxation Treaties in Turkey

Turkish companies with foreign shareholders willing to avoid the double taxation of their profits may use the provisions of the treaties signed between Turkey and the foreign parent country. Turkey has a vast network of treaties of double tax avoidance treaties.

So far, Turkey has signed double tax treaties with: Albania, Algeria, Azerbaijan, Austria, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Korea, Kuwait, Kyrgyz Republic, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Moldova, Mongolia, Montenegro, Morocco, New Zealand, Norway, Oman, Netherlands, Cyprus, Norway, Pakistan, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia and Montenegro, South Africa, South Korea, Singapore, Slovakia, Slovenia, Spain, Sudan, Syria, Sweden, Tajikistan, Thailand, Tunisia, Turkmenistan, Ukraine, united Arab Emirates, United Kingdom, Yemen, United States of America and Uzbekistan.

Other drafts of the double tax treaties with Turkey are waiting to be ratified.

According to these treaties, the income and the capital is exempt from taxation, if the company is already paying taxes in the treaty country. In order to benefit from these provisions, the applicant must prove that the taxes are paid in the country of origin. Usually, the certificate of taxation from the foreign taxation authority is necessary and an application. However, if the profits are still charged a refund is also possible by providing a proof that the taxes were already paid.

The withholding taxes for dividends, interests and royalties paid to non-residents are 15%, 10% and 20% in Turkey. The double tax treaties are also granting smaller rates for those depending on the signed provisions.

Many of the treaties that were signed with Turkey have provisions in order to avoid the tax frauds. For instance, the OECD model after which many of the treaties are elaborated is providing that every signatory state may request a list with the taxpayers that perform commercial activities in Turkey or in the foreign country.

These treaties are especially signed in order to attract the foreign investments, so necessary for the Turkish economy.