On 8 July 2014, officials from Turkey and Vietnam signed and income tax treaty The treaty is the first of its kind between the two countries.
The treaty covers Turkish income tax and corporation tax, and covers Vietnamese personal income tax and business income tax.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise of one Contracting State furnishes services in the other State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 6 months within any 12 month period.
Both country apply the credit method for the elimination of double taxation.
A protocol to the treaty, signed the same date, includes the provision that if Vietnam enters into an agreement with any other country that provides for a longer period of time before a construction PE is deemed constituted, then such longer period will apply for the purpose of the Turkey-Vietnam tax treaty.
The protocol also includes the provision that if Vietnam enters into an agreement after 23 October 2009 with an OECD Member State that provides for lower withholding tax rates for dividends, then such lower rates will apply for the purpose of the Turkey-Vietnam tax treaty.
The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.
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