On 1 December 2018, officials from Argentina and Turkey signed an income tax treaty. The treaty is the first of its kind between the two countries.
The treaty covers Argentine income tax and presumed minimum income tax and covers Turkish income tax and corporation tax.
If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be entitled to any relief or exemption from tax provided by treaty except to the extent and in such manner as may be agreed upon by the competent authorities of the Contracting States.
The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services in a Contracting 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.
Note – The final protocol to the treaty provides that the 5% rate for copyrights only applies if the beneficial owner is the author or his/her heirs. Otherwise, the rate is 15%. The final protocol also provides that the 10% rate will apply on royalties paid under contracts relating to the transfer of technology as long as it is required for the contracts to be registered or authorized according to the regulations of their domestic law. Otherwise, the rate is 15%.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
Article 27 (Limitation of Benefits) provides that a benefit under the treaty will not be granted in respect of an item of income or capital if it is reasonable to conclude that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting the benefit would be in accordance with the object and purpose of the relevant provisions of the 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.