According to an update from Turkey's Revenue Administration, the new income tax treaty with Qatar entered into force on 31 December 2018. The treaty, signed 18 December 2016, replaces the 2001 tax treaty between the two countries.
Taxes Covered
The treaty covers Qatari income tax and Turkish income tax and corporation tax.
Service PE
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 projects for a period or periods aggregating more than 6 months within any 12-month period.
Withholding Tax Rates
- Dividends - 5% if the beneficial owner is a company directly holding at least 20% of the paying company's capital or is the government of a Contracting State; otherwise 10%
- Interest - 10%
- Royalties - 10%
Capital Gains
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
- Gains from the alienation of immovable property situated in the other State; and
- Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State.
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Double Taxation Relief
Both countries apply the credit method for the elimination of double taxation.
Limitation of Benefits
Article 28 (Limitation of Benefits) provides that the competent authorities of the Contracting States, upon their mutual agreement, may deny the benefits of the treaty to any person, or with respect to any transaction, if in their opinion the receipt of those benefits under the circumstances would constitute an abuse of the treaty.
Effective Date
The treaty applies from 1 January 2019. The 2001 tax treaty between the two countries ceased to apply from that date.
Note - The 2001 tax treaty between Qatar and Turkey is a covered agreement under the BEPS MLI, while the new treaty is not.