The income tax treaty between the Philippines and Turkey entered into force on 11 January 2016. The treaty, signed 18 March 2009, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Philippine income taxes and stock transactions tax. It covers Turkish income tax, corporation tax and levies on those taxes.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for a period or periods aggregating more than 6 months within any 12-month period.

Withholding Tax Rates

• Dividends - 10% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 15%
• Interest - 10%
• Royalties -
  • 10% for royalties for the use of, or the right to use, any copyright of literary, artistic or scientific work, any patent, trade mark, design or model, plan, secret formula or process, or from the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience; and
  • 15% for royalties for the use of, or the right to use, any cinematographic films and films or tapes for television or radio broadcasting

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;
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
• Gains from the alienation of shares of a company or interest in a partnership or a trust, the property of which consists principally of immovable property situated 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.

Effective Date

The treaty applies from 1 January 2017.