On 14 January 2020, Turkey's parliament approved the law for the ratification of the pending tax treaty with Chad. The treaty, signed 26 December 2017, is the first of its kind between the two countries.

Taxes Covered

The treaty covers the income taxes and corporation taxes of both countries.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel if the activities continue for the same or connected project within a Contracting State for a period or periods aggregating more than 183 days within any 12-month period.

Withholding Tax Rates

• Dividends - 10% if the beneficial owner is a company directly holding at least 10% of the paying company's capital; otherwise, 15%
• 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.

Entry into Force and Effect

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.