The new income tax treaty between Qatar and Turkey was signed on 18 December 2016. Once in force and effective, it will replace the 2001 tax treaty between the two countries.

Taxes Covered

The treaty covers Qatari income tax, and cover 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; 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.

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. The 2001 tax treaty between the two countries will cease to apply on the date the new treaty is effective.