The amending protocol to the 1997 income and capital tax treaty between Kuwait and Turkey was signed on 14 September 2017. The protocol is the first to amend the treaty and includes the following changes:

• Replaces the title and preamble, including language developed as part of the BEPS project;
• Amends Article 4 (Resident) with respect to an individual resident in Kuwait;
• Amends Article 7 (Business Profits) to remove the restriction on the deduction by a permanent establishment in determining profits of amounts paid to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment;
• Replaces Article 10 (Dividends), including a withholding tax rate of 5% if the beneficial owner is the Government of the other Contracting State, any governmental institutions created in the other State, or an entity established in the other State that is wholly owned by the other State; otherwise 10%;
• Replaces Article 26 (Exchange of Information) to bring it in line with the OECD standard for information exchange;
• Replaces Article 27 (Mutual Agreement Procedure), including the introduction of a three-year time limit for a case to be presented, and a provision that any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States; and
• Adds a new 29A (Entitlement of Benefits), which provides that a benefit under the treaty will not be granted in respect of an item of income 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 that benefit would be in accordance with the object and purpose of the relevant provisions of the treaty.

The protocol will enter into force once the ratification instruments are exchanged and will apply from the date of its entry into force.