Turkey
Double Taxation
Avoidance Agreement
Income-tax Act, 1961: Notification under section 90: Agreement
between the Government of the
Republic of India and the Government of the Republic of Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income [CD1]
Notification No. S. O. 74(E), dtd. 3rd February,
1997
Whereas the annexed Agreement between the
Government of the Republic of India and the Government of the Republic of
Turkey for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income has come into force on the first day of
February, 1997, after the notification by the Contracting States to each other
of the completion of the procedures required for bringing into force the said
Agreement in accordance with paragraph 1 of Article 27 of the said Agreement.
Now, therefore, in exercise of the powers
conferred under section 90 of the Income-tax Act, 1961 (43 of 1961), the
Central Government hereby directs that all the provisions of the said Agreement
shall be given effect to in the Union of India.
ANNEXURE
AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE REPUBLIC OF TURKEY FOR
THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH
RESPECT TO TAXES ON INCOME.
The Government of the Republic of India and
the Government of the Republic of Turkey,
Desiring to conclude an Agreement for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income:
Have agreed as follows:
Article 1 PERSONAL SCOPE
This
Agreement shall apply to persons who are residents of one or both of the
Contracting States.
Article 2
TAXES COVERED
1.
This Agreement shall apply to taxes on income imposed
on behalf of a Contracting State irrespective of the manner in which they are
levied.
2.
There shall be regarded as taxes on income all taxes
imposed on total income, or on elements of income, including taxes on gains from
the alienation of movable or immovable property, taxes on the total amounts of
wages or salaries paid by enterprises as well as taxes on capital appreciation.
3.
The existing taxes to which the Agreement shall apply
are in particular:
a.
In the case
of Turkey:
i. the income-tax (gelir vergisi); ii. the corporation tax (kurumlar
vergisi); iii. the levy imposed on the
income-tax and the corporation tax;
(hereinafter referred to as "Turkish
tax");
b.
In the case
of India:
i. the income-tax including any
surcharge thereon;
(hereinafter referred to as "Indian tax").
4.
The Agreement shall apply also to any identical or
substantially similar taxes which are imposed by either Contracting State after
the date of signature of the Agreement in addition to or in place of, the
existing taxes. The competent authorities of the Contracting States shall
notify each other of significant changes which have been made in their
respective taxation laws.
Article 3 GENERAL DEFINITIONS
1. For
the purposes of this Agreement, unless the context otherwise requires: a.
i.
the term "Turkey" means the territory
of the Republic of Turkey including any area in which the laws of Turkey are in
force, as well as the maritime zones over which Turkey is entitled to sovereign
rights and exercises jurisdiction in accordance with international law and
Turkish law;
ii.
the term "India" means the territory
of India and includes the territorial sea and airspace above it, as well as any
other maritime zone in which India has sovereign rights, other rights and
jurisdictions, according to the Indian law and in accordance with international
law;
b.
the terms "a Contracting State" and "the
other Contracting State" mean Turkey or India as the context requires;
c.
the term "tax" means Indian tax or Turkish
tax as the context requires;
d.
the term "person" includes an individual, a
company and any other entity which is treated as a taxable unit under the
taxation laws in force in the respective Contracting States:
e.
the term "company" means any body corporate
or any entity which is treated as a company or body corporate under the
taxation laws in force in the respective Contracting States;
f.
the term "registered office" shall have the
same meaning which it has under the laws of each Contracting State;
g.
the term "national" means any individual
possessing the nationality of a Contracting State and any legal person,
partnership or association deriving its status as such from the laws in force
in a Contracting State;
h.
the terms "enterprise of a Contracting State"
and "enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
i.
the term "competent authority" means:
i.
in Turkey, the Minister of Finance or his
authorised representative;
ii.
in India, the Central Government in the Ministry
of Finance (Department of Revenue) or its authorised representative;
j.
the term "international traffic" means any
transport by a ship or an aircraft operated by an enterprise of a Contracting
State, except when the ship or aircraft is operated solely between places in
the other Contracting State.
2.
As regards the application of the Agreement by a
Contracting State any term not defined therein shall, unless the context
otherwise requires, have the meaning which it has under the laws of that State
concerning the taxes to which the Agreement applies.
Article 4 RESIDENT
1.
For the purposes of this Agreement, the term
"resident of a Contracting State" means any person who, under the
laws of that State, is liable to tax therein by reason of his domicile,
resident, legal head office (registered office), place of management or any
other criterion of a similar nature.
2.
Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then his status shall be
determined as follows:
a.
he shall be deemed to be a resident of the State in
which he has a permanent home available to him; if he has a permanent home
available to him in both States, he shall be deemed to be a resident of the
State with which his personal and economic relations are closer (centre of
vital interests);
b.
if the State in which he has his centre of vital
interests cannot be determined, or if he has not a permanent home available to
him in either State, he shall be deemed to be a resident of the Contracting
State in which he has a habitual abode;
c.
if he has a habitual abode in both Contracting States
or in neither of them, the competent authorities of the Contracting States
shall settle the question by mutual agreement.
3.
Where by reason of the provisions of paragraph 1 a
person other than an individual is a resident of both Contracting States, the
competent authorities of the Contracting States shall settle the question by
mutual agreement in accordance with Article 25 of this Agreement.
Article 5 PERMANENT
ESTABLISHMENT
1.
For the purposes of this Agreement, the term
"permanent establishment" means a fixed place of business through
which the business of an enterprise is wholly or partly carried on.
2.
The term "permanent establishment" includes
especially:
a.
a place of management;
b.
a branch;
c.
an office;
d.
a factory;
e.
a workshop;
f.
a mine, an oil or gas well, a quarry or any other place
of extraction of natural resources;
g.
an installation or structure used for the exploration
or exploitation of natural resources;
h.
a warehouse in relation to a person providing storage
facilities for others;
i. premises
used as a sales outlet or for receiving or soliciting orders; j.
i.
a building site or construction, installation or
assembly project or supervisory activities in connection therewith, where such
site, project or activities (together with other such sites, projects or
activities, if any) continue for a period of more than six months; or
ii.
where such project or supervisory activity,
being incidental to the sale of machinery or equipment, continues for a period
not exceeding six months and the charges payable for the project or supervisory
activity exceed 10 per cent. of the sale price of the machinery and equipment:
Provided that for the purpose of this
paragraph an enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent establishment
if it provides services or facilities in that Contracting State for more than
six months in connection with or supplies plant and machinery on hire used or
to be used in, the prospecting for, or extraction or production of mineral oils
in the State.
3.
Notwithstanding the preceding provisions of this
article, the term "permanent establishment" shall be deemed not to
include:
a.
the use of facilities solely for the purpose of
storage, display or occasional delivery of goods or merchandise belonging to
the enterprise;
b.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage, display or
occasional delivery;
c.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of processing by another
enterprise;
d.
the maintenance of a fixed place of business solely for
the purpose of purchasing goods or merchandise or of collecting information,
for the enterprise;
e.
the maintenance of a fixed place of business solely for
the purpose of advertising, for the supply of information, for scientific
research, or for similar activities which have a preparatory or auxiliary
character for the enterprise;
f.
the selling of goods or merchandise belonging to the
enterprise displayed in an occasional temporary fair or exhibition in the
process of closing down of such fair or exhibition;
g.
the maintenance of a fixed place of business solely for
any combination of activities mentioned in sub-paragraphs (a) to (f).
4.
Notwithstanding the provisions of paragraphs 1 and 2,
where a person --- other than an agent of an independent status to whom
paragraph 5 applies --- is acting in a Contracting State on behalf of an
enterprise of the other Contracting State, that enterprise shall be deemed to
have a permanent establishment in the first-mentioned State, if
a.
he has and habitually exercises in that State an
authority to conclude contracts on behalf of the enterprise, unless his
activities are limited to the purchase of goods or merchandise for the
enterprise,
b.
he has no such authority, but habitually maintains in
the first-mentioned State a stock of goods or merchandise from which he
regularly delivers goods or merchandise on behalf of the enterprise, or
c.
he habitually secures orders in the first-mentioned
State, wholly for the enterprise itself or for the enterprise and other
enterprises controlling, controlled by, or subject to the same common control,
as that enterprise.
5.
An enterprise of a Contracting State, shall not be
deemed to have a permanent establishment in the other Contracting State merely
because it carries on business in that other State through a broker, general
commission agent or any other agent of an independent status, provided that
such persons are acting in the ordinary course of their business.
6.
The fact that a company which is a resident of a
Contracting State controls or is controlled by a
company which is a resident of the other Contracting State,
or which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.
Article 6 INCOME FROM
IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State
from immovable property (including income from forestry) situated in the other
Contracting State may be taxed in that other State.
2.
The term "immovable property" shall have the
meaning which it has under the law of the Contracting State in which the
property in question is situated. The term shall in any case include property
accessory to immovable property, livestock and equipment used in agriculture
and forestry, fishing places of every kind, rights to which the provisions of
general law respecting landed property apply, usufruct of immovable property
and rights to variable or fixed payments as consideration for the working of,
or the right to work, mineral deposits, sources and other natural resources.
Ships, boats and aircraft shall not be regarded as immovable property.
3.
The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, or use in any other form of immovable
property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise and to income from
immovable property used for the performance of independent personal services.
Article 7 BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State
shall be taxable only in that State unless the enterprise carries on business
in the other Contracting State through a permanent establishment situated
therein. If the enterprise carries on business as aforesaid, the profits of the
enterprise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment.
2.
Subject to the provisions of paragraph 3, where an
enterprise of the Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3.
In determining the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of business of the permanent establishment, including
executive and general administrative expenses so incurred, whether in the State
in which the permanent establishment is situated or elsewhere, in accordance
with the provisions of and subject to the limitations of the taxation laws of
that State.
4.
No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
5.
For the purposes of the preceding paragraphs, the
profits to be attributed to the permanent establishment shall be determined by
the same method year by year unless there is good and sufficient reason to the
contrary.
6.
6.Where profits include items of income which are dealt
with separately in other articles of this Agreement, then the provisions of
those articles shall not be affected by the provisions of this article.
Article 8 SHIPPING AND AIR
TRANSPORT
1.
Profits derived by an enterprise of a Contracting State
from the operation of ships or aircraft in international traffic shall be
taxable only in that State.
2.
For the purposes of this article, profits from the
operation of ships or aircraft in international traffic shall mean profits
derived by an enterprise described in paragraph 1 from the transportation by
sea or air respectively of passengers, mail, livestock or goods carried on by
the owners or lessees or charterers of ships or aircraft including:
a.
the sale of tickets for such transportation on behalf
of other enterprises;
b.
other activity directly connected with such
transportation; and
c.
the rental of ships or aircraft incidental to any
activity directly connected with such transportation.
3.
Profits of an enterprise of a Contracting State
described in paragraph 1 from the use, maintenance or rental of containers (including
trailers, barges, and related equipment for the transport of containers) used
in connection with the operation of ships or aircraft in international traffic
shall be taxable only in that State.
4.
The provisions of paragraphs 1 and 3 shall also apply
to profits from participation in a pool, a joint business or an international
operating agency.
5.
For the purposes of this article interest on funds
connected with the operation of ships or aircraft in international traffic
shall be regarded as profits derived from the operation of such ships or
aircraft, and the provisions of Article 11 (Interest) shall not apply in
relation to such interest. Article 9
ASSOCIATED ENTERPRISES
1.
Where,
a.
an enterprise of a Contracting State participates
directly or indirectly in the management, control or capital of an enterprise
of the other Contracting State, or
b.
the same persons participate directly or indirectly in
the management, control or capital of an enterprise of a Contracting State and
an enterprise of the other Contracting State, and in either case conditions are
made or imposed between the two enterprises in their commercial or financial
relations which differ from those which would be made between independent
enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, but, by reasons of those conditions, have
not so accrued, may be included in the profits of that enterprise and taxed
accordingly.
2.
Where a Contracting State includes in the profits of an
enterprise of that State - and taxes accordingly - profits on which an
enterprise of the other Contracting State has been charged to tax in that other
State and the profits so included are by the first-mentioned State claimed to
be profits which would have accrued to the enterprise of the first-mentioned
State if the conditions made between the two enterprises had been those which
would have been made between independent enterprises, then that other State
shall make an appropriate adjustment to the amount of the tax charged therein
on those profits, where that other State considers the adjustment justified. In
determining such adjustment, due regard shall be had to the other provisions of
this Agreement and the competent authorities of the Contracting State shall if necessary
consult each other.
Article 10 DIVIDENDS
1.
Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting State may be taxed in
that other State.
2.
However, such dividends may also be taxed in the Contracting
State of which the company paying the dividends is a resident, in accordance
with the laws of that State, but if the recipient is the beneficial owner of
the dividends the tax so charged shall not exceed 15 per cent. of the gross
amount of the dividends.
This paragraph shall not affect the taxation
of the company in respect of the profits out of which the dividends are paid.
3.
The term "dividends" as used in this article
means income from shares, "jouissance" share or
"jouissance" rights, founders' shares or other rights, not being
debt-claims participating in profits, as well as income from other corporate
rights which is subjected to the same taxation treatment as income from shares
by the laws of the State of which the company making the distribution is a
resident, and income derived from an investment fund and investment trust.
4.
Profits of a company of a Contracting State carrying on
business in the other Contracting State through a permanent establishment
situated therein may, after having been taxed under article 7 be taxed on the
remaining amount in the Contracting State in which the permanent establishment
is situated and in accordance with paragraph 2 of this article.
5.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the dividends, being a resident of a Contracting State,
carries on business in the other Contracting State of which the company paying
the dividends is a resident, through a permanent establishment situated
therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment. In such case the
provisions of Article 7 shall apply.
Article 11
INTEREST
1.
Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
2.
However, such interest may also be taxed in the
Contracting State in which it arises and according to the laws of that State,
but if the recipient is the beneficial owner of the interest the tax so charged
shall not exceed:
a.
10 per cent. of the gross amount, if such interest is
paid on any loan of whatever kind granted by a bank or a financial institution;
and
b.
15 per cent. of the gross amount in all other cases.
3.
Notwithstanding the provisions of paragraph 2, interest
arising in a Contracting State shall be exempt from tax in that State, provided
that it is derived and beneficially owned by:
a.
the Government, a political sub-division or a local
authority of the other Contracting State;
b.
the Central Bank of the other Contracting State; or
c.
the Turkish Export-Import Bank (Eximbank) and the EXIM
Bank of India.
4.
The term "interest" as used in this article
means income from debt-claims of every kind, whether or not secured by mortgage
and whether or not carrying a right to participate in the debtor's profits, and
in particular, income from Government securities and income from bonds or
debentures, including premiums attaching to such securities, bonds or
debentures, and other income assimilated to income from money lent which is
treated as interest.
5.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the interest, being a resident of a Contracting State,
carries on business in the other Contracting State in which the interest
arises, through a permanent establishment situated therein, and the debt-claim
in respect of which the interest is paid is effectively connected with such
permanent establishment. In such case, the provisions of Article 7 shall apply.
6.
Interest shall be deemed to arise in a Contracting
State when the payer is that State itself, a political sub-division, a local
authority or a resident of that State. Where, however, the person paying the
interest, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base and such interest
is borne by such permanent establishment or fixed base, then such interest
shall be deemed to arise in the Contracting State in which the permanent
establishment or fixed base is situated.
7.
Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some other person,
the amount of the interest, having regard to the debt-claim for which it is
paid, exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this
article shall apply only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each Contracting
State, due regard being had to the other provisions of this Agreement.
Article 12 ROYALTIES AND FEES
FOR TECHNICAL SERVICES
1.
Royalties and fees for technical services arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.
2.
However, such royalties or fees for technical services
may also be taxed in the Contracting State in which they arise and according to
the laws of that State, but if the recipient is the beneficial owner of the royalties
and fees for technical services, the tax so charged shall not exceed 15 per
cent. of the gross amount of the royalties or fees for technical services.
3.
The term "royalties" as used in this article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work including
cinematograph films or films or tapes used for radio or television
broadcasting, any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial, or
scientific equipment, or for information concerning industrial, commercial, or
scientific experiment.
4.
The term "fees for technical services" as
used in this article means payments of any amount to any person other than
payments to an employee of the person making payments, in consideration for the
services of a managerial, technical or consultancy nature, including the
provision of services of technical or other personnel.
5.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the royalties or fees for technical services being a
resident of a Contracting State, carries on business in the other Contracting
State in which the royalties or fees for technical services arise, through a
permanent establishment situated therein, and the right or property or contract
in respect of which the royalties or fees for technical services are paid is
effectively connected with such permanent establishment. In such case the provisions
of Article 7 shall apply.
6.
Royalties or fees for technical services shall be
deemed to arise in a Contracting State when the payer is that State itself, a
political sub-division, a local authority or a resident of that State. Where,
however, the person paying the royalties or fees for technical services,
whether he is a resident of a Contracting State or not, has in a Contracting
State a permanent establishment or a fixed base in connection with which the
right or property or contract giving rise to the royalties or fees for
technical services is effectively connected, and such royalties or fees for
technical services are borne by such permanent establishment or fixed base then
such royalties or fees for technical services shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is
situated.
7.
Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some other person,
the amount of the royalties or fees for technical services paid, having regard
to the use, right, information or technical services for which they are paid,
exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this
article shall apply only to the lastmentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Agreement.
Article 13 CAPITAL GAINS
1.
Gains derived by a resident of a Contracting State from
the alienation of immovable property referred to in Article 6 and situated in
the other Contracting State may be taxed in that other State.
2.
Gains from the alienation of movable property forming
part of the business property of a permanent establishment which an enterprise
of a Contracting State has in the other Contracting State or of movable
property pertaining to a fixed base available to a resident of a Contracting
State in the other Contracting State for the purpose of performing independent
personal services, including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such a fixed base, may
be taxed in that other State.
3.
Gains from the alienation of ships or aircraft operated
in international traffic or movable property pertaining to the operation of
such ships or aircraft shall be taxable only in the Contracting State in which
the registered office of the enterprise is situated.
4.
Gains from the alienation of shares of the capital
stock of a company the property of which consists directly or indirectly
principally of immovable property situated in a Contracting State may be taxed
in that State.
5.
Gains from the alienation of shares other than those
mentioned in paragraph 4 in a company which is a resident of a Contracting
State may be taxed in that State.
6.
Gains from the alienation of any property other than
that referred to in paragraphs 1 to 5 shall be taxable in the Contracting State
of which the alienator is a resident. However, the capital gains mentioned in
the foregoing sentence and derived from the other Contracting State shall be
taxable in the other Contracting State if the time period does not exceed one
year between acquisition and alienation.
Article 14 INDEPENDENT
PERSONAL SERVICES
1.
Income derived by an individual who is a resident of a
Contracting State from the performance of professional services or other
independent activities of a similar character shall be taxable only in that
State except in the following circumstances, when such income may also be taxed
in the other Contracting State:
a.
if he has a fixed base regularly available to him in
the other Contracting State for the purpose of performing his activities; in
that case, only so much of the income as is attributable to that fixed base may
be taxed in that other Contracting State; or
b.
if his stay in the other Contracting State is for a
period or periods amounting to or exceeding in the aggregate 183 days in the
relevant "previous year" or "year of income", as the case
may be; in that case, only so much of the income as is derived from his
activities performed in that other State may be taxed in that other State.
2.
The term "professional services" includes
especially independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians, lawyers,
engineers, architects, dentists and accountants.
Article 15 DEPENDENT PERSONAL
SERVICES
1.
Subject to the provisions of Articles 16, 18, 19 and
20, salaries, wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived therefrom may be
taxed in that other State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned State if:
a.
the recipient is present in the other State for a
period or periods not exceeding in the aggregate 183 days in the calendar year
concerned in the case of Turkey and 183 days in the financial year concerned in
the case of India, and
b.
the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other State, and
c.
the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State.
3.
Notwithstanding the preceding provisions of this
article, remuneration derived in respect of an employment exercised aboard a
ship or aircraft operated in international traffic, may be taxed in the
Contracting State in which the registered office of the enterprise is situated.
Article 16
DIRECTORS' FEES
Directors' fees and other similar payments
derived by a resident of a Contracting State in his capacity as a member of the
board of directors of a company which is a resident of the other Contracting
State may be taxed in that other State.
Article 1 7 ARTISTES AND
SPORTSPERSONS
1.
Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as an entertainer, such as
a theatre, motion picture, radio or television artiste, or a musician, or as a
sportsperson, from his personal activities as such exercised in the other
Contracting State, may be taxed in that other State.
2.
Where income in respect of personal activities exercised
by an entertainer or a sportsperson in his capacity as such accrues not to the
entertainer or sportsperson himself but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer or sportsperson
are exercised.
3.
The provisions of paragraphs 1 and 2 shall not apply to
income derived from activities performed in a Contracting State by artistes or
sportspersons if the visit to that State is substantially supported directly or
indirectly by public funds of the other Contracting State or a political
subdivision or a local authority thereof. In such circumstances such income
shall be taxable only in the other State.
Article 18 NON-GOVERNMENT
PENSIONS
1.
Any pension, other than a pension referred to in
Article 19, or any annuity derived by a resident of a Contracting State from
sources within the other Contracting State for his past employment may be taxed
only in the first-mentioned Contracting State. This provision shall also apply
to life annuities paid to a resident of a Contracting State.
2.
Pensions and life annuities paid, and other periodical
or occasional payments made by a Contracting State, or one of its political
sub-divisions in respect of insuring personal accidents, may be taxed only in
that State.
3.
The term "pension" means a periodic payment
made in consideration of past employment or by way of compensation for injuries
received in the course of performance of services.
4.
The term "annuity" means a stated sum payable
periodically at stated times during life or during a specified or ascertainable
period of time, under an obligation to make the payments in return for adequate
and full consideration in money or money's worth.
Article 19 REMUNERATION AND
PENSIONS IN RESPECT OF GOVERNMENT SERVICE
1.
a.
Remuneration, other than a pension, paid by a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
b.
However, such remuneration shall be taxable only in the
other Contracting State if the services are rendered in that other State and
the individual is a resident of that State who i. is a national of that State; or
ii. not being the national of the
first-mentioned State, did not become a resident of that State solely for
purpose of rendering the services.
2.
a.
Any pension paid by, or out of funds created by, a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State.
b.
However, such pension shall be taxable only in the
other Contracting State if the individual is a resident of, and a national of
that other State.
3.
The provisions of Articles 15, 16 and 18 shall apply to
remuneration and pensions in respect of services rendered in connection with a
business carried on by a Contracting State or a political sub-division or a
local authority thereof.
Article 20 TEACHERS AND
STUDENTS
1.
Payments which a student or business apprentice who is
a national of a Contracting State and who is present in the other Contracting
State solely for the purpose of his education or training receives for the
purpose of his maintenance, education or training shall not be taxed in that
other State, provided that such payments arise from sources outside that other State.
2.
Likewise, remuneration received by a teacher or by an
instructor who is a national of a Contracting State and who is present in the
other Contracting State for the primary purpose of teaching or engaging in
scientific research for a period or periods not exceeding two years shall be
exempt from tax in that other State on his remuneration from personal services
for teaching or research, provided that such payments arise from sources
outside that other State.
3.
Remuneration which a student or a trainee who is a
national of a Contracting State derives from an employment which he exercises
in the other Contracting State for a period or periods not exceeding 183 days
in a calendar year in the case of Turkey and 183 days in a financial year in
the case of India, in order to obtain practical experience related to his
education or training shall not be taxed in that other State.
Article 21 OTHER INCOME
1.
Subject to the provisions of paragraph 2, items of
income of a resident of a Contracting State, wherever arising, which are not
expressly dealt with in the foregoing articles of this Agreement shall be
taxable only in that Contracting State.
2.
The provisions of paragraph 1 shall not apply to
income, other than income from immovable property as defined in paragraph 2 of
Article 6, if the recipient of such income, being a resident of a Contracting
State, carries on business in the other Contracting State through a permanent
establishment situated therein, and the right or property in respect of which
the income is paid is effectively connected with such permanent establishment.
In such case, the provisions of Article 7 shall apply.
3.
Notwithstanding the provisions of paragraphs 1 and 2,
items of income of a resident of a Contracting State not dealt with in the
foregoing articles of this Agreement and arising in the other Contracting State
may also be taxed in that other State.
Article 22 ELIMINATION OF
DOUBLE TAXATION
1.
The laws in force in either of the Contracting States shall
continue to govern the taxation of income in the respective Contracting States
except where express provisions to the contrary are made in this Agreement.
2.
a.
Where a resident of India derives income which, in
accordance with the provisions of this Agreement, may be taxed in Turkey, India
shall allow as deduction from the tax on the income of that resident an amount
equal to the income-tax paid in Turkey, whether directly or by deduction. Such
deduction in either case shall not, however, exceed that part of the income-tax
(as computed before the deduction is given) which is attributable, to the
income which may be taxed in Turkey.
b.
Where a resident of India derives income which in
accordance with the provisions of this Agreement, shall be taxable only in
Turkey, India may include this income in the tax base but shall allow as a
deduction from the income-tax that part of the income-tax which is attributable
to the income derived from Turkey.
3.
Double taxation for the residents of Turkey shall be
eliminated as follows:
a.
Where a resident of Turkey derives income covered by
sub-paragraph (b) which, in accordance with the provisions of this Agreement,
may be taxed in India, Turkey shall exempt such income from tax but may, in
calculating tax on the remaining income of that person, apply the rate of tax
which would have been applicable if the exempted income had not been so
exempted.
b.
Where a resident of Turkey derives income which in
accordance with the provisions of Articles 10, 11, 12 and paragraph 6 of
Article 13 of this Agreement, may be taxed in India, Turkey shall allow as a
deduction from the tax on the income of that person, an amount equal to the tax
paid in India.
Such deduction shall not, however, exceed that
part of the income-tax computed before the deduction is given, which is
appropriate to the income which may be taxed in India.
Article 23 NON-DISCRIMINATION
1.
Nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any requirement connected
therewith, which is other or more burdensome than the taxation and connected
requirements to which nationals of that other State in the same circumstances
are or may be subjected.
2.
Subject to the provisions of paragraph 4 of Article 10
the taxation of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State shall not be less favourably levied in
that other State than the taxation levied on enterprises of that other State
carrying on the same activities in the same circumstances or under the same
conditions. This provision shall not be construed as preventing a Contracting
State from charging the profits of a permanent establishment which an
enterprise of the other Contracting State has in the firstmentioned State at a
rate of tax which is higher than that imposed on the profits of a similar
enterprise of the first-mentioned Contracting State, nor as being in conflict
with the provisions of paragraph 3 of Article 7 of this Agreement.
3.
Enterprises of a Contracting State, the capital of
which is wholly or partly owned or controlled, directly or indirectly, by one
or more residents of the other Contracting State, shall not be subjected in the
first-mentioned State to any taxation or any requirement connected herewith
which is other or more burdensome than the taxation and connected requirements
to which other similar enterprises of the first-mentioned State are or may be
subjected in the same circumstances or under the same conditions.
4.
These provisions shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State any
personal allowances, reliefs and reductions for taxation purposes on account of
civil status or family responsibilities which it grants to its own residents.
Article 24 EXCHANGE OF INFORMATION
1.
The competent authorities of the Contracting States
shall exchange such information (including documents) as is necessary for
carrying out the provisions of this Agreement or of the domestic laws of the
Contracting States concerning taxes covered by the Agreement insofar as the
taxation thereunder is not contrary to the Agreement, in particular for the
prevention of fraud or evasion of such taxes. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State. However, if the information is
originally regarded as secret in the transmitting State, it shall be disclosed
only to persons or authorities (including courts and administrative bodies)
involved in the assessment or collection of, the enforcement or prosecution in
respect of, or the determination of appeals in relation to, the taxes which are
the subject of the Agreement. Such persons or authorities shall use the
information only for such purposes but may disclose the information in public
court proceedings or in judicial decisions. The competent authorities shall,
through consultation, develop appropriate conditions, methods and techniques
concerning the matters in respect of which such exchange of information shall
be made, including where appropriate, exchange of information regarding tax
avoidance.
2.
In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the obligation:
a.
to carry out administrative measures at variance with
the laws and the administrative practice of that or of the other Contracting
State;
b.
to supply information or documents which are not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting State;
c.
to supply information or documents which would disclose
any trade, business, industrial, commercial or professional secret or trade
process, or information, the disclosure of which would be contrary to public
policy.
Article 25 MUTUAL AGREEMENT PROCEDURE
1.
Where a resident of a Contracting State considers that
the actions of one or both of the Contracting States result or will result for
him in taxation not in accordance with the provisions of this Agreement, he
may, notwithstanding the remedies provided by the national laws of those
States, present his case to the competent authority of the Contracting State of
which he is a resident.
2.
The competent authority shall Endeavour, if the
objection appears to it to be justified and if it is not itself able to arrive
at an appropriate solution, to resolve the case by mutual agreement with the
competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with the Agreement. Any agreement
reached shall be implemented notwithstanding any time limits or other
procedural limitations in the domestic law of the Contracting States, provided
that the competent authority of the other Contracting State has received
notification that such a case exists within five years from the end of the
taxable year to which the case relates.
3.
The competent authorities of the Contracting States
shall endeavour to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of the Agreement. They may also
consult together for the elimination of double taxation in cases not provided
for in the Agreement.
4.
The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching an agreement
in the sense of the preceding paragraphs. When it seems advisable in order to
reach agreement to have an oral exchange of opinions, such exchange may take
place through a Commission consisting of representatives of the competent
authorities of the Contracting States.
Article 26 DIPLOMATIC AND
CONSULAR OFFICIALS
Nothing in this Agreement shall affect the
fiscal privileges of diplomatic or consular officials under the general rules
of international law or under the provisions of special agreements.
Article 27 ENTRY INTO FORCE
1.
Each Contracting State shall notify to the other the
completion of the procedure required as far as it is concerned for the bringing
into force of this Agreement. This Agreement shall enter into force on the
first day of the following month when the latter of those notifications has
been received.
2.
Its provisions shall have effect:
a.
in Turkey, for taxes with respect to every taxable year
beginning on or after the first day of January of the year Nineteen Hundred
Ninety-four;
b.
in India, for taxes with respect to every previous year
beginning on or after the first day of April of the year Nineteen Hundred
Ninety-four.
Article 28
TERMINATION
This Agreement shall remain in force until
terminated by a Contracting State. Either Contracting State may terminate the
Agreement through diplomatic channels, by giving notice of termination at least
six months before the end of any calendar year after expiration of a period of
five years from the date of its entry into force.
[CD1]Income-tax
Act, 1961: Notification under section 90: Agreement between the Government of
the
Republic of India and
the Government of the Republic of Turkey for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income
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