Hungary

AGREEMENT

BETWEEN THE REPUBLIC OF TURKEY AND THE REPUBLIC OF HUNGARY
FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT
TO TAXES ON INCOME

THE GOVERNMENT OF THE REPUBLIC OF TURKEY
AND

THE GOVERNMENT OF THE REPUBLIC OF HUNGARY

Desiring to conclude an Agreement for the avoidance of double taxation with respect to taxes on income and to further develop and facilitate their economic relationship

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. 1.This Agreement shall apply to taxes on income imposed on behalf of each Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. 2.There shall be regarded as taxes on income all taxes imposed on total income, or on element., of income, including taxes on yains from the alienation of movable or immovable property, taxes on tne total arraunls of wa_aes or salaries paid by enterprises, as well as taxes on capital appreciation.
3. 3.Tile existing taxes to which the Agreement snail apply are in particular :
   1. a)in the case oF Turkey :
      1. i)the income tax IGelir Veryisi);
         1. ii)tne corporation tax (Kurumlar Veryisi J;
         2. iii)the levy on behalf of the fund for the support of the defense industry {Sayumna Sanayii Destekleme Fonuj;
         3. iv)tne levy on behalf of the fund for Lue encouragement of social chartty . and solidarity tSosyal Yardimiaijma ve Uayanijmayi Te^vik fofiu); and

1. v)tiie levy on behalf of the fund for business apprentices and for tne improvement and enlargement of the vocational and technical training ((Jiraklik„ Mesleki ve Teknik Egitimi iieli$tinne ve Vayginla^ti nna Fonu);

(hereinafter referred to as ”Turkish Tax”);

1. b)in the case of Hungary:

i) the income tax of individuals;

ii) profiL taxes;

(hereinafter referred to as “Hungarian Tax”).

1. 4.The Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of Lhe Contracting States shall notify each other of any significant changes xtiich have been made in their respective taxation laws.

Article 3

GENERAL DEFINITIONS

1. 1.For the purposes of this Agreement, unless the context otherwise requires:
   1. a)i) the term “Turkey¹¹ means theterritory, territorial

waLers, continental shelves and exclusive economic zones delimited by mutual agreement  between the parties concerned,

ii) the term “Hungary” means the territory of Lhe Republic of Hungary;

1. b)the terms “a Contracting State ” and “          the other Contracting

State” mean Turkey or Hungary as the context requires;

1. c)the term “tax” means any taxby Article 2 of this

Agreement;

1. d)the term “person” includes an individual, a company and any other body of persons;
2. e)the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
3. f)the term “registered office” means the legal head office registered under Turkish or Hungarian.relavant laws;
4. g)the term “nationals” means:             .

i) all individuals possessing the nationality of a Contracting State;

ii) all le_aal persons, partnerships and associations deriving their status as such from the law in force in a Contracting State;

1. 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;
2. i)the term “competent authority” means :

i) in Turkey,- the Minister of Finance and Customs or his authorized representative;

ii) in Hungary, the Minister of Finance or his authorized representative;

1. j)the term “international traffic” means any transport by an aircraft or a road vehicle operated by an enterprise of a ContractIng State, except when the aircraft or road vehicle is operated solely between places situated in the other Contracting State.

2. As reyards the application of this Agreement by a Contracting State any term not defined therein shall, unless the context otherwise requires, nave the meaning which it has under the laws of that State concerning tne taxes to which the Agreement applies.

Article 4

resiDent

1. 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 Lax therein by reason of his domicile, residence, 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 snail be determined as follows;

1. a)he shall be deemed to be a resident of the State in which he has

a permanent home available to hi in; if he has a permanent home available to him  in           both  States, he       shall be        deemed to be a

resident of the  State in which he          has his centre of vital

interests;

1. b)if the State in which he has his centre of vital interests cannot

be determined, or                  if              Ije (las         not a permanent home                available to him

in cither State,  he            shall  be deemed      to be a          resident of the

Contracting State in which he has an habitual abode;

1. c)if be has an habitual abode in both Contracting States or in neither of them, he shall be deemed to oe a resident of the State of wnich he is a national ;
2. d)if he is a nacional of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. 3.Uhere by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contractiny States, then it shall be deemed to be a resident of the Contractiny State in which its registered office is s i Luaied.

Article 5

PERMANENT ESTABLISHMENT

1. 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. 2.The term “permanent establishment” includes especially:
   1. a)a place of management;
   2. b)a branch;
   3. c)an office;
   4. d)a factory,
   5. e)a workshop;
   6. f)a mine, an oil or gas well, a quarry or any other place of extraction of natural resources-,

y) a buildiny site, a construction or installation or assembly project but only if such site or project continue for a period of more than twelve months.

1. 3.Notwithstanding the preceding provisions of this Article, the term’ ‘permanent establ i sliment” snal! be deemed not to include:
   1. a)the use of facilities solely for the purpose of storaye, display or delivery of goods or merchandise oelonginy to the enterprise;
   2. b)the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or deli very;
   3. c)the maintenance of a stock of goods or, merchandise belonging to tlie enterprise solely for the purpose of processing by another enterprise;

dj the maintenance of a              fixed place of business   solely for     the

purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

1. e)tile maintenance of a fixed place of businessfor the

purpose of carrying on, for the enterprise, any oiher activity of a preparatory or auxiliary character;

1. f)the maintenance offixed place of business   solely for any

combination of activities mentioned in subparagraphs aj to ej, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character,

1. 4.Notwithstanding the provisions Ot paragraphs 1 and 2, where a person

– oLher than an agent of an independent status to whom paragraph 5 applies – is acting on behal f of an enterprise                and has, and haoitually  exercises,     in a

Contracting State an authority  to conclude contracts in the name of        the

enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.                                                ’

1. 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 ayent of an independent status, provided that such persons are acting in the ordinary course of their business.
2. 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 tnrouyh 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. 1.Income derived by a resident of a Contracting State from imnovable property {including income from agriculture or forestry; situated in the other Contracting State may be taxed in that other State.
2. 2.The term “immovable property” shall have the meaning which it has under the law of tne 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 immovaule 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. 3.The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any otjier form of imnovable property.
4. 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 BUSIlNESS PROFITS

1. 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 Stave 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. 2.Subject to theof  paragraph 3, where an  enterprise of a

Contracting               State carries on business                         in  the other Contracting               State through a

permanent establ i shment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profils which it might be expected to make if it were a distinct and separate enterprise engaged in the some or similar activities under’‘the¹ same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

1. 3.In determining the profits;    a permanent establishment, there shall

be allowed  as deductions              expenses which are incurred for the     purposes of tne

permanent establishment, including executive and general administrative expenses su incurred, whether in the State in which the permanent establishment is situated or elsewhere.

1. 4.No profits shali be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

b. dhere 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

AIR AND ROAD TRANSPORT

1. 1.Profits derived by an enterprise of a Contracting State from the operation of aircraft or road vehicles in international traffic shall be taxable only in that State.
2. 2.The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency-

Article 9

ASSOCIATED ENTERPRISES

1. 1.Where
   1. 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
   2. 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 c,omijarcial or financial relations which differ from those which would be made between independent enterprises, then any prufits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included Sin the profits of that enterprise and taxed accordingly.

1. 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 oe had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each

^DCher‘                                Article 10

DIVIDENDS

1. 1.Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State nay be taxed in that other State.
2. 2.However, such dividends may also be taxed in tne Concracting State of which the company paying dividends is a resident, in accordance with the laws of that State, but if the recipient is the beneficial owner of the dividends tne tax so charged shall not exceed:
3. a)10 per cenc, of the gross amount of the dividends if the recipient is a company (excluding partnership) which holds directly at least 2b percent of the capital of the company paying the dividends;
4. b)15 per cent of the gross amount of the dividends in all other

cases.

1. 3.The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, founders’ shares or other riyhls, not being debt-claims, participating in profits, as well as income fran 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.
2. 4.Profits of a company of a Contracting State carrying on business in the otner 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 sub-paragraph (a) of paragraph 2 of tnis Article.
   1. 5.The provisions of paragraphsand 2  snail not apply if  the

beneficial    owner of the dividends, being a resident  of a    Contracting State,

carries on ousiness 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.

1. 6.Where a company which is a resident of aState  derives

profits or income from the other Contracting     State’, that other State      may          not

impose any tax on the dividends paid by the company,         except          in so far as such

dividends are paid to a resident of that other State or in so far as the holding

in respect of which the dividends are paid is effectively connected with a per­manent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other SLate.

Article 11
INTEREST

1. 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. 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 ID per cent of the yross amount of the interest.
   1. 3.HotwitiisLanding the provisions of paragraph 2, interest arising in :
   2. a)Hungary and paid to the Government of Turkey, to the Central Bank of Turkey (Tiirkiye Cumtvuriyet Merkez Bankasi) or to the Turkish Eximbank (Tiirkiye Ihracat Kredi Bankasi A.$.) shall be exempt from Hungarian tax,
   3. b)Turkey and paid to the Government of Hungary or to the Central Hank of Hungary (Magyar Nemzeti Hank) shall be exempt from Turkish tax.
   4. 4.The term “interest” as used in this Article means income from Government securities, bunds or deoentures, whether or not secured by mortgage and whether or not carryiny a riyht to participate in profits, and deot-claims of every kind as well as all other income assimilated to income from money lent by tiie taxation laws of the State in which the income arises.
   5. 5.The provisions of p ragraphs 1 and 2 shall not apply if the beneficial owner of the interest beiny a resident of a Contracting State, carries on business in the other Contracting State in which tne interest arises, throuyh 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. 6.Interest shall be deemed to arise In a Contracting State when the payer is that State itself’, a political subdivision, a local authority or a resident of that State. Uhere, 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 in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
   7. 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 switch 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 a case, the excess part of the payments shall remain taxable accordiny to the laws of each Contracting State, due reyard beiny had to the other provisions of this Agreement,

Article 12 ROYALTIES

1. 1.Royalties arising 1n a Contracting State and paid to a resident of

the other Contracting State nay be taxed in that other State.          ‘

1. 2.However, such royalties may also be taxed in tne 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 the tax so charged shall not exceed 10 per cent of the yross amount of tne royalties.
2. 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, ary copyright of literary , artistic or scientific work including cinematograph films and recordings for radio or television broadcasting, any patent, trade mark, desiyn 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, coinnercial tar scientific experience,
3. 4.The provisions of paragraps 1 and.2 shall not apply if tne beneficial owner of the royalties, being-a resident of a Contracting State, carries on business in the other Contracting State in Which the royalties arise, through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such a case tiie provisions of Article 7 shall apply.
4. 5.Royalties shall be deemed to arise in a Contracting State vdjen tne payer is that State itself,, a political subdivision, a local authority or a resident of that State. Uhere, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has In a Contracting State a

YUrQtme ve (dare BOIOmil Sayfa ; 21

permanent establishment in connection with which the right or property giving rise to the royalties is effectively connected, and such royalties are borne by such permanent establishment, tnen such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

1. 6.Where, by reason of a special relationship between tne payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid,having regard to the use ,ri ght or information for which they are paid,exceeds the amount which would have been agreed upon by the payer and tne beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amounL. In such a case,tne excess part of the payment shall remain taxable according to the laws of each Contracting State, due regard being had to the otner provisions of this Agreement.

Arlicle 13
CAPITAL GAINS

1. 1.Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article b and situated in t»<- otlier Contracting State may be taxed in that other State.
2. 2.Gains from the alienation of movable property’ forming part of tru. 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 tne other Contracting State for the purpose of performing Independent personal services, including such gains from the alienation of such a permanent establishment (alone or witn the whole enterprise] or of such a fixed base, maj be taxed in that other State.
3. 3.Gains from the alienation of aircraft or road vehicles operated in international traffic, or movable property pertaining to the operation of such aircraft or road vehicles, shall be taxable only in the Contracting State in which the registered office of the enterprise is situated.
4. 4.Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only 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, may also be taxed in the other Contracting State if the time period does not exceed one year between acquisition and alienation.

Article 14

IlMEPENDENT PERSONAL SERVICES

1. 1.Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base.
2. 2.The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, dentists, lawyers, engineers, architects and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

1. 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. 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:
   1. a)the recipient: VS present in the other State for a period or periods not exceeding in tne aggregate 183 days in the calendai year concerned, and
   2. b)the remuneration^ is paid by, or on behalf of, an employer who is not a ’ resident of the other State, and
   3. c)the remuneration is not borne by a permanent establi snment or a fixed base which the employer has in the other State.
   4. 3.Notwithstanding the preceding provisions of this Article, remuneration derived In respect of an employment exercised aboard an aircraft or road vehicle operated in international traffic, may be taxed in the Contracting State in which tne registered office of the enterprise 1s situated.

Article 16
DIRECTORS’ FEES

Directors’ fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or any similar organ of a company which 1s a resident of the other Contracting State may be taxed in that other State.

Article 17

ARTISTES AND ATHLETES

1. 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 an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed 1n that other State.
2. 2.Where income in respect of personal activities exercised by an entertainer or an athlete 1n his capacity as such accrues not to the entertainer or athlete himself Dut to another person, that income may, notwithstanding the provisions of Articles 7, 14 and IS, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3. 3.The provisions of paragraphs 1 arid 2 shall not apply to income derived from activities performed in a Contracting State by entertainers or athletes if the visit to that State .is substantially supported by public funds of the Contracting States or their political subdivisions or local authorities thereof or if the activities of such ■ persons are exercised under a cultural agreement or arrangement between the Contracting States.

Article 18
PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a      resident of a Contracting State in

consideration of past employment shall be taxable only in that State. This provision shall also apply to life annuities paid to a resident of a Contracting State.

Article 19
GOVERNMENT SERVICE

1. 1.a) Remuneration, other than a pension, paid by a Contracting State

or a political or an administrative subdivision or a local authority thereof to any individual in respect of services rendered to that State or subdivision or local authority thereof shall be taxable only 1n that State.

b) Notwithstanding the provisions of sub-paragraph 1 – a} of this Article, such remuneration shall be taxable only in the other Contracting State.if the services are rendered in that State and the recipient 1s a resident of that other Contracting State who;

(i) is a national of that State not being a national of the State mentioned         in    sub-paragraph a) above; or

(ii) not being a national of the State mentioned In sub-paragraph a) above did not become a resident of that State solely for the purpose of performing the services.

1. 2.aj Any pension paid by, or out of funds created by, a Contracting

State or a political or an administrative subdivision or a local authority thereof to any individual in respect of services rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

b) Notwithstanding the provisions of sub-paragraph 2 – a) of this Article, such pension shall be taxable only 1n the other Contracting State if the individual is a national of, and a resident of, that State.

1. 3.The provisions of Articles 15, 16 and 18 of this Agreement shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by one of. the Contracting States or a political or an administrative subdivision 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 he’taxed In that other State, provided that such payments arise from sources outside that other State.

1. 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 remunerations from personal services for teaching or research, provided that such payments arise froip, sources outside that other State.
2. 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 order to obtain practical experience related to his education or formation shall not do taxed in that other State.

Article 21
OTHER INCOME

Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

Article 22

ELIMINATION OF DOUBLE TAXATION

Double taxation shall be eliminated as follows :

1. 1.In the case of Turkey :

Where a resident of Turkey derives income which, in accordance with the provisions of this Agreement, may be taxed in Hungary and in Turkey; Turkey shall, subject to the provisions of Turkish taxation laws regarding credit for foreign taxes, allow as a deduction from the tax on income of that person, an amount equal to the tax on income paid in Hungary.

Such deduction shall not, however, exceed that part of the income tax computed in Turkey before the deduction is given, which is appropriate to the income which may be taxed in Hungary.

1. 2.In the case of Hungary :
   1. a)Where a resident of Hungary derives income which, exclusive of income covered by sub-paragraph b), hereafter, in accordance with the provisions of this Agreement, may be taxed in Turkey, Hungary 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.
   2. b)Where a resident of Hungary derives income wnich in accordance with the provisions of Articles 10,11,12 and paragraph 4 of Article 13 of this Ayrement, may be taxed in Turkey, Hungary shall allow as a deduction from the tax on the Income of that person, an amount equal to the tax paid in Turkey,

Such deductions shall not, however, exceed that papt of the income tax computed in Hungary before the deduction is given, which is appropriate to the income which may be taxed in Turkey.

Article 23
NON-DISCRIMINATION

1. 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 _rand connected requirements’ to which nationals of that other State in the same circumstances are or may be subjected.
2. 2.Subject to the provisions of paragraph 4 of Article 10, the taxation on 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 activites.
3. 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, no^ be subjected in the first-mentioned State to any taxation or any requirement ‘connected therewith which 1s 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.
4. 4.These provisions shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State aqy 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. 1.The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out the provisions of this Agreement or of the domestic laws of tne Contracting States concerning taxes covered by the Agreement insofar as the taxation thereunder is not contrary to the Agreement. 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 and shall be disclosed only to persons or authorities (including cuurts and administrative bodies) involved in the assessment or collection of, tile enforcement or prosecution in respect of, or the determination of appeals in relation lo, the taxes cove’red by the Agreement. Such persons or authorities shall use the information only* for such purposes. They may disclose the information in public court proceedings or In judicial decisions.
2. 2.In no case shall the ^provisions of paragraph 1 be construed so as to impose on a Contracting State thd ooligation :
   1. a)to carry out administrative ‘measures at variance with the laws and the administrative practice of that or of tne other Contracting State ;
   2. b)to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State ;
   3. c)to supply information 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 (ordre public).