Malta
AGREEMENT BETWEEN THE REPUBLIC OF MALTA AND THE REPUBLIC OF TURKEY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
THE REPUBLIC OF MALTA AND 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 or of its political subdivisions or local authorities, 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 Turkey:
i) the income tax; and
ii) the corporation tax;
(hereinafter referred to as “Turkish tax”);
b) in Malta:
the income tax;
(hereinafter referred to as “Malta tax”).
4. The Agreement shall apply also 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 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) the term “Turkey” or “Malta” means, its land territory, internal
waters, territorial sea and the airspace above them as well as maritime areas
over which it has jurisdiction or sovereign rights for the purpose of
exploration, exploitation or conservation of natural resources, pursuant to
international law;
b) the terms “a Contracting State” and “the other Contracting State”
mean Turkey or Malta as the context requires;
c) the term “tax” means any tax covered by Article 2 of this
Agreement;
d) the term “person” includes an individual, a company and any
other body of persons;
e) the term “company” means any body corporate or any entity
which is treated as a body corporate for tax purposes;
f) the term “legal head office” means, in the case of Turkey, the
registered office under the Turkish Code of Commerce and, in the case of
Malta, the place of incorporation under Malta law;
g) the term “national” means:
i) any individual possessing the nationality of a Contracting
State;
ii) 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; and
ii) in Malta, the Minister responsible for finance or his
authorised representative;
j) the term “international traffic” means any transport by a ship,
aircraft or road vehicle operated by an enterprise of a Contracting State,
except when the ship, aircraft or road vehicle 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 law 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 the State, is liable to tax therein by
reason of his domicile, residence, legal head office, place of management or any
other criterion of a similar nature. But this term does not include any person who is
liable to tax in that State in respect only of income from sources in that State.
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 State in which he has an
habitual abode;
c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;
d) if he is a national of both States or of 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, then it shall be deemed to be a
resident of the State in which its place of effective management is situated.
However, where such person has its place of effective management in a
Contracting State and the place of its legal head office in the other Contracting
State, then the competent authorities of the Contracting States shall determine by
mutual agreement the State of which the person shall be deemed to be a resident
for the purposes of the 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; and
f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources including an offshore drilling site.
3. The term “permanent establishment” likewise encompasses:
a) a building site, construction, assembly or installation project or
supervisory activities in connection therewith, but only if such site, project or
activities continue for a period of more than 12 months;
b) the furnishing of services, including consultancy services by an
enterprise through employees or other personnel engages by the enterprise
for such purpose, but only where activities of that nature continue (for the
same or a connected project) within a Contracting State for a period or
periods aggregating more than 6 months within any 12-month period.
4. 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 purposes of storage, display or
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 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 carrying on, for the enterprise any other activity of a preparatory
or auxiliary character;
f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in sub-paragraphs a) to e), provided that
the overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person –
other than an agent of an independent status to whom paragraph 6 applies – is
acting on behalf of an enterprise and has, and habitually 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 4 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.
6. 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. However, when the activities of such an agent
are devoted wholly or almost wholly on behalf of that enterprise he will not be
considered an agent of an independent status within the meaning of this paragraph.
7. 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 agriculture or 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 (including the breeding and cultivation
of fish) and forestry, 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, or to
explore for, 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 a
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 of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment (including executive and
general administrative expenses so incurred) and which would be deductible if the
permanent establishment were an independent entity which paid those expenses,
whether incurred in the Contracting State in which the permanent establishment is
situated or elsewhere.
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. 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, AIR AND LAND TRANSPORT
1. Profits of an enterprise of a Contracting State from the operation of
ships, aircraft or road vehicles in international traffic shall be taxable only in that
State.
2. The provisions of paragraph 1 of this Article shall also apply to profits
derived from the participation in a pool, a joint business or an international
operating agency.
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 reason 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 States 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 and according to the laws of
that State but:
a) where the dividends are paid by a company which is a resident of
Turkey to a resident of Malta who is the beneficial owner thereof, the tax so
charged in Turkey shall not exceed:
i) 10 per cent of the gross amount of the dividends if the
beneficial owner is a company (excluding partnership) which holds
directly at least 25 per cent of the capital of the company paying the
dividends;
ii) 15 per cent of the gross amount of the dividends in all
other cases.
b) Where the dividends paid by a company which is a resident of
Malta to a resident of Turkey who is the beneficial owner thereof shall be
exempt from any tax in Malta which is chargeable on dividends in addition to
the tax chargeable in respect of the profits of the company. Furthermore,
Malta tax chargeable with respect to distributed profits of the company shall
not exceed 15 per cent of the gross amount thereof if the distributed profits
consist of gains or profits earned in any year in respect of which that
company is in receipt of any benefit under the provisions regulating aids to
industries in Malta: provided that the receiving company submits returns and
accounts to the taxation authorities of Malta in respect of its income liable to
Malta tax for the relative year of assessment.
This paragraph shall not affect the taxation of the company in respect of the
profits out of which distributions are made, but the recipient of any
distributed profits shall be entitled to any refund which may be available
under the law of Malta on account of the tax paid by the company, if the tax
so paid is in excess of that chargeable on the distributed profits in accordance
with the provisions of this paragraph or of the law of Malta.
3. The term “dividends” as used in this Article means income from shares,
“jouissance” shares 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 resident in Malta carrying on business in Turkey
through a permanent establishment situated therein may, after having been taxed in
terms of Article 7, be taxed in Turkey on the remaining amount in accordance with
sub-paragraph a) of 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, or performs in that
other State independent personal services from a fixed base situated therein, and
the holding in respect of which the dividends are paid is effectively connected with
such permanent establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
6. Subject to the provisions of paragraph 4 of this Article, where a
company which is a resident of a Contracting State 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 insofar as such dividends are paid to a
resident of that other State or insofar 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 State.
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 10 per cent of
the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2 of this Article, interest
arising in a Contracting State shall be exempt from tax in that State if it is derived
and beneficially owned by the Government or Central Bank of the other
Contracting State.
4. The term “interest” as used in this Article means income from debtclaims
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 as well as all other income
assimilated to income from money lent by the taxation law of the State in which
the income arises.
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, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in respect of which
the interest is paid is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14, as the case may
be, shall apply.
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.
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 in connection with which the indebtedness on which the interest is paid
was incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the 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
1. Royalties 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 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 the tax so charged shall not exceed 10 per cent of
the gross amount of the royalties.
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, or the sale (which is
contingent on the productivity, use or disposition) of any copyright of literary,
artistic or scientific work including cinematography films and recordings for radio
and television, any patent, trade mark, design or model, plan, secret formula or
process, or for information concerning industrial, commercial or scientific
experience, or for the use of, or the right to use industrial, commercial or scientific
equipment.
4. The provisions of paragraphs 1 and 2 shall not apply if the 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, or performs in that other State independent personal
services from a fixed base situated therein, and the right or property in respect of
which the royalties are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
5. Royalties 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. Where, however, the person paying the royalties, 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 giving rise to the
royalties is effectively connected, and such royalties are borne by such permanent
establishment or fixed base, then such royalties shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated.
6. 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, having regard to the use, right or information 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 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 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 shares or comparable interests in a
company the assets of which consist wholly or principally of immovable property
may be taxed in the Contracting State in which the assets or the principal assets of
the company are situated.
3. 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 fixed base, may be taxed in that other
State.
4. Gains derived by a resident of a Contracting State from the alienation of
ships, aircraft or road vehicles operated in international traffic, or movable
property pertaining to the operation of such ships, aircraft or road vehicles, shall be
taxable only in that State.
5. Gains from the alienation of any property other than that referred to in
paragraphs 1, 2, 3 and 4 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 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 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. However, such income may be taxed in the other
Contracting State in the following circumstances:
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 any 12 month period
commencing or ending in the fiscal year concerned; in that case, only so
much of the income as is derived from the activity exercised in the other
Contracting 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 any 12 month period commencing
or ending in the fiscal year concerned, 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, aircraft or road
vehicle operated in international traffic by an enterprise of a Contracting State may
be taxed in that State.
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 17
ARTISTES AND SPORTSMEN
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 sportsman, 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 sportsman in his capacity as such accrues not to the entertainer or
sportsman 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 sportsman are exercised.
3. Income derived by an entertainer or a sportsman from activities
exercised in a Contracting State shall be exempt from tax in that State, if the visit
to that State is supported wholly or mainly by public funds of the other Contracting
State or a political subdivision or a local authority thereof.
Article 18
PENSIONS
1. 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.
2. Notwithstanding the provisions of paragraph 1, pensions paid and other
payments made under the social security legislation of a Contracting State shall be
taxable only in that State.
Article 19
GOVERNMENT SERVICE
1. a) Salaries, wages and other similar remuneration, other than a
pension, paid by a Contracting State or a political subdivision 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 salaries, wages and other similar remuneration
shall be taxable only in the other Contracting State if the services are rendered in
that State and the individual is a resident of that State who:
i) is a national of that State; or
ii) did not become a resident of that State solely for the
purpose of rendering the services.
2. a) Any pension paid by, or out of funds created by, a Contracting
State or a political subdivision 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 pension shall be taxable only in the other
Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16 and 18 shall apply to salaries, wages
and other similar remuneration and to pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a political
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 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 a period or periods not exceeding two years for the primary purpose of teaching
or engaging in scientific research 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 fiscal year, in
order to obtain practical experience related to his education or formation, shall not
be taxed in that other State.
Article 21
OTHER INCOME
1. 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.
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, or performs in that other State independent personal services from a fixed
base situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base. In
such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
Article 22
ELIMINATION OF DOUBLE TAXATION
1. In the case of Turkey double taxation shall be avoided as follows:
Where a resident of Turkey derives income which, in accordance with the
provisions of this Agreement, may be taxed in Malta, 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 resident, an amount equal to the tax on
income paid in Malta.
Such deduction shall not, however, exceed that part of the tax computed in
Turkey before the deduction is given, which is appropriate to the income which
may be taxed in Malta.
2. In the case of Malta, double taxation shall be eliminated as follows:
Subject to the provisions of the law of Malta regarding the allowance of a
credit against Malta tax in respect of foreign tax, where, in accordance with the
provisions of this Agreement, there is included in a Malta assessment income from
sources within Turkey, the Turkish tax on such income shall be allowed as a credit
against the relative Malta tax payable thereon.
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, in particular with respect to
residence, are or may be subjected. This provision shall, notwithstanding the
provisions of Article 1, also apply to persons who are not residents of one or both
of the Contracting States.
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
activities.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of
Article 11, or paragraph 6 of Article 12 apply, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to a
resident of the first-mentioned State.
4. 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 therewith 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.
5. 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
MUTUAL AGREEMENT PROCEDURE
1. Where a person 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, irrespective of the remedies provided by
the domestic law of those States, present his case to the competent authority of the
Contracting State of which he is a resident or, if his case comes under paragraph 1
of Article 23, to that of the Contracting State of which he is a national. The case
must be presented within 3 years from the first notification of the action resulting
in taxation claimed to be not in accordance with this Agreement.
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 a satisfactory 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 which is not in
accordance with the Agreement. The solution so reached shall be implemented
notwithstanding any time limits in the domestic law of the Contracting States.
However, in the case of Turkey, the taxpayer must claim any refund that may result
from such mutual agreement within a period of one year after the tax
administration has notified the taxpayer of the result of the mutual agreement.
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 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such
information as is foreseeably relevant for carrying out the provisions of this
Agreement or to the administration or enforcement of the domestic laws
concerning taxes of every kind and description imposed on behalf of the
Contracting States, or of their political subdivisions or local authorities, insofar as
the taxation thereunder is not contrary to the Agreement. The exchange of
information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 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 courts and administrative bodies) concerned with the assessment or
collection of, the enforcement or prosecution in respect of, the determination of
appeals in relation to the taxes referred to in paragraph 1, or the oversight of the
above. 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.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as
to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws
and administrative practice of that or of the other Contracting State;
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;
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).
4. If information is requested by a Contracting State in accordance with
this Article, the other Contracting State shall use its information gathering
measures to obtain the requested information, even though that other State may not
need such information for its own tax purposes. The obligation contained in the
preceding sentence is subject to the limitations of paragraph 3 but in no case shall
such limitations be construed to permit a Contracting State to decline to supply
information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a
Contracting State to decline to supply information solely because the information
is held by a bank, other financial institution, nominee or person acting in an agency
or a fiduciary capacity or because it relates to ownership interests in a person.
Article 26
LIMITATION OF BENEFITS
1. Where under any provision of this Agreement any income is relieved
from tax in a Contracting State and, under the law in force in the other Contracting
State, a person, in respect of that income, is subject to tax by reference to the
amount thereof which is remitted to or received in that other Contracting State and
not by reference to the full amount thereof, then the relief to be allowed under this
Agreement in the first-mentioned Contracting State shall apply only to so much of
the income as is taxed in the other Contracting State.
2. The provisions of Articles 6 to 21 of this Agreement shall not apply to:
a) persons enjoying a special fiscal treatment by virtue of the laws
or the administrative practice of either one of the Contracting States which
are identified in the Protocol to this Agreement;
b) any persons enjoying a special fiscal treatment under the provisions of
the Merchant Shipping Act, 1973- and to that extent- are not subject to tax in Malta
on the profits derived from the operation of ships in international traffic.
Neither shall they apply to income derived from such persons by a resident of
the other Contracting State, nor to shares or other rights in such persons owned by
such a resident.
3. Notwithstanding any other provision of this Agreement, a resident of a
Contracting State shall not receive the benefit of any reduction in or exemption
from taxes provided for in this Agreement by the other Contracting State if the
main purpose or one of the main purposes of the creation or existence of such
resident or any person connected with such resident was to obtain the benefits
under this Agreement that would not otherwise be available.
Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members
of diplomatic missions or consular posts under the general rules of international
law or under the provisions of special agreements.
Article 28
ENTRY INTO FORCE
1. Each Contracting State shall notify to the other Contracting State the
completion of the procedures required by its law for the bringing into force of this
Agreement. This Agreement shall enter into force on the date of the later of these
notifications.
2. The provisions of this Agreement shall have effect:
a) in Turkey:
i) with regard to taxes withheld at source, in respect of
amounts paid or credited on or after the first day of January next
following the date upon which this Agreement enters into force; and
ii) with regard to other taxes, in respect of taxable years
beginning on or after the first day of January next following the date
upon which this Agreement enters into force.
b) in Malta, in respect of taxes on income derived during any
calendar year or accounting period, as the case may be, beginning on or after
the first day of January immediately following the date on which the
Agreement enters into force.
Article 29
TERMINATION
1. 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 beginning after the expiration of a period of five years from the date
of entry into force of the Agreement.
2. In such event, the Agreement shall cease to have effect:
a) in Turkey:
i) with regard to taxes withheld at source, in respect of
amounts paid or credited after the end of the calendar year in which
such notice is given; and
ii) with regard to other taxes, in respect of taxable years
beginning after the end of the calendar year in which such notice is
given.
b) in Malta, in respect of taxes on income derived during any
calendar year or accounting period, as the case may be, beginning on or after
the first day of January immediately following the date on which the notice is
given.
IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have
signed the present Agreement.
Done in duplicate at Istanbul this 14th day of July 2011, in the English and
Turkish Languages, both texts being equally authentic.
PROTOCOL
At the moment of signing the Agreement between the Government of the
Republic of Malta 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, the two parties have agreed upon the following provisions, which
will form an integral part of the Agreement.
With respect to Article 22 “Elimination of Double Taxation” it is understood
that in case if a resident of Turkey derived dividend from Malta, Turkey is not
obliged to provide credit for the tax paid in Malta on the profits out of which the
dividends are paid.
IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have
signed the present Protocol.
Done in duplicate at Istanbul this 14th day of July 2011, in the Turkish and
English Languages, both texts being equally authentic.