Double Taxation Agreement UK Turkey: What You Need to Know
If you`re a UK or Turkey resident or a business operating in either country, you might be wondering about the Double Taxation Agreement (DTA) between the two. This agreement aims to prevent double taxation of income, capital gains, and other taxes in both countries. In this article, we`ll explain what the DTA is, who it applies to, and how it affects your taxes.
What is the Double Taxation Agreement?
The UK and Turkey signed the DTA in 1986 to eliminate double taxation by allocating taxing rights between the two countries. The agreement covers taxes on income, profits, and gains, including:
– Income tax (including the surcharge)
– Corporation tax
– Capital gains tax
– Petroleum tax
– Turkish counterpart of UK taxes
The DTA sets a framework for avoiding double taxation by defining the criteria for determining residency status, income source, and taxable income or capital gains.
Who does the DTA apply to?
The DTA applies to individuals and businesses who are considered residents of either the UK or Turkey according to their tax laws. A resident is someone who is liable to pay taxes in a country under its domestic laws, either as a citizen or as a non-citizen who meets the residency criteria.
The DTA also applies to the following:
– British citizens who are resident in Turkey
– Turkish citizens who are resident in the UK
– The UK government, its agencies, and public institutions
– The Turkish government, its agencies, and public institutions
– Businesses that are registered or have a permanent establishment in either country
How does the DTA affect your taxes?
The DTA ensures that taxpayers in both countries are not taxed twice on the same income or capital gains. Here`s how it works:
– If you`re a UK resident who has income or capital gains from Turkey, the DTA ensures that you only pay tax on that income or gain in the UK. You won`t be taxed twice in both countries.
– If you`re a Turkish resident who has income or capital gains from the UK, the DTA ensures that you only pay tax on that income or gain in Turkey. Again, you won`t be taxed twice.
– If you`re a business operating in either country, the DTA ensures that you only pay corporate tax in one country. The DTA outlines the criteria for determining a permanent establishment or a taxable presence in a country.
The DTA also covers other taxes, such as inheritance tax and social security contributions, but to a limited extent.
Conclusion
The Double Taxation Agreement between the UK and Turkey is a crucial agreement for individuals and businesses operating in both countries. It provides clarity on tax obligations, eliminates double taxation, and promotes cross-border trade and investment. If you`re unsure about how the DTA affects your taxes, it`s advisable to consult a tax expert or seek guidance from the tax authorities in your country.