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.

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