dtc agreement between turkey and bahrain

8/2/2019 DTC agreement between Turkey and Bahrain

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CHAPTER ISCOPE OF THE AGREEMENT

Article 1

PERSONS COVERED

This Agreement shall apply to persons who are residents ~f one or both of theContracting States. '

Article 2

TAXES COVERED

This Agreement shall apply o taxes on ncome mposed on behalf of a Contracting Stateor of its political subdivisions or local authorities, rrespective of the manner n whichthey are evied.

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There shall be regarded as taxes on income all taxes mpos.ed on total income, or onelements of income, including taxes on gains from the alienation of movable orimmovable property, axes on he total amounts f wages or salaries aid by enterprises.

The existing taxes o which the Agreement hall apply are n particular:.

in Bahrain to income tax payable under Amiri Decree No. 22/1979 ("The Oil

Tax") (hereinafter referred to as "Bahrain Tax") j

a)

in Turkey:)

i) the income ax; andii) the corporation ax (hereinafter eferred o as "Turkish ax").

The Agreement shall apply also to any identical or substantially similar taxes that areimposed after the date of signature of the Agreement n addition to, or in place of, theexisting taxes. The competent uthorities of the Contracting States shall notify each otherof any significant changes hat have been made n their respective axation aws.

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CHAPTER IIDEFINITIONS

Article 3

GENERAL DEFINITIONS

For the purposes of this Agreement, unless he context otherwise equires:

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Article 4

REsmENT

1. For the purposes of this Agreement, the tenn "resident of a Contracting State" means:

(a) in the case of Bahrain, an individual who is a national of Bahrain and who ispresent in Bahrain for a period or periods totalling in the aggregate at least

183 days in the fiscal year concerned, and a company or other legal person

which is incorporated or has its place of management n Bahrain.

(b) in the case of Turkey, any person who, under he laws of Turkey, is liable to

tax therein by reason of his domicile, residence, egal head office, place ofmanagement, r any other criterion of a similar nature;

This teffil., however, does not include any person who is liable to tax in a ContractingState in respect only of income or capital gains from sources n that State.

Where by reason of the provisions of paragraph an individual is a resident of bothContracting States, hen his status hall be detennined as ollows:

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a) he shall be deemed to be a resident only of the State in which he has a permanent

home available to him; ifhe has a permanent home available to him in both States, heshall be deemed to be a resident of the State with which his personal and economicrelations are closer (centre of vital interests);

b) if the State n which he has his centre of vital interests cannot be determined, or ifhehas not a permanent ome available o him in either State, he shall be deemed o be aresident only of the State n which he has an habitual abode;

c) if he has an habitual abode n both States or in neither of them, he shall be deemed obe a resident only of the State of which he s a national;

d) if he is a national of both States or of neither of them, he competent uthorities of theContracting States hall settle he question by mutual agreement.

Where by reason of the provisions of paragraph a person other than an individual is aresident of both Contracting States, then it shall be deemed o be a resident of theContracting State n which its place of effective management s situated. However, wheresuch person has ts place of effective management n one of the States and its legal headoffice in the other State, then the competent authorities of the Contracting States shallconsult o determine by mutual agreement whether he legal head office of such a personhas o be considered as he actual place of effective management r not.

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Article 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term "permanent establishment" means a fixedplace of business through which the business of an enterprise is wholly or partly carriedon.

The teml"pennanent establishment" ncludes especially:

a) a place of management;

b) a branch;

c) an office;

d) a factory;

e) aworkshop;

f) a mine, an oil or gas well, a quarry or any other place of extraction of naturalresources;

g) a refinery;

h) a sales outlet; and

i) a warehouse n relation o a person roviding storage acilities for others.3. A building site or construction or installation project constitutes a pennanent

establishment nly if it lasts more than 9 months;

4. Notwithstanding the preceding provisions of this Article, the termestablishment" hall be deemed not to include:

"pennanent

a) the use of facilities solely for the purpose of storage, display or delivery of goodsor merchandise elonging o the enterprise;

b) the maintenance f a stock of goods or merchandise elonging to the enterprisesolely for the purpose of storage, display or delivery;

c) the maintenance of a stock of goods or merchandise elonging to the enterprisesolely for the purpose of processing by another nterprise;

d) the maintenance f a fixed place of business olely for the purpose of purchasinggoods or merchandise r of collecting nformation, for the enterprise;

e) the maintenance f a fixed place of business olely or the purpose of carrying on,for the enterprise, any other activity of a preparatory r auxiliary character;

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f) the maintenance of a fixed place of business solely for any combination ofactivities mentioned in sub-paragraphs a) to e), provided that the overall activityof the fixed place of business resulting from this combination is of a preparatoryor auxiliary character.

5 Notwithstanding the provisions of paragraphs 1 and 2, where a person -other than anagent of an independent status to whom paragraph 6 applies -is acting in a ContractingState, on behalf of the enterprise of the other Contracting State, the enterprise shall bedeemed to have a pennanent establishment in the first mentioned Contracting State, ifsuch a person:

a) has and habitually exercises in the first -mentioned State, an authority toconclude contracts on behalf of the enterprise; unless his activities are limited tothe purchase of goods or merchandise for the enterprise; and

b) has no such authority, but habitually maintains n the first -mentioned State astock of goods or merchandise belonging to the enterprise from which heregularly fills orders or makes deliveries on behalf of the enterprise.

An enterprise of a Contracting State shall not be deemed to have a pennanentestablishment n the other ContractiIig State merely because t carries on business n thatother State through a broker, general commission agent or any other agent of anindependent tatus, provided that such persons re acting n the ordinary course of theirbusiness.

The fact that a company which is a resident of a Contracting State controls or iscontrolled by a company which is a resident of the other Contracting State, or whichcarries on business n that other State (whether hrough a permanent establishment orotherwise), shall not of itself constitute either company a permanent stablishment f theother.

CHAPTERmTAXAllON OF INCOME

Article 6

INCOME FROM IMMOVABLE PROPERTY

Income derived by a resident of a Contracting State rom immovable property (includingincome from agriculture or forestry) situated n the other Contracting State may be taxedin that other State.

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The term "immovable property" shall have he meaning, which it has under he law of theContracting State n which the property n question s situated. The term shall in any caseinclude property accessory o immovable property, livestock and equipment used inagriculture (including the breeding and cultivation of fish) and forestry, rights to whichthe provisions of general law respecting anded property apply, usufruct of immovableproperty and rights to variable or fixed payments as consideration or the working of, orthe right to work, mineral deposits, sources and other natural esources; hips and aircraftshall not be regarded as mmovable property.

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2. However, such dividends may also be taxed in the Contracting State of which thecompany paying the dividends is a resident and according to the laws of that State, but ifthe beneficial owner of the dividends is a resident of the other Contracting State, the taxso charged shall not exceed:

a)10 per cent of the gross amount of the dividends f the beneficial owner is acompany other han a partnership) which holds directly at least 25 per cent of thecapital of the company aying the dividends; and

b) 15 per cent of the gross amount of the dividends n all other cases

The tenIl "dividends" as used in this Article means income from shares, "jouissance"shares or "jouissance" rights, mining shares, founders' shares or other rights, not beingdebt-claims, participating in profits, as well as income from other corporate rights whichis subjected to the same taxation treatment as ncome from shares by the laws of the Stateof which the company making the distribution is a resident.

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Profits of a company of a Contracting State carrying on business n the other ContractingState through a permanent establishment ituated herein may, after having been taxedunder Article 7, be taxed on the remaining amount n the Contracting State n which thepermanent establishment s situated and n accordance ith the provision of domestic awof that State.

4.

The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of thedividends, being a resident of a Contracting State, carries on business n the otherContracting State of which the company paying the dividends s a resident, hrough apermanent establishment ituated herein, or performs n that other State independent

personal services rom a fixed base situated herein, and he holding in respect of whichthe dividends are paid is effectively connected with such permanent establishment orfixed base. In such case he provisions of Article 7 or Article 14, as the case may be,shall apply.

5.

Subject to the provision of paragraph 4 of this Article, where a company which is aresident 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, exceptinsofar as such dividends are paid to a resident of that other State or insofar as the holdingin respect of which the dividends are paid is effectively connected with a permanentestablishment 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 theundistributed profits consist wholly or partly of profits or income arising in such otherState.

6.

Article II

INTEREST

Interest arising in a Contracting State and paid to a resident of the other Contracting Statemay be taxed n that other State.

1.

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2 Subject to the provisions of paragraph 4 of Article 10, the taxation on a permanentestablishment, which an enterprise of a Contracting State has in the other ContractingState, shall not be less favourably levied in that other State than the taxation levied onenterprises of that other State carrying on the same activities.

3 Except where the provisions of paragraph 1 of Article 9, paragraph 6 of Article 11. orparagraph 6 of Article 12, apply. interest. oyalties and other disbursements aid by anenterprise of a Contracting State o a resident of the other Contracting State shall. for thepurpose of determining the taxable profits of such enterprise. be deductible under thesame conditions as f they had been paid to a resident f the first mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned orcontrolled, 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 requirementconnected therewith which is other or more burdensome than the taxation and connectedrequirements 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 toresidents of the other Contracting State any personal allowances, reliefs and reductionsfor taxation purposes on account of civil status or family responsibilities which it grantsto its own residents.

Article 24

MUTUAL AGREEMENT PROCEDURE

1. Where a resident of a Contracting State considers hat the actions of one or both of theContracting States result or will result for him in taxation not in accordance with theprovisions of this Agreement, he may, irrespective of the remedies provided by thedomestic law of those States, present his case to the competent authority of theContracting State of which he is a resident or, if his case comes under paragraph 1 ofArticle 23, to that of the Contracting State of which he s a national.

2 The competent authority shall endeavour, f the objection appears o it to be ustified andif it is not itself able to arrive at a satisfactory solution, to resolve he case by mutualagreement with the competent authority of the other Contracting State, with a view to the

avoidance of taxation, which is not n accordance ith the Agreement.

3. The competent authorities of the Contracting States shall endeavour o resolve by mutualagreement any difficulties or doubts arising as to the interpretation or application of theAgreement. They may also consult together for the e11m1nation f double taxation incases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with each otherdirectly for the purpose of reaching an agreement n the sense of the precedingparagraphs. When it seems advisable in order to reach agreement o have an oralexchange of opinions, such exchange may ake place hrough a Commission onsisting of

representatives f the competent uthorities of the. Contracting States.

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Article 25EXCHANGE OF INFORMATION

1 The competent authorities of the Contracting States shall provide assistance hroughexchange of information that is foreseeably relevant to the administration andenforcement of the domestic aws of the Contracting States concerning axes of everykind and description mposed on behalf of the Contracting States, or of their politicalsubdivisions or local authorities, nsofar as the taxation hereunder s not contrary to theAgreement. Such nformation shall include nformation hat s foreseeably elevant o thedetermination, assessment nd collection of such axes, he recovery and enforcement oftax claims, or the investigation or prosecution of tax matters. Information shall beexchanged n accordance with the provisions of this Article and shall be treated asconfidential in the manner provided in paragraph 7 of this Article. The rights andsafeguards ecured o persons by the laws or administrative practice of the requestedState emain applicable o the extent that they do not unduly prevent or delay effectiveexchange f information.

A requested State s not obligated o provide infonnation, which is neither held by itsauthorities nor in the possession or control of persons who are within its territorialjurisdiction.

3. For the purposes f this Article:a) the term "publicly traded company" means any company whose principal class of

shares s listed on a recognised stock exchange rovided its listed shares can bereadily purchased or sold by the public. Shares an be purchased or sold "by thepublic" if the purchase or sale of shares s not implicitly or explicitly restricted oa limited group of investors;

b) the term "principal class of shares" means the class or classes of sharesrepresenting majority of the voting power and value of the company;

c) the teml "recognised stock exchange" means any properly regulated stockexchange, which publicly trades shares and shall specifically mean in the case ofBahrain, the Bahrain Stock Exchange and in the case of Turkey, the IstanbulStock Exchange;

d) the tenn "collective investment und or scheme" means any pooled investmentvehicle, rrespective of legal fonn. The tenn "public collective investment und orscheme" means any collective investment und or scheme provided the units,shares or other interests n the fund or scheme an be readily purchased, sold orredeemed y the public. Units, shares or other interests n the fund or scheme canbe readily purchased, sold or redeemed by the public" if the purchase, sale or

redemption s not implicitly or explicitly restricted o a limited group of investors;

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publicly traded companies or public collective investment funds or schemesunless such nformation can be obtained without gi~g rise to disproportionatedifficulties.

e) The competent authority of the Applicant State shan provide the followinginformation to the competent authority of the request~d State when making arequest or information under his Article to demonstrate he foreseeable elevanceof the information o the request:

(i) the identity of the person under examination r invesqgation;

(ii) a statement of the information sought ncluding i~ nature and the form inwhich the Applicant State wishes to receive the infor$lation from the requestedState; I

(iii) the tax purpose or which the information s sought;

(iv) grounds for believing that the information requested s held in the requestedState or is in the possession r control of a person within the jurisdiction ofthe requested State;

(v) to the extent known, the name and address of any person believed to be inpossession of the requested information;

(vi) a statement hat the request s in conformity with the law and administrativepractices of the applicant State, hat if the requested nformation was withinthe jurisdiction of the applicant State then the competent authority of the

applicant State would be able to obtain he infonnation under he laws of theapplicant State or in the nonnal course of administrative practice and that it isin confortnity with this Article;

(vii) a statement hat he Applicant State has pursued all means available n its ownterritory to obtain the information, except those that would give rise todisproportionate ifficulties.

f) The competent authority of the requested State shall forward the requestedinformation as promptly as possible o the Applicant State. To ensure a promptresponse, he competent authority of the requested State shall:

i) Confinn receipt of a request n writing to the competent authority of theapplicant State and shall notify the competent authority of the applicant Stateof deficiencies n the request, f any, within 60 days of the receipt of therequest.

ii) If the competent authority of the requested State has been unable o obtain andprovide the information within 90 days of receipt of!the request, ncluding if itencounters obstacles n furnishing the information 6r it refuses o furnish theinformation, it shall immediately nform the applicant State, explaining thereason or its inability, the nature of the obstacles r the reasons or its refusal.

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the applicant State, or any requirement connected herewith, which discriminatesagainst a national of the requested State as compared with a national of the applicantState n the same circumstances.

7 Any infonnation received by a Contracting State under this Article shall be treated asconfidential and may be disclosed only to persons or authorities (including courts and

administrative bodies) in the jurisdiction of the Contracting State concerned with theassessment or collection of, the enforcement or prosecution in respect of, or thedetennination of appeals in relation to, the taxes covered by this Agreement. Suchpersons or authorities shall use such infonnation only for such purposes. They maydisclose the information in public court proceedings or in judicial decisions. Theinfonnation may not be disclosed to any other person or entity or authority or any otherjurisdiction without the express written consent of the competent authority of therequested State.

8. Incidence of costs ncurred in providing assistance hall be agreed by the ContractingStates.

Article 26

ANTI -A VOmANCE MEASURES

1. The Provisions of Articles 10,11 and 12 which confer an exemption rom, or a reductionin tax shall not apply if income arising in a Contracting State s received by a person(other han an individual) that s a resident of the other Contracting State and one or morepersons who are not residents of that other Contracting State;

a) have directly or indirectly or through one or more person, wherever resident, asubstantial nterest n such person, n the form of a participation or otherwise; or

b) exercise directly or indirectly, alone or together, he management r control of suchperson.

2. A substantial nterest shall be deemed o exist when at least 25 percent of the capital stockof the company s so held.

Article 27

MEMBERS OF DIPLOMATIC l\flSSIONS ANDCONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missionsand consular posts under he general ules of international aw or under he provisions of specialagreements.

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CHAPTER VFINAL PROVISIONS

Article 28

ENTRY INTO FORCEEach of the Contracting States shall notify to the other, through thd diplomatic channels hecompletion of the procedures equired by its domestic aw for the bhnging into force of thisAgreement. This Agreement shall enter nto force on the date of the litter of these notificationsand its provisions shall have effect for taxes with respect o every axaijle period beginning on orafter the first day of January of the year ollowing that of entry nto foroe of the Agreement.

Article 29

TE Rl\fiN A TI 0 N

This Agreement shall remain n force until terminated by a Contracting State. Either ContractingState may emrinate he Agreement, hrough diplomatic channels, y giving notice oftenninationat least six months before the end of any calendar year following after the period of five yearsfrom the date on which the Agreement enters nto force. In such event, he Agreement hall ceaseto have effect for taxes with respect o every axable period beginning on or after he first day ofJanuary of the year ollowing that n which the notice s given.

IN WITNESS WHEREOF, the undersigned duly authorized hereto, have signed the present

Agreement.

Done in duplicate at M~Nt\.M8.. this l.J:f:.tb day of .N.a)/~1Y1~~H 005, in theArabic, Turkish, and English Languages, all three texts being equally authentic. hI case ofdivergence between he texts, he English ext shall be the operative one.

For the Government of theKingdom of Bahrain

For the Government of the

Republic of Turkey

.H.E. Ahmed bin Mohammed AI KhalifaMinister of Finance

H.E. Mr. Kiir~at TiizmenMinister of State

dtc agreement between turkey and bahrain

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