The tax agreement between the United Kingdom (UK) and Turkey is an important topic for businesses operating in both countries. The agreement was signed on 12 January 2011, and it came into effect on 1 January 2013.
The purpose of the agreement is to prevent double taxation and to ensure that businesses operating in both countries are treated fairly. The agreement covers income taxes, capital gains taxes, and inheritance taxes. It also provides for the exchange of information between the two countries to prevent tax avoidance and evasion.
Under the agreement, businesses and individuals who operate in both countries will not have to pay tax twice on the same income. For example, a UK company that has a presence in Turkey will not have to pay Turkish tax on its profits and then pay UK tax on the same profits. Instead, the company will only have to pay tax in one country, and it will be entitled to a credit for the tax paid in the other country.
The agreement also provides for reduced withholding tax rates on dividends, interest, and royalties. For example, if a UK company pays dividends to a Turkish company, the UK company will only have to withhold tax at a reduced rate of 5% instead of the normal rate of 15%. Similarly, if a Turkish company pays royalties to a UK company, the Turkish company will only have to withhold tax at a reduced rate of 10% instead of the normal rate of 20%.
The tax agreement between the UK and Turkey is beneficial for businesses operating in both countries as it provides certainty and helps to avoid double taxation. It also makes it easier for businesses to expand into new markets without worrying about the tax implications.
In conclusion, the tax agreement between the UK and Turkey is an important topic for businesses operating in both countries. It provides for the prevention of double taxation, reduced withholding tax rates, and the exchange of information to prevent tax avoidance and evasion. Businesses operating in both countries should be aware of the provisions of the agreement and ensure that they comply with its requirements.