S.I. No. 501/2008 - Double Taxation Relief (Taxes on Income and Capital Gains) (Republic of Turkey) Order 2008

1. Each Contracting State shall notify to the other Contracting State the completion of the procedure required by its law for the bringing into force of this Convention.

2. This Convention shall enter into force on the date of receipt of the later of these notifications and shall thereupon have effect

(

a

) in Ireland

(i) as respects income tax and capital gains tax, for any year of assessment beginning on or after the first day of January in the year next following the date on which this Convention enters into force;

(ii) as respects corporation tax, for any financial year beginning on or after the first day of January in the year next following the date on which this Convention enters into force;

(

b

) in Turkey

as respects any taxable periods beginning on or after the first day of January in the year next following the date on which this Convention enters into force.

Article 29

TERMINATION

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention at any time after five years from the date on which the Convention enters into force provided that at least six months prior notice of termination has been given through diplomatic channels.

In such event, this Convention shall cease to have effect

(

a

) in Ireland

(i) as respects income tax and capital gains tax, for any year of assessment beginning on or after the first day of January in the year next following the date on which the period specified in the said notice of termination expires;

(ii) as respects corporation tax, for any financial year beginning on or after the first day of January in the year next following the date on which the period specified in the said notice of termination expires;

(

b

) in Turkey

as respects any taxable periods beginning on or after the first day of January in the year next following the date on which the period specified in the said notice of termination expires.

In witness whereof the undersigned, duly authorised thereto, have signed this Convention.

Done in duplicate at Dublin this 24th day of October, 2008, in the English and Turkish languages, both texts being equally authentic.

For Ireland

For the Republic of Turkey

Brian Lenihan

Kemal Unakitan

PROTOCOL

At the time of signing the Convention between Ireland and the Republic of Turkey for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, the undersigned have agreed that the following provisions shall form an integral part of the Convention

1.

With reference to Article 10 (Dividends).

With reference to paragraph 3, in the case of Turkey the term “dividends” also includes income derived from an investment fund and an investment trust.

2.

With reference to Article 25 (Mutual Agreement Procedure).

With reference to paragraph 2, in the case of Turkey it is understood that the taxpayer must claim the refund resulting 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.

In witness whereof the undersigned, duly authorised thereto, have signed this Protocol.

Done in duplicate at Dublin this 24th day of October 2008 in the English and Turkish languages, both texts being equally authentic.

For Ireland

For the Republic of Turkey

Brian Lenihan

Kemal Unakitan

GIVEN under the Official Seal of the Government,

2 December 2008

BRIAN COWEN.

Taoiseach.

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

This Order gives the force of law to the Convention between Ireland and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, which is set out in the Schedule to the Order. The effect of the Convention is summarised below.

This Convention with Turkey, which was signed in Dublin on 24 October 2008 is comprehensive in scope and is based on the OECD Model Convention.

The taxes covered by the Convention are, for Ireland, Income Tax, Corporation Tax and Capital Gains Tax: for Turkey, the Income Tax and the Corporation Tax.

The Convention provides for the allocation of taxing rights between Ireland and Turkey and for the granting of relief from double taxation with regard to items of income and capital gains which, under the laws of Ireland and the laws of Turkey, may under the terms of the Convention be taxed in both countries.

Where both countries continue to have taxing rights, for example in the case of dividend, interest and royalty income, business profits arising through a permanent establishment which a person resident in one country has in the other country, or in the case of capital gains arising from the disposal of immovable property, the Convention provides that the country of residence of the recipient of the income or gain will give credit against its tax on the income or gains for the tax paid in the other country on the same income or gains. Irish direct investors (i.e. Irish companies holding 10% or more of the voting power of the paying company) in receipt of dividends from a Turkish company are granted credit for the tax paid by the Turkish company on the profits out of which the dividends are paid (known as credit for underlying tax).

Reduced rates of withholding tax are provided for in the case of dividend, interest and royalty income. With respect to dividend income, in the case of Turkey, the Convention provides for a reduced rates of 5% to the extent that dividends are not exempt from tax in Turkey and that they are subject to the full rate of corporation tax there and where the recipient is a company that owns 25% of the company paying the dividends, 10% where the recipient is a company that owns 25% of the company paying the dividends; and 15% otherwise. In the case of Ireland, the Convention provides for a reduced rate of 5% where the recipient is a company that owns 25% of the company paying the dividends; and 15% otherwise. Source state taxation on interest is limited to 10% where interest is beneficially owned by a resident of a Contracting State and where it is paid in respect of a loan or other debt claim for a period exceeding two years or if the interest is received by a financial institution; otherwise source country taxation of interest is limited to 15%. Source State taxation of royalties is limited to 10% of the gross amount of the royalties.

The Convention also provides for safeguarding nationals and enterprises of one country against discriminatory taxation in the other country, for consultation between the competent authorities of the two countries for the purpose of resolving any doubts or difficulties arising as to the interpretation or application of the Convention and for the exchange of such information between these authorities as is necessary for carrying out the provisions of the Convention or of the domestic law of either country in relation to the taxes covered by the Convention.

The Convention will enter into force when each country notifies the other of the completion of its procedures for bringing the Convention into force. It will thereupon have effect in both countries for tax periods beginning in the following year.

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 27

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions and consular posts under the general rules of international law or under the provisions of special agreements.

Article 28

ENTRY INTO FORCE

6. The provisions of paragraph 5 shall not affect the right of a Contracting State to levy according to its law a tax on

(

a

) gains derived by a resident of the other Contracting State from the alienation of shares or bonds issued by a resident of the first-mentioned State if the period between acquisition and alienation does not exceed one year;

(

b

) gains from the alienation of any property derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the three years immediately preceding the alienation of the property if the property was held by the individual before he became a resident of that other State.

Article 14

INDEPENDENT PERSONAL SERVICES

7. Subject to the provisions of paragraph 4, 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 in so far as such dividends are paid to a resident of that other State or in so far 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

8. 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

S.I. No. 501 of 2008

DOUBLE TAXATION RELIEF (TAXES ON INCOME AND CAPITAL GAINS) (REPUBLIC OF TURKEY) ORDER 2008

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of

9

th January

, 2009.

WHEREAS it is enacted by section 826(1) (as amended by

section 35

of the

Finance Act 2007

(No. 11 of 2007)) of the

Taxes Consolidation Act 1997

(No. 39 of 1997) that where the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, corporation tax in respect of income and chargeable gains, capital gains tax or any taxes of a similar character imposed by the laws of the State or by the laws of that territory and, in the case of taxes of any kind or description imposed by the laws of the State or the laws of that territory, in relation to exchanging information for the purposes of the prevention and detection of tax evasion or granting relief from taxation under the laws of that territory to persons who are resident in the State for the purposes of tax, and that it is expedient that those arrangements should have the force of law, and the order so made is referred to in Part 1 of Schedule 24A of the

Taxes Consolidation Act 1997

, then subject to section 826 of that Act the arrangements shall, notwithstanding anything in any enactment, have the force of law as if such order were an Act of the Oireachtas on and from the date of the insertion of a reference to the order into Part 1 of Schedule 24A

AND WHEREAS it is further enacted by section 826(6) of the

Taxes Consolidation Act 1997

that where such an order is proposed to be made, a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of the following Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by section 826(1) (as amended by

section 35

of the

Finance Act 2007

(No. 11 of 2007)) of the

Taxes Consolidation Act 1997

(No. 39 of 1997) hereby order as follows