Supreme Court E-Library
Information At Your Fingertips


  View printer friendly version

January 11, 2016


AGREEMENT BETWEEN THE REPUBLIC OF THE PHILIPPINES 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 the Philippines 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
PERSONS COVERED

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, and taxes on total amounts of wages or salaries paid by enterprises.

  3. The existing taxes to which the Agreement shall apply are, in particular:

    a) in the Philippines:

    the income taxes imposed under Title II and the stock transaction tax in accordance with Section 127 of the Tax Reform Act of 1997 (hereinafter referred to as “Philippine tax”);

    b) in Turkey:

    (i) the income tax:
    (ii) the corporation tax:
    (iii) the levy imposed on the income tax and the corporation tax (hereinafter referred to as “Turkish tax”).

  4. The Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of substantial 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) (i) The term “Philippines” means the national territory which comprises the Philippine archipelago, with all the islands and waters embraced therein, and all other.territories over which the Philippines has sovereignty or jurisdiction consisting of its terrestrial, fluvial and aerial domains including its territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas. The waters around, between, and connecting the islands of the archipelago, regardless of their breadth and dimensions from part of the internal waters of the Philippines.

(ii) the term “Turkey” means the Turkish territory including territorial sea and air space above it, as well as the maritime areas over which it has jurisdiction or sovereign rights for the purposes of exploration, exploitation and conservation of natural resources, pursuant to international law;

b) the terms “a Contracting State” and “the other Contracting State” mean the Philippines or Turkey 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, an estate, a trust, 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 the registered office registered under the domestic laws of a Contracting State;

g) 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;

h) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

i) 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;

j) the term "competent authority" means:

(i) in the case of the Philippines, the Secretary of Finance or his/her duly authorized representative;

(ii) in the case of Turkey, the Minister of Finance or his authorized representative

    2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has that time under the law of the State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

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 that 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, and also includes that State and any political subdivision or local authority thereof. 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 I 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 only 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 only of the State with which his personal and economic relations are closer (center of vital interests);

    b) if the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be a resident only 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 only of the State of which he is 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 only of the State in which its legal head office is situated.


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;

    f) a mine, an oil or gas well, a quarry or any other place of extraction or an installation or structure used for the exploration of natural resources;

    g) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activity continues for a period of more than six months;

    h) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue in the territory of the other Contracting State for a period or periods aggregating more than six months within any twelve-month period.

  3. 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 purpose of storage or 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 or 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 of 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.

  4. Notwithstanding the provisions of paragraphs 1 and 2, where a person, other than an agent of an independent status to whom paragraph 5 applies, is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in first-mentioned State if he has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to those mentioned in paragraph 3 or this Article.

  5. 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, a general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

  6. 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 and forestry, fishing place of every kind, 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, mineral deposits, sources and other natural resources: ships, boats and aircraft shall not be regarded as immovable property.

  3. The provisions of paragraph I 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 form immovable property of an enterprise and to income form 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 deduction expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the 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 AND AIR TRANSPORT

  1. Profits of an enterprise of a Contracting State derived from the other Contracting State from the operation of ships or aircraft in international traffic may be taxed in that other State, in accordance with the law of that other State, but the tax so charged shall not exceed one and one-half per cent of the gross revenues derived from sources in that State.

  2. For the purposes of this Article, profits derived by an enterprise of a Contracting State from the operation of ships and aircraft in international traffic shall include inter alia profits derived from the use or rental containers. If such profits are incidental to the profits to which the provisions of paragraph I apply.

  3. The provisions of paragraph I 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 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 adjustments, 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 if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

    a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company (excluding partnerships) which holds directly at least 25 per cent of the capital of the paying company;

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

    This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid

  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 taxation law of that State of which the paying company is a resident.

  4. Profits of a company of a Contracting State carrying on business in the other Contracting State through a permanent establishment situated therein may, after having been taxed under Article 7 (Business Profits), be taxed on the remaining amount in the Contracting State in which the permanent establishment is situated and in accordance with paragraph 2 of this Article.

  5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividents 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 therin, or performs in that other Stae 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 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.

  6. 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, the 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 t o 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 beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

  3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and received by the government of the other Contracting State including a political subdivision or a local authority thereof or the Central Bank of that other Contracting State shall be taxable only in that other Contracting State.

  4. The term “interest” as used in this Article means income from debt-claims 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 and prizes attaching to such securities, bonds or debentures.

  5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interests, 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 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.

  6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether be is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed based 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 based, then such interest shall be deemed to arise in the Contracting 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 law of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State the tax so charged shall not exceed:

    a) 15 per cent of the gross amount of royalties arising from the use of, or the right to use, any cinematographic films and films or tapes for television or radio broadcasting, or

    b) 10 per cent of the gross amount of royalties arising from the use of, or the right to use, any copyright of literary, artistic or scientific work, any patent, trade mark, design or model, plan, secret formula or process, or from the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

  3. The term “royalties” as used in this Article means payment of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematographic films and films or tapes for television or radio broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

  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 based situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed based. In such case, the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.

  5. Royalties shall be deemed to arise in a Contracting State when the payer is 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 fixed base in connection with which the obligation to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting 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 (Income from Immovable Property) and situated in the other Contracting State may be taxed in that other State.

  2. 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 Stae in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such permanent establishment (alone or with the whole enterprise) or of such fixed base may be taxed in that other State.

  3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or gains from the alienation of movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.

  4. Gains from the alienation of shares of a company, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State. Gains from the alienation of an interest in a partnership or a trust, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State.

  5. Gains from the alienation of any property, other than those mentioned in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.

 

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 if:

    a) he has a fixed base regularly available to him in that order Contracting State for the purpose of performing his activities, but only so much of the income as is attributable to that fixed base may be taxed in that Contracting State; or

    b) he is present in that other State for a period (or periods) exceeding in the aggregate 183 days within any twelve-month period; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

  2. The term “professional services” includes specially 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 (Directors Fees), 18 (Pensions), 19 (Government Services), 20 (Professors and Teachers), and 21 (Students and Trainees), 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 within any twelve-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 or aircraft 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 (Independent Personal Services), and 15 (Dependent Personal Services), income derived by a resident of a Contracting State as an entertainer, such as a theater, 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 of an entertainer or a sportsman in his capacity as such accrues not to that entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7 (Business Profits), 14 (Independent Personal Services), and 15 (Dependent Personal Services), be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

  3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, income derived in respect of the activities referred to in paragraph 1 of this Article within the framework of cultural or sports exchange programme agreed to by both Contracting States, substantially supported by public funds and/or officially recognized and endorsed by a Contracting State, shall be exempted from taxation in the Contracting State in which these activities are exercised.

 

Article 18
PENSIONS

 

  1. Subject to the provisions of paragraph 2 of Article 19 (Government Service), pensions and other similar remuneration paid to 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 resident of a Contracting State.

  2. Notwithstanding the provisions of paragraph 1 of this Article and of paragraph 2 of Article 19 (Government Service), benefits received by an individual, being a resident of a Contracting State under the social security legislation of the other Contracting State shall be taxable only in that other State.

Article 19
GOVERNMENT SERVICE

 

  1. a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that State or a political subdivision or local authority thereof, shall be taxable only in that State.

    b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient 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 a political subdivision or local authority thereof shall be taxable only in that State.
    b) However, such pension shall be taxable only in the other Contracting State if the recipient is a resident and a national of that State.

  3. The provisions of Article 15 (Dependent Personal Services), 16 (Directors’ Fees) and 18 (Pensions) shall apply to remuneration and 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
PROFESSORS AND TEACHERS  

  1. Remuneration which a professor or a teacher, who is a resident of one of the Contracting States and who visits the other Contracting State for a period not exceeding two years for the purpose of teaching or carrying out advanced study or research at a university, college, school or other educational institution, receives for those activities shall be taxable only in the first-mentioned State.

  2. This Article shall not apply to remuneration which a professor or a teacher receives for conducting research if the research is undertaken primarily for the private benefit of a specific person or persons.

  3. For the purpose of paragraph 1 of this Article, the term “remuneration” shall include remittance from sources outside the other State sent to enable the professor or teacher to carry out the purposes referred to in paragraph 1.

Article 21
STUDENTS AND TRAINEES

An individual who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that State solely as a student of a university, college or other similar educational institution or as a trainee for the purpose of acquiring technical, professional or business experience shall be exempt from tax in that other State on:

a) all remittances from abroad for purposes of his maintenance or training, and
b) for an aggregate period of not more than two years from the date of his first arrival, on any remuneration, provided, such services are in connection with his training or incidental thereto.

 

Article 22
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 (Income from Immovable Property), 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 based 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 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.

Article 23
ELIMINATION OF DOUBLE TAXATION

  1. In the Philippines, in accordance with the provisions and subject to the limitations of the laws of the Philippines, as may be amended from time to time without changing the general principles hereof, double taxation shall be avoided in the following manner:

    In accordance with the principles of this Agreement, taxes paid or accrued under the laws of Turkey, whether directly or by deduction, in respect of income from sources within Turkey shall be allowed as a credit against Philippine tax subject to the following limitations:

    a) the amount of the credit in respect to the tax paid or accrued to Turkey shall not exceed the same proportion of taxes covered by this Agreement against which such credit is taken, which the taxpayer’s taxable income from sources within Turkey bears to his entire taxable income for the same taxable year; and

    b) the total amount of the credit shall not exceed the same proportion of the taxes covered by the Agreement against which such credit is taken, which the taxpayer’s taxable income from sources without the Philippines bears to his entire taxable income for the same taxable year.

  2. Double taxation for the residents of Turkey shall be eliminated as follows:

    a) Subject to the provisions of sub-paragraph (b), where a resident of Turkey derives income which, in accordance with the provisions of this Agreement, may be taxed in the Philippines, Turkey shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Philippines. Such deduction shall not, however exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Philippines.
b) Where a resident of Turkey derives income which, in accordance with the provisions of this Agreement, shall be taxable only in Philippines. Turkey may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

 

Article 24
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 requirement to which nationals of that other Contracting State in the same circumstances are or may be subjected.

  2. Subject to the provisions of paragraph 4 of Article 10 (Dividends), 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 or Article 9 (Associated Enterprises), paragraph 7 of Article 11 (Interest), or paragraph 6 of Article 12 (Royalties) apply, interest, royalties, and other disbursements paid by 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 25
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 laws 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 24 (Non-Discrimination), to that Contracting State of which he is a national. The case must be presented within three years from the first notification of the action which gives rise to taxation not in accordance with the provisions of the Agreement.

  2. The competent authority shall endeavor, 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.

  3. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement.They may also consult togehter for the elimination of double taxation in cases not provided for in this Agreement.

  4. The competent authorities of the Contracting States may communicate with each other directly including through a joint commission consisting of themselves or their representatives for the purpose of reaching an agreement in the sense of the preceding paragraphs.

 

Article 26
EXCHANGE OF INFORMATION

  1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement insofar as the taxation thereunder is in accordance with this Agreement, in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1 (Persons Covered). Any information received 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) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. 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.

  2. In no case shall the provisions of paragraph 1 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 or which would be contrary to public policy.

Article 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS

Nothing in this Agreement shall effect the fiscal privileges of diplomatic agents and consular officers under the general rules of international law or under the provisions of special agreements.

 

Article 28
ENTRY INTO FORCE

  1. Each of the Contracting States shall notify the other, through diplomatic channels, of the completion of the procedures required by its law for the entry into force of this Agreement.

  2. This Agreement shall enter into force on the day of the later of the notifications referred to in paragraph 1 and its provisions shall have effect:

a) in respect of tax withheld at source, on income paid to non-residents on or after the first day of January in the calendar year next following that in which the Agreement enters into force:

b) in respect of other taxes, on income in any taxable year beginning on or after the first day of January in the calendar year next following that in which the Agreement enters into force.

 

Article 29
TERMINATION

This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving to the other Contracting State a written notice of termination at least six months before the end of any calendar year following after the period of five years from the date on which the Agreement enters into force. In such event, the Agreement shall cease to have effect:

a) in respect of tax withheld at source, on income paid to non-residents on or after the first day of January in the calendar year next following that in which the notice is given;

b) in respect of other taxes, on income in any taxable year beginning on or after the first day of January in the calendar year next following that in which the notice is given.

 

IN WITNESS WHEREOF , the undersigned, duly authorized thereto, have signed this Agreement.

 

DONE in duplicate in Ankara, Turkey this 18 thday of March, 2009, in the English and Turkish languages, both texts being equally authentic.

 

FOR THE REPUBLIC OF
THE PHILIPPINES


(Sgd.)
FOR THE REPUBLIC OF
TURKEY


(Sgd.)

 

__________________________________________________________________________________________________________________________________________

PROTOCOL

The Government of the Republic of the Philippines and the Government of the Republic of Turkey

Have agreen on signing in Ankara, Turkey on this 18th day of March 2009 the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income upoon the following provision which shall form an integral part of the said Agreement:

  1. With respect to the definition of "dividends":

    It is understood that in Turkey, the term "dividends" also includes income derived fron an investment fund and investment trust.
  2. With reference to Article 7, paragraph 1:

    In respect of paragraph 1 of Article 7, profits derived from the sale of goods or merchandise of the same or similar kind as those sold, or from other business activities of the same or similar kind as those affected, through a permanent establishment, may be considered attributable to that permanent establishment, if it is proved that this transaction has been resorted to in order to avoid taxation in the State where the permanent establishment is situated.

 

IN WITNESS WHEREOF, the undersigned, duly authorized thereto, have signed this Protocol.

DONE in duplicate in Ankara, Turkey this 18 day of March, 2009 in the English and Turkish languages, both texts being equally authentic.

 

FOR THE REPUBLIC OF
THE PHILIPPINES


(Sgd.)
FOR THE REPUBLIC OF
TURKEY


(Sgd.)

 

Entry into Force: January 11, 2016

 



© Supreme Court E-Library 2019
This website was designed and developed, and is maintained, by the E-Library Technical Staff in collaboration with the Management Information Systems Office.