Discussions on the additional tax regulation adopted with Law no. 7440 have been continuing in various aspects, with the main axis being constitutionality.\u00a0 However, the overlap between the issue and international tax law is also highly important. <\/br><\/br><\/p>\n
The imposition of additional tax depending on exemptions has inevitably brought tax treaty applications onto the agenda. In terms of treaties for the avoidance of double taxation, which have adopted the exemption method, additional taxes lead to violations of international laws and treaty overrides. Discussions on the additional tax regulation adopted with Law no. 7440 have been continuing in various aspects, with the main axis being constitutionality.\u00a0 However, the overlap between the issue and […]<\/p>\n","protected":false},"author":3,"featured_media":4656,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":""},"categories":[115,116,121],"tags":[122,112,123],"class_list":["post-4689","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-dunya-gazetesi-en-2","category-makaleler-en-2","category-selcuk-ozgenc-en-2","tag-additional-tax","tag-tax","tag-tax-treaties"],"yoast_head":"\n
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\nTools for the avoidance of double taxation in tax treaties<\/strong>
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\nAlthough tax treaties have several purposes, the main purpose is to avoid double taxation for the residents of contracting states. With such treaties, states agree where various items of income will be subject to tax on the basis of exclusive or shared authority principles. At treaty level, the methods of exemption and offsetting are used to avoid double taxation.
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\nIn the exemption method, the state of residence exempts the foreign-origin incomes from tax. In the offsetting method, the state of residence offsets the tax paid to the county of origin from its own taxes. Turkish tax treaties use both methods, predominantly offsetting*.
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\nApplication of the exemption method<\/strong>
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\nIn the application of the exemption method, it is not important whether the state, to which the treaty provisions grant taxation authority, actually exercises such authority. Examples of treaties based on the exemption method include, but are not limited to, treaties with the Netherlands, Belgium, TRNC, Sweden and Morocco.
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\nFunctioning of the treaties<\/strong>
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\nTreaties for the avoidance of double taxation leave the taxation authorities of contracting states as they are, or limit them; however, do not expand such authorities under any circumstances.
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\nAdditional taxes lead to treaty overrides<\/strong>
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\nAs per Article 90 of the Constitution, tax treaties are superior to laws, and under Vienna Convention on the Law of Treaties (VCLT). According to VCLT, contracting states are obliged to mutually abide by the treaty provisions (\u201cpacta sunt servanda\u201d).
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\nTreaty override means that a contracting state gives priority to a provision of domestic law over international law. In this respect, certain obligations arising from the treaty are rejected by the contracting state on the ground that they contradict with the provisions of domestic law. Therefore, the treaty itself is violated. Treaty override may occur in a number of ways.
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\nThese may arise from lawmakers or judicial practices. An example for lawmakers\u2019 practices is that a contracting state may intentionally or unintentionally enact a new law that does not comply with or has noncompliant effect with the provision of the treaty**.
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\nThe discussion should be clarified by the Tax \u00a0Administration<\/strong>
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\nThe exemption method regulated in treaties is basically the method for the elimination of double taxation. If a rule accepted with the treaty is removed with an additional tax regulation in domestic law, this clearly constitutes a violations of the treaty; therefore, the Tax Administration should make an explanation to eliminate the taxpayers\u2019 hesitations with a Communiqu\u00e9.
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\nOtherwise, it is quite likely that taxpayers resort to the jurisdiction for the issue, and bring the tax treaty issue up for discussion.
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\n*See: Billur YALTI SOYDAN, Uluslararas\u0131 Vergi Anla\u015fmalar\u0131, Istanbul, 1995. ** See: A.Sel\u00e7uk \u00d6zgen\u00e7, \u201cVergi Anla\u015fmalar\u0131n\u0131n A\u015f\u0131m\u0131: Kar\u015f\u0131la\u015ft\u0131rmal\u0131 \u0130\u00e7tihat \u00d6rnekleri \u00dczerinden T\u00fcrk Hukukuna \u0130li\u015fkin \u00c7\u0131kar\u0131mlar\u201d, VSD, S:331, 2016<\/p>\n","protected":false},"excerpt":{"rendered":"